"DRAFT"
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000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
SIMPLE INDIVIDUAL RETIREMENT ANNUITY RIDER
This rider is part of the Contract to which it is attached by Pacific Life &
Annuity Company ("PL&A").
The Contract under which it has been issued is hereby modified as specified
below in order to qualify as a SIMPLE Individual Retirement Annuity under the
terms of the Internal Revenue Code of 1986 (the "Code") as amended.
DEFINITIONS
ANNUITANT - is the individual named to receive periodic annuity payments
purchased under this Contract.
ANNUITY START DATE - is the date you choose to have PL&A begin periodic annuity
payments to the Annuitant. The Annuity Start Date may be no later than April 1
of the calendar year following the year in which the Annuitant reaches age
70 1/2.
CONTINGENT ANNUITANT - is the individual who becomes the Annuitant if the
Annuitant dies before periodic annuity payments purchased under the Contract
begin. Only the spouse of the Annuitant may be named the Contingent Annuitant.
CONTINGENT OWNER - is the individual who becomes the Owner if you die before
periodic annuity payments purchased under this Contract begin. Only the spouse
of the Annuitant may be named the Contingent Owner.
DESIGNATED BENEFICIARY - is the individual designated as a beneficiary by the
Annuitant.
The provisions of this rider will control if in conflict with those of the
Contract. Notwithstanding any provisions in the Contract to the contrary:
1. The Annuitant will at all times be the Owner of the Contract. The Owner's
rights under the Contract shall be nonforfeitable and for the exclusive benefit
of the Owner and his or her beneficiaries.
2. No benefits under the Contract may be transferred, sold, assigned, or
pledged as collateral for a loan, or as security for the performance of an
obligation, or for any other purpose, to any person; except that the Contract
may be transferred to a former spouse of the Owner under a divorce decree or
written instrument incident to such divorce. In the event of such transfer, the
transferee shall for all purposes be treated as the Owner under this Contract.
3. This SIMPLE IRA will accept only cash contributions made on behalf of the
Annuitant pursuant to the terms of a SIMPLE IRA Plan described in section 408(p)
of the Internal Revenue Code. A rollover contribution or a transfer of assets
from another SIMPLE IRA of the Annuitant will also be accepted. No other
contributions will be accepted.
4. Prior to the expiration of the 2-year period beginning on the date the
Annuitant first participated in any SIMPLE IRA Plan maintained by the
Annuitant's employer, any rollover or transfer by the Annuitant
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of funds from this SIMPLE IRA must be made to another SIMPLE IRA of the
Annuitant. Any distribution of funds to the Annuitant during this 2-year period
may be subject to a 25% additional tax if the Annuitant does not roll over the
amount distributed into a SIMPLE IRA. After the expiration of this 2-year
period, the Annuitant may roll over or transfer funds to any IRA of the
Annuitant that is qualified under section 408(a) or (b) of the Internal Revenue
Code.
5. Additional Purchase Payments (or premium payments) under the Contract must
be at least the minimum as stated in the Purchase Payments (or Premiums)
provision of the Contract.
6. Any Purchase Payments (or premium) refund declared by PL&A other than
refunds attributable to excess contributions will be applied toward the purchase
of additional benefits before the close of the calendar year following the
refund.
7. In accordance with Regulations prescribed by the Secretary of the Treasury,
or his delegate pursuant to the Code ("Regulations"), the entire interest under
the Contract must be distributed to the Owner:
(a) Not later than the April 1st next following the close of the calendar
year in which the Owner attains age 70 1/2 (the "Required Beginning
Date"), or
(b) Commencing not later than the Required Beginning Date in equal or
substantially equal amounts, in annual or more frequent installments,
over:
(i) the Owner's life or the lives of the Owner and his or her
Designated Beneficiary; or
(ii) a period not exceeding the Owner's life expectancy or the joint
and last survivor life expectancy of the Owner and his or her
Designated Beneficiary.
(c) If the Owner's entire interest is to be distributed in other than a
lump sum, then the amount to be distributed each year, commencing with
the Required Beginning Date and then for each succeeding calendar
year, shall not be less than the quotient obtained by dividing the
Owner's entire interest by the lesser of:
(i) the applicable life expectancy; or
(ii) if the Owner's spouse is not the Designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4
of Section 1.401(a)(9)-2 of the proposed Income Tax Regulations.
Distributions after the death of the Owner shall be calculated
using the applicable life expectancy as the relevant divisor
without regard to the proposed Regulation Section 1.401(a)(9)-2.
The preceding paragraph shall not apply if distribution is in the form of
an annuity with non-increasing payments.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Owner by the time distributions are required to begin,
life expectancy shall be recalculated annually. Such election shall be
irrevocable as to the Owner and shall apply to all subsequent years. The life
expectancy of a non-spouse Beneficiary may not be recalculated. Instead, life
expectancy will be calculated using the attained age of
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such Beneficiary during the calendar year in which distributions are required to
begin pursuant to this section, and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the calendar year life expectancy was first calculated.
(d) If the Owner's spouse is not the Designated Beneficiary, the form
of Xxxxxxx elected must assure that at least 50% of the value of
the Contract available for distribution is payable within the
Owner's life expectancy.
(e) The method of distribution shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the Regulations
thereunder. Further the method selected must meet the "minimum
distribution incidental benefit" rule of Code Section 401(a)(9),
and the proposed Regulation Section 1.401(a)(9)(2). This includes
the following:
(i) where the Owner's only Designated Beneficiary is the
spouse, the minimum amount that must be distributed in a
distribution calendar year is the amount determined under
the regular minimum distribution requirements in this
Section 7.
(ii) where the distributions are not made as annuity payments
under an annuity contract and where the Owner's spouse is
not the Designated Beneficiary, the minimum amount that
must be distributed in a distribution calendar year is the
quotient obtained by dividing the Owner's entire interest
by the joint and last survivor expectancy described in the
proposed Regulation Section 1.401(a)(9)-2.
(iii) where distribution is to be made under an annuity contract
purchased on or before the Owner's Required Beginning Date
and the Owner's spouse is not the Designated Beneficiary,
the minimum amount that must be distributed is determined
as follows:
- Period certain annuity without a life contingency:
The period certain may not exceed the appropriate
joint and last survivor expectancy described in the
proposed Regulation Section 1.401(a)(9)-2.
- Life annuity or a joint and survivor annuity: A
life annuity on the Owner's life which satisfies the
regular minimum distribution requirements satisfies
the "minimum distribution incidental benefit" rule.
The periodic annuity payment to the survivor under a
joint and survivor annuity may not exceed the
applicable percentage of the annuity payment to the
Owner. These percentages are defined in the proposed
Regulation Section 1.401(a)(9)-2.
- Life annuity with period certain: The distribution
must satisfy the requirements for a single life (or
joint and survivor) annuity and the period certain
may not exceed the period determined for non-annuity
distributions.
Only a method of distribution offered by PL&A that satisfies these
conditions can be selected. You must make this selection before the end of the
calendar year in which you attain age 70 1/2.
8. On the death of the Owner, distribution shall be made in accordance with
the annuity options described in the Contract. However, selection of an annuity
option which does not satisfy the conditions of this Section 8 shall not be
permitted.
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If the Owner dies before distribution of his or her interest in the
Contract commences, the entire interest should be distributed by December 31st
of the fifth full year which follows the Owner's death unless: (i) such interest
is paid in equal or substantially equal installments over a period not exceeding
the lifetime, or the life expectancy, of the Designated Beneficiary; and (ii)
payments begin by December 31st of the calendar year which follows the Owner's
death.
If the Designated Beneficiary of the Owner is the Owner's surviving spouse,
the spouse may elect to receive equal or substantially equal payments over the
life or life expectancy of the surviving spouse commencing at any date prior to
the later of: (i) December 31 of the calendar year immediately following the
calendar year in which the Owner died; and (ii) December 31 of the calendar year
in which Owner would have attained age 70 1/2. Such election must be made no
later than the earlier of December 31 of the calendar year containing the fifth
anniversary of the Owner's death or the date distributions are required to begin
pursuant to the preceding sentence. The surviving spouse may accelerate these
payments at any time, i.e., increase the frequency or amount of such payments.
If the surviving spouse is the Designated Beneficiary, the spouse may
convert this Individual Retirement Annuity to the spouse's own Individual
Retirement Annuity by requesting that he or she be made the Annuitant. If the
spouse so requests, the spouse shall be Owner and Annuitant for purposes of
applying the restrictions contained in this rider.
For purposes of the above, life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations. For purposes of distributions beginning after the Owner's death,
unless otherwise elected by the surviving spouse by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the surviving spouse and shall apply to all
subsequent years. In the case of any other Designated Beneficiary, life
expectancies shall be calculated using the attained age of such Beneficiary
during the calendar year in which distributions are required to begin pursuant
to this section, and payments for any subsequent calendar year shall be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the calendar year life expectancy was first calculated.
Any amount paid to a child of the Owner will be treated as if it had been
paid to the surviving spouse if the remainder of the interest becomes payable to
the surviving spouse when the child reaches the age of majority.
If the Owner dies after distribution of his or her interest in the Contract
has commenced, the remaining interest will be distributed at least as rapidly as
under the method of distribution being used prior to the Owner's death.
If the Owner dies before his or her entire interest has been distributed to
him or her, no additional cash contributions or "rollover contributions" shall
be accepted.
9. No one other than the spouse of the Owner may be named as the Contingent
Annuitant and/or the Contingent Owner. If the Owner dies, the Contingent
Annuitant shall be treated as the Annuitant for purposes of applying the
restrictions contained in this rider.
If, despite the restrictions contained in this rider, someone other than
the spouse is named as a Contingent Annuitant, such person shall be treated as
the Primary Beneficiary under the Contract.
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10. PL&A shall furnish annual calendar year reports concerning the status of
the Contract.
11. If contributions made on behalf of the Annuitant pursuant to a SIMPLE IRA
Plan maintained by the Annuitant's employer are received directly by PL&A from
the employer, PL&A will provide the employer with the summary description
required by section 408(l)(2) of the Internal Revenue Code.
12. If this SIMPLE IRA is maintained by a designated financial institution
(within the meaning of section 408(p)(7) of the Internal Revenue Code) under the
terms of a SIMPLE IRA Plan of the Annuitant's employer, the Annuitant must be
permitted to transfer the Annuitant's balance without cost or penalty (within
the meaning of section 408(p)(7)) to another IRA.
13. PL&A reserves the right to amend this rider to comply with future changes
in the Code and any regulations or rulings and other published guidance issued
under the provisions of the Code or interpretations thereof without consent
(except for the states of Michigan, Pennsylvania, South Carolina and Washington,
where affirmative consent is required). PL&A shall provide the Owner of the
Contract with a copy of any such amendment.
SIGNED FOR PACIFIC LIFE & ANNUITY COMPANY,
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxx
President and Chief Executive Officer Secretary
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