INDIVIDUAL RETIREMENT ANNUITY (IRA)
CONTRACT AMENDMENT
Made a part of the Contract ("this Contract")
Issued by the Lincoln National Life Insurance Company ("LNL")
to which this amendment is attached
1. This amendment will be controlling and overrides any contradictory
provision in the Contract.
2. If the Contract is an immediate annuity, certain provisions of this IRA
Contract Amendment may not apply because distributions will have already
commenced under the Contract.
3. This Contract is for the exclusive benefit of the Owner and his or her
beneficiary(s). Joint or contingent owners cannot be named under the
Contract.
4. The Contract will not be transferable except to LNL on surrender or
settlement. The Owner may not sell or assign the Contract, nor may it be
discounted or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose
CONTRIBUTIONS
5. The minimum purchase payment for the Contract is determined under the
Contract provisions and may cause the Contract to only be available for
rollovers and transfers equal to or greater than the minimum amount.
(a) Except in the case of a rollover contribution (as permitted by Internal
Revenue Code Sections 402(c), 402(e)(6), 403(a)(4), 403(b)(8),
403(b)(10), 408(d)(3) and 457(e)(16)) or a contribution made in
accordance with the terms of a Simplified Employee Pension ("SEP") as
described in Section 408(k), no contributions will be accepted unless
they are in cash, and the total of such contributions shall not exceed:
$3,000 for any taxable year beginning in 2002 through 2004;
$4,000 for any taxable year beginning in 2005 through 2007; and
$5,000 for any taxable year beginning in 2008 and years thereafter.
After 2008, the limit will be adjusted by the Secretary of the Treasury
for cost-of-living increases under Code Section 219(b)(5)(C). Such
adjustments will be in multiples of $500.
(b) In the case of an individual who is 50 or older, the annual cash
contribution limit is increased by $500 for any taxable year beginning
in 2002 through 2005; and $1,000 for any taxable year beginning in 2006
and years thereafter.
(c) The annual purchase payment under a SEP may not exceed the amount
permitted under Code Section 408(j) and (k). The annual purchase
payment under a Salary Reduction SEP ("SARSEP") may not exceed the
amount permitted under Code Section 408(k)(6).
(d) No contributions will be accepted under a SIMPLE IRA plan established
by any employer pursuant to Code Section 408(p). Also, no transfer or
rollover of funds attributable to contributions made by a particular
employer under its SIMPLE IRA plan will be accepted from a SIMPLE IRA,
that is, an IRA used in conjunction with a SIMPLE IRA plan, prior to
the expiration of the 2-year period beginning on the date the
individual first participated in that employer's SIMPLE IRA plan.
6. This Contract does not require fixed purchase payments. LNL does not impose
a penalty upon the Owner if the Owner stops and resumes making purchase
payments. The entire interest of the Owner in this Contract is
nonforfeitable and the "automatic nonforfeiture option" provision is not
applicable to this Contract. However, if no purchase payments are received
under the Contract for two full consecutive contract years and any paid-up
annuity benefit arising from the purchase payments made prior to such
two-year period is less than $20 a month, LNL may terminate the Contract by
payment in cash of the then present value of the paid-up benefit to the
Owner.
7. Purchase payments made pursuant to this Contract must be from "compensation"
of the Owner. "Compensation" means wages, salaries, professional fees, or
other amounts derived from or received for personal services actually
rendered (including, but not limited to commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, and bonuses) and includes earned
income, as defined in Code Section 401(c)(2) (reduced by the deduction the
self-employed individual takes for contributions made to a self-employed
retirement plan). For purposes of this definition, Section 401(c)(2) will be
applied as if the term trade or business for purposes of Code Section 1402
included service described in subsection (c)(6). Compensation does not
include amounts derived from or received as earnings or profits from
property (including, but not limited to, interest and dividends) or amounts
not includible in gross income. Compensation also does not include any
amount received as a pension or annuity or as deferred compensation. The
term "compensation" will include any amount includible in the individual's
gross income under Code Section 71 with respect to a divorce or separation
instrument described in subparagraph (A) of Section 71(b)(2).
DISTRIBUTIONS
8. Notwithstanding any provision of this IRA Contract Amendment to the
contrary, the distribution of the Owner's interest in the IRA shall be made
in accordance with the requirements of Code Section 408(b)(3) and the
regulations thereunder, the provisions of which are herein incorporated by
reference. If distributions are not made in the form of an annuity on an
irrevocable basis (except for acceleration), then distribution of the
interest in the IRA (as determined under paragraph 11) must satisfy the
requirements of Code Section 408(a)(6) and the regulations thereunder,
rather than paragraphs (a), (b) and (c) below and paragraphs 9 and 10.
(a) The entire interest of the Owner will commence to be distributed no
later than the first day of April following the calendar year in which
such individual attains age 70 1/2 (the "required beginning date") over
(a) the life of such individual or the lives of such individual and his
or her designated beneficiary or (b) a period certain not extending
beyond the life expectancy of such individual or the joint and last
survivor expectancy of such individual and his or her designated
beneficiary. Payments must be made in periodic payments at intervals of
no longer than 1 year and must be either non-increasing or they may
increase only as provided in Q&As-1 and -4 of Section 1.401(a)(9) - 6T
of the Temporary Income Tax Regulations. In addition, any distribution
must satisfy the incidental benefit requirements specified in Q&A-2 of
Section 1.401(a)(9) -6T unless otherwise provided.
(b) The distribution periods described in paragraph (a) above cannot exceed
the periods specified in Section 1.401(a)(9) -6T of the Temporary Tax
Regulations.
(c) If annuity payments commence, the first required payment can be made as
late as April 1 of the year following the year the individual attains
age 70 1/2 and must be the payment that is required for one payment
interval. The second payment need not be made until the end of the next
payment interval.
9. If the Owner dies on or after required distributions commence, the remaining
portion of his or her interest will continue to be distributed under the
contract distribution option chosen.
10. If the Owner dies before required distributions commence, his or her entire
interest will be distributed at least rapidly as follows:
(a) If the designated beneficiary is someone other than the Owner's
surviving spouse, the entire interest will be distributed, starting by
the end of the calendar year following the calendar year of the Owner's
death, over the remaining life expectancy of the designated
beneficiary, with such life expectancy determined using the age of the
beneficiary as of his or her birthday in the year following the year of
the Owner's death, or, if elected, in accordance with paragraph (c)
below.
(b) If the Owner's sole designated beneficiary is the Owner's surviving
spouse, the entire interest will be distributed, starting by the end of
the calendar year following the calendar year of the Owner's death (or
by the end of the calendar year in which the Owner would have attained
age 70 1/2, if later), over such spouse's life, or, if elected, in
accordance with paragraph (c) below. If the surviving spouse dies
before the required distributions commence to him or her, the remaining
interest will be distributed, starting by the end of the calendar year
following the calendar year of the spouse's death, over the spouse's
designated beneficiary's age as of his or her birthday in the year
following the death of the spouse, or, if elected, will be distributed
in accordance with paragraph (c) below. If the surviving spouse dies
after required distributions commence to him or her, any remaining
interest will continue to be distributed under the contract option
chosen.
(c) If there is no designated beneficiary, or if applicable by operation of
paragraph (a) or (b) above, the entire interest will be distributed by
the end of the calendar year containing the fifth anniversary of the
Owner's death (or of the spouse's death in the case of the surviving
spouse's death before distributions are required to begin under
paragraph (b) above).
(d) Life expectancy is determined using the Single Life Table in Q&A -1 of
Section 1.401(a) (9) -9 of the Income Tax Regulations. If distributions
are being made to a surviving spouse as the sole designated
beneficiary, such spouse's remaining life expectancy for a year is the
number in the Single Life Table corresponding to such spouse's age in
the year. In all other cases, remaining life expectancy for a year is
the number in the Single Life Table corresponding to the beneficiary's
age in the year specified in paragraph (a) or (b) and reduced by 1 for
each subsequent year.
11. The "interest" in the IRA includes the amount of any outstanding rollover,
transfer and recharacterization under Q&As -7 and -8 of Section 1.408 -8 of
the Income Tax Regulations and the actuarial value of any other benefits
provided under the IRA, such as guaranteed death benefits.
12. For purposes of paragraphs 9 and 10 above, required distributions are
considered to commence on the Owner's required beginning date or, if
applicable, on the date distributions are required to begin to the surviving
spouse under paragraph (10)(b) above. However, if distributions start prior
to the applicable date in the preceding sentence, on an irrevocable basis
(except for acceleration) under an annuity contract meeting the requirements
of Section 1.401(a)(9) -6T of the Temporary Income Tax Regulations, then
required distributions are considered to commence on the annuity starting
date.
13. If the sole designated beneficiary is the Owner's surviving spouse, the
spouse may elect to treat the IRA as his or her own IRA. This election will
be deemed to have been made if such surviving spouse makes a contribution
to the IRA or fails to take required distributions as a beneficiary.
14. At least once each Contract Year, LNL shall furnish to the Owner of this
Contract reports concerning the status of this annuity and such information
concerning required minimum distributions as are prescribed by the Internal
Revenue Service.
15. This Contract will be amended from time to time to comply with the
provisions of the Internal Revenue Code, related regulations and other
published guidance.
16. The Owner has the sole responsibility for determining whether any purchase
payment is deductible for federal income purposes.
The Lincoln National Life Insurance Company
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Executive Vice President and
Chief Executive Officer of Annuities
