AMERICAN FOUNDATION LIFE INSURANCE COMPANY
0000 XXX. 000 XXXXX
XXXXXXXXXX, XXXXXXX 00000
000-000-0000
(A STOCK INSURANCE COMPANY)
The Company will provide the benefits described in this contract. They will not
be less than the minimum benefits required by the laws of the state in which
this contract is delivered.
MARKET VALUE ADJUSTMENT
This contract contains a Market Value Adjustment formula. The formula may
result in an upward or downward adjustment of the Account Value when withdrawals
are made prior to the end of any Guaranteed Period. Generally, the Market Value
Adjustment will not be applied to:
- The Death Benefit, when proper claim is made within 1 year of death (see
page 7);
- Surrenders from a Sub-Account at the end of its Guaranteed Period (see page
9);
- Interest Withdrawals (see page 9);
- Annuitization on the Annuity Commencement Date (see page 9).
The Market Value Adjustment is described on the Schedule of this contract.
SEPARATE ACCOUNT
Your Annuity Premium(s) will be allocated to and accounted for in a non-unitized
separate account. The assets of this separate account cannot be charged with
liabilities arising out of other business of the Company. Contract values are
determined in accordance with the terms of this contract without regard to the
actual performance of the assets in the separate account.
YOU HAVE THE RIGHT TO RETURN THIS CONTRACT.
YOU MAY CANCEL THIS CONTRACT WITHIN THIRTY DAYS AFTER YOU RECEIVE IT BY
RETURNING IT TO OUR ADMINISTRATIVE OFFICE OR TO OUR AGENT, WITH A WRITTEN
REQUEST FOR CANCELLATION. WE WILL PROMPTLY RETURN THE ACCOUNT VALUE ADJUSTED BY
THE MARKET VALUE ADJUSTMENT.
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxx
Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxx
President Secretary
NON-PARTICIPATING FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACT
THIS IS A LEGAL CONTRACT - READ IT CAREFULLY
SCHEDULE
XXXX XXX NONE
----------------------------------- -----------------------------------
Owner Joint Owner
XXXX XXX MARCH 1, 2039
----------------------------------- -----------------------------------
Xxxxxxxxx Xxxxxxx Commencement Date
NYR-9999900 MARCH 1, 1997
----------------------------------- -----------------------------------
Contract Number Effective Date
-------------------------------------------------------------------------------
Guaranteed Guaranteed Annuity
Sub-Account # Period Interest Rate Premium
------------- ---------- ------------- ------------
NYR9999900-AA 3 YEARS 4.75% $ 10,000.00
NYR9999900-AB 5 YEARS 5.25% $ 10,000.00
NYR9999900-AC 7 YEARS 5.75% $ 10 000.00
NYR9999900-AD 10 YEARS 6.25% $ 10,000.00
------------
TOTAL ANNUITY PREMIUM $ 40,000.00
-------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is equal to the Market Value Adjustment percentage
indicated below, applied to the amount of each full or partial surrender
requested less any amount available under the "INTEREST WITHDRAWAL" provision of
this Contract at the time of the surrender. The Market Value Adjustment does
not apply to surrenders made from a Sub-Account at the end of its Guaranteed
Period; such surrenders should be requested during the final 30 days of the
Guaranteed Period.
MARKET VALUE ADJUSTMENT PERCENTAGE = (C - I + 0.25%) X (N/12), WHERE:
C = the Guaranteed Interest Rate currently in effect for a Guaranteed
Period with a duration equivalent to the time remaining in the Guaranteed
Period from which the surrender is being made. Linear interpolation will
be used to determine C when the time remaining is not an integral number of
whole years. When the time remaining is less than one year, C will be the
current one year rate;
I = the Guaranteed Interest Rate initially established for the Guaranteed
Period from which the surrender is being made;
N = the number of months remaining in the Guaranteed Period from which the
surrender is being made.
Factors used in determining I, such as whether I was established as an Initial
or a Subsequent Guaranteed Interest Rate, will be considered when determining
C.
In the event a current Guaranteed Interest Rate is no longer established by the
Company, a suitable replacement index, subject to all necessary regulatory
approvals, will be used.
A detailed description of the Market Value Adjustment has been filed with the
Superintendent of the New York Insurance Department.
2
SURRENDER CHARGE
The Surrender Charge percentage for each year of an Initial or Subsequent
Guaranteed Period is indicated in the appropriate table below. The Surrender
Charge is determined by applying the Surrender Charge percentage to the amount
of each full or partial surrender requested adjusted by any applicable Market
Value Adjustment, less any amount available under the "INTEREST WITHDRAWAL"
provision of this Contract at the time of the surrender. The Surrender Charge
does not apply to surrenders made from a Sub-Account at the end of its
Guaranteed Period.
SURRENDER CHARGE FOR INITIAL GUARANTEED PERIODS
GUARANTEED
PERIOD PREMIUM YEAR DURING WHICH SURRENDER IS TAKEN
1 2 3 4 5 6 7 8 9 10
1 1%
2 2% 1%
3 3% 2% 1%
4 4% 3% 2% 1%
5 5% 4% 3% 2% 1%
6 6% 5% 4% 3% 2% 1%
7-10 7% 6% 5% 4% 3% 2% 1% 0% 0% 0%
SURRENDER CHARGE FOR SUBSEQUENT GUARANTEED PERIODS
GUARANTEED
PERIOD PREMIUM YEAR DURING WHICH SURRENDER IS TAKEN
1 2 3 4 5 6 7 8 9 10
1 1%
2 2% 1%
3 3% 2% 1%
4 4% 3% 2% 1%
5 5% 4% 3% 2% 1%
6 5% 5% 4% 3% 2% 1%
7-10 5% 5% 5% 4% 3% 2% 1% 0% 0% 0%
INDEX
Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Control Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interest Credited and Guaranteed Periods . . . . . . . . . . . . . . . . . . 8
Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Surrenders - Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Annuity Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3
DEFINITIONS
ACCOUNT VALUE - The sum of all Sub-Account Values.
ADMINISTRATIVE OFFICE - 0000 Xxxxxxx 000 Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000.
ANNUITANT - Annuity payments may depend upon the continuation of the life of a
person. That person is called an Annuitant. Annuity payments will be paid to
the Annuitant, unless directed otherwise by the Owner.
ANNUITY - A series of periodic payments.
ANNUITY COMMENCEMENT DATE - The date on which Annuity payments are determined.
The initial payment must be made within one month of the Annuity Commencement
Date.
ANNUITY PREMIUM - Payments (less premium taxes, if applicable) made and
allocated to the Guaranteed Period(s) you select under this contract. Each
Annuity Premium and each allocation to a Guaranteed Period must be at least
$10,000. Only one contract will be issued regardless of the number of Annuity
Premiums made. We reserve the right not to accept any Annuity Premium payment.
BENEFICIARY - The person or persons entitled to receive the Death Benefit under
this contract upon the death of an Owner.
PRIMARY - The Primary Beneficiary is the surviving Owner, if any. If there
is no surviving Owner, the Primary Beneficiary is the person or persons
designated on the application or, if changed by the Owner, the person or
persons so named in our records.
CONTINGENT - The person named to receive the Death Benefit if the Primary
Beneficiary is not living at the time of an Owner's death. If no
Beneficiary designation is in effect or if no Beneficiary is living at the
time of an Owner's death, the estate of the deceased Owner will be the
Beneficiary.
IRREVOCABLE - An irrevocable Beneficiary is one whose consent is needed to
change the Beneficiary designation, and to exercise certain other rights.
COMPANY - American Foundation Life Insurance Company. The Company is also
referred to as "we", "us", or "our".
DEATH BENEFIT - The amount payable to a Beneficiary upon the death of an Owner
prior to the Annuity Commencement Date. Only one Death Benefit is payable under
this contract even though the contract may, in some circumstances, continue
beyond an Owner's death.
EFFECTIVE DATE - The date on which this contract takes effect. Contract Years
are measured from the Effective Date.
GUARANTEED INTEREST RATE - The effective rate of interest, calculated after
daily compounding has been taken into account, which is established by the
Company for a Guaranteed Period. Guaranteed Interest Rates are designated as
either "Initial" or "Subsequent".
4
GUARANTEED PERIOD - The period for which a Guaranteed Interest Rate will be
credited to a Sub-Account. Guaranteed Periods are designated as either
"Initial" or "Subsequent".
MARKET VALUE ADJUSTMENT - An adjustment made to a Sub-Account Value when a
partial or full surrender is made prior to the end of any Guaranteed Period.
NET ACCOUNT VALUE - The sum of all Net Sub-Account Values.
NET SUB-ACCOUNT VALUE - The Sub-Account Value after application of the Market
Value Adjustment and less deductions for any Surrender Charges and applicable
premium taxes.
NET SURRENDER AMOUNT - The Surrender Amount after application of the Market
Value Adjustment and less deductions for any Surrender Charges and applicable
premium taxes.
OWNER - The Owner(s) of the contract, also referred to as "you" or "your."
Individuals, as well as non-natural persons such as corporations or trusts, may
be Owners.
SUB-ACCOUNT - Annuity Premium is allocated to one or more Sub-Accounts. A
Sub-Account is characterized by its Guaranteed Period and its corresponding
Guaranteed Interest Rate.
SUB-ACCOUNT PREMIUM - Annuity Premium allocated and credited to a Sub-Account
("Initial"), or any amount transferred and credited to a Sub-Account at the end
of a Guaranteed Period ("Subsequent"). Premium Years are measured from the date
the Sub-Account Premium is credited.
SUB-ACCOUNT VALUE - The Sub-Account Premium, increased by all interest credited
and decreased by previous full or partial surrenders (including applicable
Surrender Charges, Market Value Adjustments and premium taxes) and previous
interest withdrawals. The Sub-Account Value of each Sub-Account under this
contract must be at least $10,000 at all times.
SURRENDER AMOUNT - The portion of the Sub-Account Value removed to satisfy a
written request for a full or partial surrender.
SURRENDER CHARGE - A charge imposed when a partial or full surrender is made
prior to the end of a Guaranteed Period.
SURRENDER DATE - The date on which a full or partial surrender is processed.
WRITING - A written form satisfactory to the Company received at the
Administrative Office.
GENERAL PROVISIONS
ENTIRE CONTRACT
The entire agreement between the Company and the Owner consists of this
contract, the attached copy of the application and any riders, endorsements or
amendments we provide. All statements in the application are considered
representations and not warranties.
5
APPLICATION OF LAW
The provisions of this contract are to be interpreted in accordance with the
laws of the state in which it was delivered.
NON-PARTICIPATING
This contract does not share in our surplus or profits and does not pay
dividends.
MODIFICATION OF CONTRACT
No change or waiver of the terms of this contract is valid unless made by us in
writing, and signed by our President, Vice President, or Secretary. We reserve
the right to change the provisions of this contract to conform to any applicable
laws, regulations or rulings issued by a governmental agency. We will send
notice of changes affecting your contract.
ERROR IN AGE OR SEX
Payments under this contract may depend upon a person's age and sex. If the date
of birth or sex provided us is not correct, the benefits under this contract
will be adjusted to the amount which would have been payable at the correct age
and sex. If we made any underpayments because of the error, the amount of any
underpayment shall be immediately paid in one sum. Any overpayments made shall
be deducted from the current or succeeding payments due under the contract.
Overpayments and underpayments shall bear interest at an annual effective rate
of 3%.
Proof of the Annuitant's age and sex will be required before the first payment
will be made under an Annuity option involving lifetime payments.
ASSIGNMENT
Upon notice to us, the Owner may assign his or her rights under this contract.
The assignment must be in Writing and we assume no responsibility for the
validity of any assignment. A claim against a contract under assignment is
subject to proof of claimant's interest and the extent of the assignment.
SETTLEMENT
The Owner may elect to apply settlement proceeds, including any full or partial
surrender proceeds or the Death Benefit, to any payout option offered by us for
such payments at the time the election is made. The settlement option selected
must comply with the requirements of the Internal Revenue Code. Any payment we
make under this contract is payable at our Administrative Office.
FACILITY OF PAYMENT
If a person receiving payments under this contract is incapable of giving us a
valid receipt we may make such payment to whomever has assumed his or her care
and principal support. Any such payment shall fully discharge us to the extent
of that payment. We may require proof that the Annuitant is living to continue
Annuity payments.
PROTECTION OF PROCEEDS
To the extent permitted by law, no benefits payable under this contract will be
subject to the claims of creditors of any payee.
6
ANNUAL REPORTS
At the end of each contract Year we will send you a report showing the current
Account Value, Sub-Account Values and all other information required by law.
CONTROL PROVISIONS
ANNUITY COMMENCEMENT DATE CHANGE
You may change the Annuity Commencement Date by notice to us in Writing. We
must receive your request at least 30 days before the proposed Annuity
Commencement Date. The Annuity Commencement Date you select cannot be earlier
than the end of any existing Guaranteed Period nor later than the Annuitant's
90th Birthday.
ANNUITANT CHANGE
The Owner may change the Annuitant prior to the Annuity Commencement Date. The
request must be in Writing. Once it is received and acknowledged at our
Administrative Office. The change will relate back to and take effect on the
date the request was signed. The new Annuitant's 90th birthday may not be
before the end of any existing Guaranteed Period. If any Owner is not an
individual, the Annuitant may not be changed.
BENEFICIARY CHANGE
You may change the Beneficiary at any time. We must receive your request in
Writing. If any Beneficiary has been designated irrevocably we will also need
the Irrevocable Beneficiary's written consent to make the change. The change
will relate back to and take effect on the date the request was signed but we
will not be liable for any payment we make before such request has been received
and acknowledged at our Administrative Office.
CONTROL
You may assign the contract, surrender the contract, amend or modify the
contract with our written consent, and exercise, receive and enjoy every other
right and benefit contained in the contract. The use of the rights may be
subject to the consent of any assignee or Irrevocable Beneficiary. Except with
respect to termination, Joint Owners may provide that each Owner alone may
exercise all rights, options and privileges.
DEATH OF THE ANNUITANT OR OWNER
If the Annuitant is not an Owner and dies prior to the Annuity Commencement
Date, the Owner first named on the application will become the new Annuitant
unless the Owner designates otherwise. If any Owner is not an individual, the
death of the Annuitant will be treated as the death of an Owner.
If any Owner dies while this contract is in force prior to the Annuity
Commencement Date, a Death Benefit will be payable to the Beneficiary.
DEATH BENEFIT
The Death Benefit will be determined as of the date due proof of death is
received by the Company. If a claim for the Death Benefit is received at our
Administrative Office within 1 year of the date of death the Death Benefit will
equal the greater of: (1) the Account Value, less applicable premium taxes; or
(2) the Net Account Value. If a claim is received past 1 year after the date of
death the Death Benefit will equal the Net Account Value.
7
Only one Death Benefit is payable under this contract.
The Death Benefit may be taken in one sum immediately and the contract will
terminate. If the Death Benefit is not taken immediately as a lump sum, then the
entire interest in the contract must be distributed under one of the following
options:
(1) the entire interest must be distributed over the life of the
Beneficiary, or over a period not extending beyond the life expectancy
of the Beneficiary, with distribution beginning within one year of the
Owner's death; or,
(2) the entire interest must be distributed within 5 years of the Owner's
death.
If the Beneficiary is the deceased Owner's spouse, the surviving spouse may
elect, in lieu of receiving the Death Benefit, to continue the contract and
become the new Owner. The surviving spouse may select a new Beneficiary. Upon
this spouse's death, the Death Benefit will become payable and must then be
distributed to the new Beneficiary in one sum immediately or according to either
paragraph (1) or (2), above.
If there is more than one Beneficiary, the foregoing provisions will apply to
each Beneficiary individually.
The contract shall be interpreted to comply with the requirements of Section
72(s) of the Internal Revenue Code.
INTEREST CREDITED AND GUARANTEED PERIODS
Initial Sub-Account Premium will earn interest at the Initial Guaranteed
Interest Rate. You may select from any Guaranteed Period we are offering under
this contract at the time the Annuity Premium is made, provided no Guaranteed
Period extends beyond the Annuity Commencement Date.
You may not transfer a Sub-Account Value to any other Sub-Account before the end
of the existing Sub-Account's Guaranteed Period. At least 45 days, but no more
than 75 days prior to the end of each Guaranteed Period, we will send a written
notice advising you of the maturity date and maturity value of the Sub-Account.
At the end of any Guaranteed Period a Subsequent Guaranteed Period will begin.
Unless you instruct us otherwise in Writing, the Sub-Account Value at maturity
will become the Sub-Account Premium for a Subsequent Guaranteed Period with the
same duration as the previous Guaranteed Period, if it does not extend beyond
the Annuity Commencement Date. Otherwise, the Subsequent Guaranteed Period will
be the longest Guaranteed Period then offered which does not extend beyond that
date. The Company will always offer a 1-year Subsequent Guaranteed Period in
addition to other Guaranteed Periods then available.
Subsequent Sub-Account Premium will earn interest at the Subsequent Guaranteed
Interest Rate. The Subsequent Guaranteed Interest Rate will be determined at the
beginning of the Subsequent Guaranteed Period and may not be equal to the
Initial Guaranteed Interest Rate then offered for an Initial Guaranteed Period
of the same duration.
Initial and Subsequent Guaranteed Interest Rates will not be less than an annual
effective interest rate of 3%.
8
PREMIUM TAXES
Premium taxes will be deducted if applicable. Premium taxes may be deducted
from the Annuity Premium when received, from a full or partial surrender, from
the Death Benefit, or from the amount applied to an Annuity, in accordance with
applicable law.
SURRENDERS - TERMINATION
Full surrenders may be made at any time. Partial surrenders may only be made if
each Sub-Account Value after the partial surrender is at least $10,000. You
must specify the Sub-Accounts from which the partial surrender is to be made,
but if a surrender is requested from a Sub-Account which has the same Guaranteed
Period as any other Sub-Account, the partial surrender must come from the
Sub-Account with the shortest time remaining.
The Surrender Charge and Market Value Adjustment will not apply to full or
partial surrenders made from a Sub-Account at the end of its Guaranteed Period.
The Net Surrender Amount will be calculated by the Company on the Surrender Date
using the following formula:
(A - M - S - P), WHERE:
A = the Surrender Amount
M = the amount of the Market Value Adjustment;
S = the amount of the Surrender Charge;
P = the amount of unpaid premium taxes, if any.
The Company may defer payment of any partial or full surrender for the period
permitted by law. In no event will the deferral exceed 6 months from the
Surrender Date.
INTEREST WITHDRAWALS
After the first Premium Year of any Sub-Account, you may request a withdrawal of
all, or a portion of the interest credited to that Sub-Account during the prior
Premium Year. Your request must be in Writing and you may only make one such
request per Premium Year. No Surrender Charge or Market Value Adjustment will
be imposed on these interest withdrawals.
ANNUITY OPTIONS
ANNUITY BENEFIT
We will send a written notice advising you of the Annuity Commencement Date at
least 45 days, but no more than 75 days, before that date. If the Annuitant is
alive on the Annuity Commencement Date the Account Value, less applicable
premium taxes, will be applied to the Annuity option you have selected. In the
absence of a selection, however, this amount will be applied under OPTION 1 -
Payments for a 5 Year Certain Period.
If an Annuitant or Owner dies on or after the Annuity Commencement Date any
remaining payments will be distributed at least as rapidly as under the method
of distribution being used on the date of death.
An Annuity may not be surrendered after the commencement of Annuity payments.
9
OPTION 1 - PAYMENT FOR A CERTAIN PERIOD. Guaranteed payments will be made for
any Certain Period from 5 to 30 years.
OPTION 2 - PAYMENTS FOR LIFE. Payments are based upon the life of the Annuitant
and stop upon the Annuitant's death.
OPTION 3 - LIFE INCOME WITH PAYMENTS FOR A CERTAIN PERIOD. Payments are based
on the life of the Annuitant. Payments will continue for the lifetime of that
person with payments guaranteed for the selected Certain Period of 10 years.
Payments stop upon the death of the Annuitant or at the end of the Certain
Period, whichever is later.
MINIMUM AMOUNTS - If monthly payments are less than $100 we may make payments
quarterly, semi-annually, or annually.
ANNUITY TABLES
OPTION 1 TABLE OPTIONS 2 AND 3 TABLE
Payments for a Payments for Life, and Life Income with
Certain Period Payments for a Certain Period
LIFE WITH 10 YEARS
LIFE ONLY PERIOD CERTAIN
MONTHLY AGE OF ---------------- ------------------
YEARS PAYMENT ANNUITANT MALE FEMALE MALE FEMALE
----- ------- --------- ---------------- ------------------
5 17.91 60 4.77 4.25 4.68 4.21
10 9.61 65 5.46 4.78 5.28 4.70
15 6.87 70 6.44 5.53 6.03 5.36
20 5.51 75 7.79 6.63 6.90 6.21
25 4.71 80 9.70 8.26 7.81 7.22
30 4.18 85 & 12.38 10.70 8.60 8.20
over
These tables illustrate the minimum monthly payment rates for each $1,000
applied. The basis for these calculations is the 1983 Individual Annuitant
Mortality Table A projected 14 years with interest at 3% per annum. Minimum
monthly payment rates for ages and Certain Periods not shown will be calculated
on the same basis and may be obtained from us. To determine future minimum
monthly rates according to these tables, one year will be deducted from the
attained age of the Annuitant for every three completed years beyond the year
1997. Upon annuitization, if we have available rates more favorable than those
guaranteed, the higher rates will apply.
FLEXIBLE PREMIUM DEFERRED MODIFIED GUARANTEED ANNUITY CONTRACT
NON-PARTICIPATING
10
AMERICAN FOUNDATION LIFE INSURANCE COMPANY
0000 XXX. 000 XXXXX
XXXXXXXXXX, XXXXXXX 00000
QUALIFIED RETIREMENT PLAN ENDORSEMENT
The Contract to which this Qualified Plan Endorsement is attached is amended as
of its Effective Date as follows:
The Contract was issued to a custodian or trustee of a qualified retirement plan
under Section 401(a) of the Internal Revenue Code (the "Code") maintained on
behalf of Annuitants for whom the annuity under the Contract is purchased. Such
custodian or trustee is the Owner and Beneficiary. Except as otherwise provided
under the Code and applicable regulations, the Annuitant cannot be changed. The
Owner shall not distribute the Contract to the Annuitant until a distributable
event under the plan for which the Contract is purchased occurs. If a Contract
is distributed by the Owner to the Annuitant, (1) the Annuitant becomes the
Owner, (2) the provisions below apply to such Owner, and (3) a Beneficiary may
be designated by such Owner (or, in the absence of such a designation, the
Owner's estate shall be the Beneficiary), subject to the provisions below.
1. After such distribution, the Contract is nontransferable and may not be
sold, assigned, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other purpose to
any person other than to American Foundation Life Insurance Company, nor
may the Annuitant be changed. Annuity payments under the Contract cannot
be surrendered, commuted, assigned, encumbered or anticipated in any way,
except to the extent required by a qualified domestic relations order as
defined in Code Section 414(p).
2. No amount may be paid from the Contract in a lump sum unless such payment
is allowed under both the retirement plan for which the annuity under the
Contract is purchased and the Code and related regulations. An Annuitant
who is married must have the consent of his or her spouse in order to: (a)
withdraw all or part of the Contract Value, and (b) choose an Annuity
Option other than a Qualified Joint and Survivor Annuity (within the
meaning of Code Section 417). If no Annuity Option is chosen, a Qualified
Joint and Survivor Annuity will be automatic for a married Annuitant. The
form of the spouse's consent must satisfy Code Section 417 (and applicable
regulations).
3. The Annuitant's entire interest in this Contract shall be distributed as
required under Code Section 401(a)(9) and applicable regulations. Unless
otherwise provided under applicable law, the Annuitant's entire interest
shall be distributed, or commence to be distributed, no later than the
"Required Beginning Date," over:
(a) the life of the Annuitant, or the lives of the Annuitant and his or
her designated beneficiary (within the meaning of Code Section
401(a)(9)), or
(b) a period not extending beyond the life expectancy of the Annuitant, or
the joint and last survivor expectancy of the Annuitant and his or her
designated beneficiary.
If the Annuitant's interest is to be distributed over a period greater than
one year, then the amount to be distributed by December 31 of each year
(including the year in which the Required Beginning Date occurs) shall be
made in accordance with the requirements of Code Section 401(a)(9), and the
regulations thereunder, including the incidental death benefit requirements
of Code Section 401(a)(9)(G), including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
1
4. An unmarried Annuitant will be deemed to have elected a life annuity unless
he or she makes a different election in the manner required under Code
Section 417.
5. Except as otherwise provided by law, the term "Required Beginning Date" as
used in this Endorsement means April 1 of the calendar year following the
later of the calendar year in which (1) the Annuitant attains age 70 1/2, or
(2) the Annuitant retires. However, the Required Beginning Date means
April 1 of the calendar year following the calendar year in which the
Annuitant attains age 70 1/2 for an Annuitant who (1) is a 5-percent owner
(as defined in Code Section 416) of the organization sponsoring the plan
which purchased this Contract with respect to the plan year ending in the
calendar year in which the Annuitant attains age 70 1/2; and (2) is not in a
governmental plan or church plan (as defined in Code Section 401(a)(9)(C)).
6. Payments must be made in periodic intervals of no longer than one year. In
addition, payments must be either nonincreasing or they may increase only
as provided in Q&A F-3 of Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
If guaranteed payments are to be made under the Contract, the period over
which the guaranteed payments are to be made must not exceed the shorter of
(1) the Annuitant's life expectancy, or if a Joint Annuitant is named, the
joint and last survivor expectancy of the Annuitant and the Joint
Annuitant, and (2) the applicable maximum period under Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
7. Notwithstanding any other provisions of the Contract or this Endorsement,
(a) Unless otherwise permitted under applicable law, if the Annuitant dies
before the Required Beginning Date and an irrevocable annuity
distribution has not begun, the entire interest will be distributed in
accordance with one of the following three provisions:
(1) The entire interest will be paid by December 31 of the calendar
year containing the fifth anniversary of the Annuitant's death.
(2) If the interest is payable to an individual who is the
Annuitant's designated beneficiary, except as provided in
paragraph (3) below, the entire interest will be distributed
beginning within one year of the Annuitant's death and will be
made (in accordance with the regulations under Code section
401(a)(9)) over the life of the designated beneficiary, or over a
period not extending beyond the life expectancy of the designated
beneficiary. An irrevocable election of this method of
distribution must be made by the designated beneficiary within
one year of the Annuitant's death.
(3) If the designated beneficiary in paragraph (2) above is the
Annuitant's surviving spouse, the spouse may irrevocably elect to
receive equal or substantially equal payments over the life of
the surviving spouse, or over a period not extending beyond the
life expectancy of the surviving spouse, commencing at any date
on or before the later of: (i) December 31 of the calendar year
immediately following the calendar year in which the Annuitant
died; and (ii) December 31 of the calendar year in which the
Annuitant would have attained age 70 1/2. Such election by the
surviving spouse must be made no later than the earlier of
December 31 of the calendar year containing the fifth anniversary
of the Annuitant's death or the date distributions are required
to begin pursuant to the preceding sentence.
2
If the surviving spouse dies before distributions begin, the
limitations of this Section 7(a) (without regard to this
paragraph (3)) shall be applied as if the surviving spouse were
the Annuitant.
(b) Unless otherwise permitted under applicable law, if the Annuitant dies
on or after the Required Beginning Date (or if distributions have
begun before the Required Beginning Date as irrevocable annuity
payments), the remaining portion of such interest, if any, will
continue to be distributed at least as rapidly as under the method of
distribution being used at the time of the Annuitant's death.
(c) Distributions under this Section 7 are considered to have begun if the
distributions are made on account of the Owner reaching his or her
Required Beginning Date or, if prior to the Required Beginning Date,
distributions irrevocably commence to an Owner over a period permitted
and in an annuity form acceptable under Section 1.401(a)(9) of the
Proposed Income Tax Regulations.
8. 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. Life
expectancies shall be recalculated unless such recalculation is not
permitted, or the Annuitant (or for purposes of distributions beginning
after the Annuitant's death, the Annuitant's surviving spouse) elects at
the time distributions are to begin that life expectancies are not to be
recalculated annually. Such an election shall be irrevocable as to the
Annuitant (or the Annuitant's surviving spouse), and shall apply to all
subsequent years. The life expectancy of a non-spouse beneficiary may not
be recalculated, and shall be calculated using the attained age of such
beneficiary during the calendar year in which distributions are required to
begin pursuant to this Endorsement. 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.
9. Upon the death prior to the Annuity Commencement Date of the Annuitant,
leaving a spouse surviving, the death benefit will be paid as a Qualified
Preretirement Survivor Annuity (within the meaning of Code Section 417)
unless the spouse has consented to the designation of someone else as
beneficiary or elects a different Annuity Option and such designation is
permitted under applicable law. In either case, the form of the consent or
election must satisfy Code Section 417.
10. Elections and consents made pursuant to this Endorsement may be made and
revoked only in the form, time and manner prescribed in Code Section 417
(and applicable regulations).
11. We will not pay the Account Value in one lump sum in lieu of annuity
benefits if the Contract Value is greater than $3,500, as determined on the
first day of the month preceding the Annuity Commencement Date, in
accordance with the requirements of Code Section 411(a)(11) and 417 (and
applicable regulations).
12. Notwithstanding any provision of the Contract to the contrary that would
otherwise limit a distributee's election under this paragraph, a
distributee may elect, at the time and in the manner prescribed by the
Company, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a
direct rollover.
A distributee includes an Annuitant. In addition, the Annuitant's
surviving spouse and the Annuitant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Code Section 414(p), are distributees with regard to the interest of the
spouse or former spouse.
3
An eligible rollover distribution is any distribution of all or any portion
of the balance to the credit of the distributee, except than an eligible
rollover distribution does not include (1) any distribution that is one of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint and last survivor expectancies) of the distributee
and the distributee's designated beneficiary, or for a specified period of
ten years or more; (2) any distribution to the extent such distribution is
required under Code Section 401(a)(9); and (3) the portion of any
distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).
An eligible retirement plan is an individual retirement account described
in Code Section 408(a), an individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts the
distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
A direct rollover is a payment by the Company to the eligible retirement
plan specified by the distributee.
13. All references in the Contract to Code Section 72(s) are deleted.
14. Annuity payments will be based on unisex rates.
15. The terms of the Contract and Endorsement are subject to the provisions of
any plan under which the Contract and Endorsement are issued.
16. All annuity options under the Contract must meet the requirements of Code
Section 401(a)(9) and applicable regulations, including the requirement
that payments to persons other than the Annuitant are incidental. The
provisions of this Endorsement reflecting the requirements of Code Section
401(a)(9) override any annuity option which is inconsistent with such
requirements.
17. The Company reserves the right, and the Owner agrees the Company shall have
such right, to make any amendments to this Endorsement from time to time as
may be necessary to comply with the Code, as amended, and any regulations
relating to the Contract under Code Section 401(a). We will notify you
immediately of any such changes.
Signed for the Company as of the Effective Date.
AMERICAN FOUNDATION LIFE INSURANCE COMPANY
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Secretary
4
AMERICAN FOUNDATION LIFE INSURANCE COMPANY
0000 XXX. 000 XXXXX
XXXXXXXXXX, XXXXXXX 00000
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
The Contract to which this Individual Retirement Annuity Endorsement is attached
is issued to fund a program under the Individual Retirement Annuity provisions
of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the
applicable provisions of the Contract are restricted or amended by this
Endorsement as required by Code Section 408.
The Contract is amended as of the Effective Date as follows:
1. The Annuitant must be an individual who is the sole Owner, and all payments
made from the Contract while the Annuitant is alive must be made to the
Annuitant. Except as otherwise permitted under the Code and applicable
regulations, neither the Owner nor the Annuitant can be changed. The
Contract is established for the exclusive benefit of the Owner and his or
her beneficiaries. The Owner's interest under the Contract is
nontransferable, and may not be sold, assigned, discounted or pledged as
collateral for a loan or as security for the performance of any obligation
or for any other purpose, to any person other than the Company.
2. Regardless of any other provision of the Contract or this Endorsement,
(a) Unless otherwise permitted under applicable law, the entire interest
of the Owner will be distributed, or commence to be distributed, no
later than the first day of April following the calendar year in which
the Owner attains age 70 1/2 (the "Required Beginning Date"), in equal
or substantially equal amounts over:
(1) the life of the Owner, or the lives of such Owner and his or her
designated beneficiary (within the meaning of Code Section
401(a)(9)), or
(b) a period not extending beyond the life expectancy of the Owner,
or the joint and last survivor expectancy of the Owner and his or
her designated beneficiary.
Payments must be made in periodic intervals of no longer than one
year. In addition, payments must be either nonincreasing or they may
increase only as provided in Q&A F-3 of Section 1.401(a)(9)-1 of the
Proposed Income Tax Regulations.
(b) If the Owner's interest is to be distributed over a period greater
than one year, the amount to be distributed by December 31 of each
year (including the year in which the Required Beginning Date occurs)
shall be made in accordance with the requirements of Code Section
401(a)(9) and the regulations thereunder, including the incidental
death benefit requirements of Code Section 401(a)(9)(G) and the
regulations thereunder, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income
Tax Regulations.
1
3. Notwithstanding any other provision of the Contract or this Endorsement,
(a) Unless otherwise permitted under applicable law, if the Owner dies
before the Required Beginning Date and an irrevocable annuity
distribution has not begun, the entire interest will be distributed in
accordance with one of the following four provisions:
(1) The entire interest will be paid by December 31 of the calendar
year containing the fifth anniversary of the Owner's death.
(2) If the interest is payable to an individual who is the Owner's
designated beneficiary, except as provided in paragraphs (3) and
(4) below, the entire interest will be distributed beginning
within one year of the Owner's death and will be made (in
accordance with the regulations under Code Section 401(a)(9))
over the life of the designated beneficiary or over a period not
extending beyond the life expectancy of the designated
beneficiary. The irrevocable election of this method of
distribution must be made by the designated beneficiary within
one year of the Owner's death.
(3) If the designated beneficiary in paragraph (2) above is the
Owner's surviving spouse, the spouse may irrevocably elect to
receive equal or substantially equal payments over the life of
the surviving spouse or over a period not extending beyond the
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 the Owner
would have attained age 70 1/2. Such election by the surviving
spouse 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.
(4) If the designated beneficiary is the Owner's surviving spouse,
the spouse may irrevocably elect to treat the Contract as his or
her own individual retirement annuity. This election will be
deemed to have been made if such surviving spouse pays an Annuity
Premium, makes a rollover to or from the Contract, or fails to
elect paragraphs (2) or (3) of this Section 3(a).
If the designated beneficiary in paragraph (2) above is the Owner's
surviving spouse and the surviving spouse dies before distributions
begin, the limitations of this Section 3(a) (without regard to
paragraphs (3) and (4)) shall be applied as if the surviving spouse
were the Owner.
(b) Unless otherwise permitted under applicable law, if the Owner dies on
or after the Required Beginning Date (or if distributions have begun
before the Required Beginning Date as irrevocable annuity payments),
the remaining portion of such interest, if any, will continue to be
distributed at least as rapidly as under the method of distribution
being used at the time of the Owner's death.
(c) Distributions under this Section 3 are considered to have begun if
distributions are made on account of the Owner reaching his or
her Required Beginning Date or if prior to the
2
Required Beginning Date distributions irrevocably commence to an Owner over
a period permitted and in an annuity form acceptable under Section
1.401(a)(9) of the Proposed Income Tax Regulations.
4. 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. Life
expectancies shall be recalculated unless such recalculation is not
permitted, or the Owner (or for purposes of distributions beginning after
the Owner's death, the Owner's surviving spouse) elects at the time
distributions are to begin that life expectancies are not to be
recalculated annually. Such an election shall be irrevocable as to the
Owner (or the Owner's surviving spouse), and shall apply to all subsequent
years. The life expectancy of a non-spouse beneficiary may not be
recalculated, and shall be calculated using the attained age of such
beneficiary during the calendar year in which distributions are required to
begin pursuant to this Endorsement. 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.
5. Annuity Premiums are payable in cash and may not include any amounts other
than a rollover contribution (as permitted by Code Sections 402(c),
403(a)(4), 403(b)(8), or 408(d)(3)), a nontaxable transfer from an
Individual Retirement Account under Code Section 408(a) or another
Individual Retirement Annuity under Code Section 408(b), a contribution
made in accordance with the terms of a Simplified Employee Pension as
described in Code Section 408(k), and a contribution in cash not to exceed
$2,000 in any taxable year. Any refund of Annuity Premiums (other than
those attributable to excess contributions) will be applied, before the
close of the calendar year following the year of the refund, toward the
payment of future Annuity Premiums or the purchase of additional benefits.
No contribution will be accepted under a SIMPLE plan established by any
employer pursuant to Code Section 408(p). No transfer or rollover of funds
attributable to contributions made by a particular employer under its
SIMPLE plan will be accepted from a SIMPLE IRA, that is, an Individual
Retirement Account under Code Section 408(a) or an Individual Retirement
Annuity under Code Section 408(b) used in conjunction with a SIMPLE plan,
prior to the expiration of the 2-year period beginning on the date the
Owner first participated in that employer's SIMPLE plan.
6. Except as provided by law, the entire interest of the Owner in the Contract
is nonforfeitable.
7. If the Contract is issued in connection with a Simplified Employee Pension,
annuity payments will be based on unisex rates.
8. The Company will furnish annual calendar year reports concerning the status
of this Contract.
9. All references in the Contract to Code Section 72(s) are deleted.
10. All annuity options under the Contract must meet the requirements of Code
Sections 401(a)(9) and 408(b)(3). The provisions of this Endorsement
reflecting the requirements of these Code sections override any annuity
option which is inconsistent with such requirements.
3
If guaranteed payments are to be made under the Contract, the period over
which the guaranteed payments are to be made must not exceed the shorter of
(1) the Annuitant's life expectancy, or if a Joint Annuitant is named, the
joint and last survivor expectancy of the Annuitant and the Joint
Annuitant, and (2) the applicable maximum period under Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
The market value adjustment and surrender charge will not be applied to the
extent of a distribution required under Code Sections 401(a)(9) and
408(b)(3) for this Contract.
11. The Company reserves the right, and the Owner agrees the Company shall have
such right, to make any amendments to this Endorsement from time to time as
may be necessary to comply with the Code, as amended, and any regulations
relating to the Contract as an Individual Retirement Annuity under Code
Section 408(b). We will notify you immediately of any such changes.
Signed for the Company as of the Effective Date.
AMERICAN FOUNDATION LIFE INSURANCE COMPANY
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Secretary
4
AMERICAN FOUNDATION LIFE INSURANCE COMPANY
0000 XXX. 000 XXXXX
XXXXXXXXXX, XXXXXXX 00000
TAX-SHELTERED ANNUITY ENDORSEMENT
The Contract to which this Tax-Sheltered Annuity Endorsement is attached is
amended as of its Effective Date as follows:
1. The Annuitant must be an individual who is the sole Owner and, except as
otherwise permitted by this Endorsement, all payments made from the
Contract while the Annuitant is alive must be made to the Annuitant.
The Owner's interest in the Contract is nontransferable within the meaning
of Internal Revenue Code (the "Code") Section 401(g) and applicable
regulations. In particular, the Contract may not be sold, assigned,
discounted or pledged as collateral for a loan or as security for the
performance of any obligation or for any other purpose, to any person other
than the Company. Except as provided by law, the Owner's interest in the
Contract is nonforfeitable. Except as otherwise permitted under the Code
and applicable regulations, the Annuitant cannot be changed.
2. The Owner must be an employee of an organization described in Code Section
403(b)(1)(A). If the Contract is used as a funding mechanism for a
rollover under Code Sections 403(b) or 408(d)(3), or a nontaxable transfer,
the Owner must be one individual and that same individual must be the
Annuitant.
3. Regardless of any other provision of the Contract or this Endorsement,
(a) Unless otherwise permitted under applicable law, the entire interest
of the Owner will be distributed, or commence to be distributed, no
later than the "Required Beginning Date," in equal or substantially
equal amounts over:
(1) the life of the Owner, or the lives of the Owner and his or her
designated beneficiary (within the meaning of Code Section
401(a)(9)), or
(2) a period not extending beyond the life expectancy of the Owner,
or the joint and last survivor expectancy of the Owner and his or
her designated Beneficiary.
Except as otherwise provided by law, the term "Required Beginning
Date" as used in this Endorsement means April 1 of the calendar year
following the later of (1) the calendar year in which the Owner
attains age 70 1/2; and (2) the calendar year in which the Owner
retires. However, the Required Beginning Date means April 1 of the
calendar year following the calendar year in which the Owner attains
age 70 1/2 for an Owner who (1) is a 5-percent owner (as defined in
Code Section 416) of the
organization described in Section 2 of this Endorsement with respect
to the plan year ending in the calendar year in which the Owner
attains age 70 1/2; and (2) is not in a governmental plan or church
plan (as defined in Code Section 401(a)(9)(C)).
Payments must be made in periodic intervals of no longer than one
year. In addition, payments must be either nonincreasing or they may
increase only as provided in Q&A F-3 of Section 1.401(a)(9)-1 of the
Proposed Income Tax Regulations.
(b) If the Owner's interest is to be distributed over a period greater
than one year, the amount to be distributed by December 31 of each
year (including the year in which the Required Beginning Date occurs)
shall be made in accordance with the requirements of Code Section
401(a)(9) and the regulations thereunder, including the incidental
death benefit requirements of Code Section 401(a)(9)(G) and the
regulations thereunder, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income
Tax Regulations.
4. Notwithstanding any other provision of the Contract or this Endorsement,
(a) Unless otherwise permitted under applicable law, if the Owner dies
before the Required Beginning Date and an irrevocable annuity
distribution has not begun, the entire interest will be distributed in
accordance with one of the following three provisions:
(1) The entire interest will be paid by December 31 of the calendar
year containing the fifth anniversary of the Owner's death.
(2) If the interest is payable to an individual who is the Owner's
designated beneficiary, except as provided in paragraph (3)
below, the entire interest will be distributed beginning within
one year of the Owner's death and will be made (in accordance
with the regulations under Code section 401(a)(9)) over the life
of the designated beneficiary, or over a period not extending
beyond the life expectancy of the designated beneficiary. An
irrevocable election of this method of distribution must be made
by the designated beneficiary within one year of the Owner's
death.
(3) If the designated beneficiary in paragraph (2) above is the
Owner's surviving spouse, the spouse may irrevocably elect to
receive equal or substantially equal payments over the life of
the surviving spouse, or over a period not extending beyond the
life expectancy of the surviving spouse, commencing at any date
on or before 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 the Owner
would have attained age 70 1/2. Such election by the surviving
spouse 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.
If the surviving spouse dies before distributions begin, the
limitations of this Section 4(a) (without regard to this
paragraph (3)) shall be applied as if the surviving spouse were
the Owner.
(b) Unless otherwise permitted under applicable law, if the Owner dies on
or after the Required Beginning Date (or if distributions have begun
before the Required Beginning Date as irrevocable annuity payments),
the remaining portion of such interest, if any, will continue to be
distributed at least as rapidly as under the method of distribution
being used at the time of the Owner's death.
(c) Distributions under this Section 4 are considered to have begun if
distributions are made on account of the Owner reaching his or her
Required Beginning Date or if prior to the Required Beginning Date
distributions irrevocably commence to an Owner over a period permitted
and in an annuity form acceptable under Section 1.401(a)(9) of the
Proposed Income Tax Regulations.
5. 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. Life
expectancies shall be recalculated unless such recalculation is not
permitted, or the Owner (or for purposes of distributions beginning after
the Owner's death, the Owner's surviving spouse) elects at the time
distributions are to begin that life expectancies are not to be
recalculated annually. Such an election shall be irrevocable as to the
Owner (or the Owner's surviving spouse), and shall apply to all subsequent
years. The life expectancy of a non-spouse beneficiary may not be
recalculated, and shall be calculated using the attained age of such
beneficiary during the calendar year in which distributions are required to
begin pursuant to this Endorsement. 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.
6. Annuity Premiums are payable in cash and may not include amounts other than
a rollover contribution (as permitted by Code Sections 403(b)(8) and
408(d)(3)) and a nontaxable transfer from another contract qualifying under
Code Section 403(b) or from a custodial account qualifying under Code
Section 403(b)(7). In all events, payments made pursuant to a salary
reduction agreement shall be limited to the extent provided in Code Section
402(g). Payments shall not exceed the amount allowed by Code Section 415.
To the extent payments are in excess of the amounts permitted under Code
Sections 402(g), 415, or 403(b)(2), the Company may distribute amounts
equal to such excess as permitted by applicable law.
7. Notwithstanding any other provision of the Contract, withdrawals and other
distributions attributable to contributions made pursuant to a salary
reduction agreement after December 31, 1988, and the earnings on such
contributions and on amounts held as of December 31, 1988, shall not be
paid unless the Owner has reached age 59 1/2, separated from service, died,
became disabled (within the meaning of Code Section 72(m)(7)), or incurred
a hardship; provided that amounts permitted to be distributed in the event
of hardship shall be limited to actual salary deferral contributions
(excluding earnings thereon); and provided further that amounts may be
distributed pursuant to a Qualified Domestic Relations Order to the extent
permitted by Code Section 414(p).
8. Notwithstanding any other provision of the Contract, an Annuity Premium
made by a permitted rollover or a nontaxable transfer from a custodial
account qualifying under Code Section 403(b)(7), and the earnings of such
amounts, shall not, except to the extent otherwise provided by Federal tax
law, be paid or made available unless the Owner has reached age 59 1/2,
separated from service, died, became disabled (within the meaning of Code
Section 72(m)(7)), or in the case of such amounts attributable to
contributions made under the custodial account pursuant to a salary
reduction agreement, incurred a hardship; provided that amounts permitted
to be distributed in the event of hardship shall be limited to amounts
attributable to actual salary deferral contributions made under the
custodial account (excluding earnings thereon); and provided further that
amounts may be distributed pursuant to a Qualified Domestic Relations Order
to the extent permitted by Code Section 414(p).
9. A distributee may elect, at the time and in the manner prescribed by us, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
(a) A distributee includes an Owner. In addition, the Owner's surviving
spouse and the Owner's spouse or former spouse who is the alternative
payee under a Qualified Domestic Relations Order, as defined in
section 414(p), are distributees with regard to the interest of the
spouse or former spouse.
(b) An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that
an eligible rollover distribution does not include (1) any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or
life expectancy) of the distributee or the joint lives (or joint and
survivor expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or
more; (2) any distribution to the extent such distribution is required
under Code Section 401(a)(9); and (3) the portion of any distribution
that is not includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to employer
securities).
(c) An eligible retirement plan is an annuity described in Code Section
403(b), an Individual Retirement Account described in Code Section
408(a), or an Individual Retirement Annuity described in Code Section
408(b), that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an Individual
Retirement Account or an Individual Retirement Annuity.
(d) A direct rollover is a payment by us to the eligible retirement plan
specified by the distributee.
10. Annuity payments will be based on unisex rates.
11. All references in the Contract to Code Section 72(s) are deleted.
12. All annuity options under the Contract must meet the requirements of Code
Section 403(b)(10) and applicable regulations, including the requirement
that payments to persons other than the Owner are incidental. The
provisions of this Endorsement reflecting the requirements of Code Sections
401(a)(9) and 403(b)(10) override any annuity option which is inconsistent
with such requirements.
If guaranteed payments are to be made under the Contract, the period over
which the guaranteed payments are to be made must not exceed the shorter of
(1) the Annuitant's life expectancy, or if a Joint Annuitant is named, the
joint and last survivor expectancy of the Annuitant and the Joint
Annuitant, and (2) the applicable maximum period under Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
The market value adjustment and surrender charge will not be applied to the
extent of a distribution required under Code Section 401(a)(9) and
403(b)(10) for this Contract.
13. The Company reserves the right, and the Owner agrees the Company shall have
such right, to make any amendments to this Endorsement from time to time as
may be necessary to comply with the Code, as amended, and any regulations
relating to the Contract as a Tax Sheltered Annuity under Code Section
403(b). We will notify you immediately of any such changes.
14. The terms of the Contract and Endorsement are subject to the provisions of
any plan under which the Contract and Endorsement are issued.
Signed for the Company as of the Effective Date.
AMERICAN FOUNDATION LIFE INSURANCE COMPANY
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Secretary
