Minnesota Life INDIVIDUAL RETIREMENT ANNUITY
SIMPLE - (XXX) AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement modifies the contract. Provisions are changed before issue. In
the event of a conflict between the provisions of this agreement and the
contract to which it is attached, the provisions of this agreement will control.
These changes will allow its use with a Savings Incentive Match Plan for
Employees (herein "SIMPLE-XXX").
PURCHASE PAYMENTS
ARE SIMPLE-XXX PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant's employer establishes a SIMPLE-XXX, purchase payments
may be limited. The annual cash purchase payments must be the lesser of: (a)
an amount equal to 100% of the compensation included in gross income in any
taxable year; or (b) $6,000, or such other maximum amount as may be allowed by
law. Mandated employer purchase payments, in addition to your purchase
payments, can range from 0% to 3% of your annual compensation.
DO PURCHASE PAYMENT LIMITATIONS APPLY TO A ROLLOVER?
No. Limits on purchase payments to the contract do not apply with a rollover
contribution. A rollover contribution is one within the meaning of sections
408(d)(3)(G) of the Internal Revenue Code (herein "Code") or a purchase payment
made in accordance with the terms of a SIMPLE-XXX as described in section 408(p)
of the Code. In that case, a cash purchase payment may be the amount received
by or on behalf of an annuitant as all or any portion of a distribution which is
a rollover contribution. The distribution may be one as allowed by law. A
rollover contribution must be received by us not later than 60 days after the
annuitant receives it. A direct rollover payment may be made to us from the
plan making the distribution. A purchase payment may not include contributions
to a tax-qualified plan made by the annuitant as an employee.
MAY THE ANNUITANT ALWAYS MAKE PURCHASE PAYMENTS?
No. We will not accept purchase payments under this contract as of a date the
annuitant is not eligible for a SIMPLE-XXX.
In addition, no additional cash contributions or rollover contributions may be
accepted under the contract if: (a) the owner dies before the distribution of
the entire interest in the contract; and (b) the beneficiary is not the
surviving spouse.
Purchase payments which exceed those allowed for a SIMPLE-XXX may be returned.
We will send them to the payer. Return is without regard to the provisions of
this contract dealing with withdrawals.
DISTRIBUTION PROVISIONS
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS?
Yes. The distribution of an annuitant's value shall be made in accordance with
the minimum distribution requirements of section 408(b)(3) of the Code and the
regulations thereunder, including the incidental death benefit provisions of
section 1.401(a)(9)-2 of the proposed regulations. All of these rules are
incorporated herein by reference.
XXX-00-0000 Xxxxxxxxx Life Insurance Company
The annuitant's accumulation value, or withdrawal value if applicable, must be
distributed or begin to be distributed, by the annuitant's required beginning
date. This is the April 1 following the calendar year in which the annuitant
reaches age 70 1/2. For each succeeding year, a distribution must be made on or
before December 31.
WHAT FORMS OF DISTRIBUTION ARE AVAILABLE?
By the required beginning date the annuitant may elect to have the accumulation
value, or withdrawal value if applicable, distributed. It must be in one of the
following forms:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the annuitant;
(c) equal or substantially equal payments over the joint lives of the annuitant
and spouse;
(d) equal or substantially equal payments over a specified period that may not
be longer than the annuitant's life expectancy;
(e) equal or substantially equal payments over a specified period that may not
be longer than the joint life and last survivor expectancy of the annuitant
and spouse.
Options (b), (c), (d), and (e) can be satisfied by an annuity form elected by
the annuitant or by systematic withdrawal.
Payments must be made in periodic payments at 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 or such final regulations as adopted.
ARE THERE SPECIAL RULES IF THE ANNUITANT DIES BEFORE THE ENTIRE VALUE IN THE
CONTRACT IS DISTRIBUTED?
Yes. If the annuitant dies on or after the date distributions have begun, the
entire remaining value must be distributed at least as rapidly as under the
method of distribution being used as of the date of the annuitant's death. If
the annuitant dies before distributions have begun, the entire remaining value
must be distributed as elected by the annuitant or, if the annuitant has not so
elected, as elected by the beneficiary or beneficiaries, as follows:
(a) by December 31st of the year containing the fifth anniversary of the
annuitant's death; or
(b) in equal or substantially equal payments over the life or life expectancy
of the designated beneficiary or beneficiaries starting by December 31st of
the year following the year of the annuitant's death. If, however, the
beneficiary is the annuitant's surviving spouse, then this distribution is
not required to begin until later. It must begin by December 31st of the
year in which the annuitant would have turned 70 1/2.
ARE OTHER OPTIONS AVAILABLE TO A SPOUSE BENEFICIARY?
Yes. In addition to the options discussed above, the spouse beneficiary has
other options. He or she may elect to treat the annuitant's XXX as his or her
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own. This is done by either: (a) not taking a distribution within the required
time period; or (b) making eligible XXX contributions to it.
If the beneficiary chooses one of these options then he or she is the contract
owner. He or she will assume all rights and privileges under the contract.
This right is available only to the spouse of the annuitant.
HOW ARE LIFE EXPECTANCIES FOR CALCULATING REQUIRED DISTRIBUTIONS DETERMINED?
Life expectancy is computed by use of the expected return multiples in Table V
and VI of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the annuitant prior to the commencement of
distributions or, if applicable, by the surviving spouse where the annuitant
dies before distributions have commenced, life expectancies of an annuitant or
spouse beneficiary shall be recalculated annually for purposes of required
distributions. An election not to recalculate shall be irrevocable and shall
apply to all subsequent years. The life expectancy of a nonspouse beneficiary
shall not be recalculated. Instead, life expectancy will be calculated using
the attained age of such beneficiary during the calendar year in which the
annuitant attains age 70 1/2, 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.
MAY THE ANNUITANT SATISFY MINIMUM DISTRIBUTION REQUIREMENTS BY RECEIVING A
DISTRIBUTION FROM ANOTHER XXX?
Yes. An annuitant may satisfy the minimum distribution requirements under
sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from
one XXX that is equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the owner of two or more
IRAs may use the "alternative method" described in Notice 88-38, to satisfy the
minimum distribution requirements described above.
WITHDRAWAL BENEFITS
ARE THERE LIMITS ON WITHDRAWALS?
Yes. These limits apply to a partial withdrawal or a surrender of the contract
before the annuitant's age 59 1/2. In that case, we must receive notice of the
intended disposition of the proceeds. This will not apply if the annuitant dies
or is disabled.
MAY TAX PENALTIES APPLY?
Yes. If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are imposed
under the Code. The annuitant may not be subject to tax penalties on amounts
received before age 59 1/2 if: (1) the annuitant becomes disabled as defined by
the Code; (2) the amount received is in excess of the allowed deduction and
returned to the annuitant before the required tax return filing date for that
year, together with any earned interest; or (3) if the entire amount in the
contract is received and reinvested in a similar plan entitled to similar tax
treatment. Additional exceptions to tax penalties may be available to the
annuitant.
We will not be liable for any tax penalties under this contract. We are not
liable for penalties on amounts received or paid by us under this contract.
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Any transaction treated by law as a contract distribution may be treated by us
as a complete contract surrender.
GENERAL INFORMATION
IS THE INTEREST OF THE ANNUITANT IN THIS CONTRACT NONFORFEITABLE?
Yes. The entire interest of the annuitant in this contract is nonforfeitable.
The annuitant shall possess the entire benefit provided by this contract. This
contract is established for the exclusive benefit of the annuitant and his or
her beneficiaries.
HOW WILL A REFUND OF PREMIUMS BE APPLIED?
Any refund of premiums (other than those attributable to excess purchase
payments) will be applied, before the close of the calendar year following the
year of the refund, toward the payment of future premiums or the purchase of
additional benefits.
MAY THIS AGREEMENT BE AMENDED?
Yes. This contract may be amended as required to reflect any change in the
Code, regulations or published revenue rulings. The annuitant will be deemed to
have consented to any such amendment. We will promptly furnish any such
amendment to the annuitant.
This agreement is effective as of the original contract date unless a different
effective date is shown here.
/s/ Xxxxxx X. Xxxxxxxxx
Secretary
/s/ Xxxxxx X.Xxxxxxx
President
MHC-98-9431 Minnesota Life 4
