INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
ENDORSED ON THIS CERTIFICATE/CONTRACT ON ITS DATE OF ISSUE:
This contract has been purchased as an Individual Retirement Annuity (IRA) as described in Section 408(b) of the Internal
Revenue Code of 1986, as amended, (hereinafter referred to as the "IRC"). In order to qualify as an IRA, the following
provisions apply, notwithstanding any provisions to the contrary in this contract:
- NONTRANSFERABLE. Only the annuitant may be the owner, and this contract is not transferable by the owner 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 Aid Association for Lutherans (hereafter referred to as "we," "our," and "us").
- OWNERSHIP. This contract is for the exclusive benefit of the owner or his or her beneficiaries.
- CONTRIBUTION LIMITATIONS.
- Flexible Premium Payments. For annuity contracts that permit flexible premium payments, the following provisions apply:
- Maximum Permissible Amount. Except in the case of a qualified rollover contribution, a recharacterization (as defined
in (d) below), or a contribution made in accordance with the terms of a Simplified Employee Pension (SEP) as described in
IRC Section 408(k), no contribution will be accepted unless it is in cash and the total of such contributions to all the
owner's IRAs for a taxable year does not exceed the applicable amount (as defined in a(ii) below), or the owner's
compensation (as defined in (e) below), if less, for that taxable year. The contribution described in the previous sentence
that may not exceed the lesser of the applicable amount or the owner's compensation is referred to as a "regular
contribution."
A "qualified rollover contribution" is a rollover contribution that meets the requirements of IRC Sections 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) and 457(e)(16).
- Applicable Amount. The applicable amount is determined under (1) or (2) below:
- If the owner is under age 50, the applicable amount is:
- $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.
- If the owner is 50 or older, the applicable amount is:
- $3,500 for any taxable year beginning in 2002 through 2004;
- $4,500 for any taxable year beginning in 2005;
- $5,000 for any taxable year beginning in 2006 through 2007; and
- $6,000 for any taxable year beginning in 2008 and years thereafter.
After 2008, the limits in (ii)(1) & (2) above will be adjusted by the Secretary of the Treasury for cost-of-living increases under IRC Section 219(b)(5)(C). Such adjustments will be in multiples of $500. - If the owner is under age 50, the applicable amount is:
- Maximum Permissible Amount. Except in the case of a qualified rollover contribution, a recharacterization (as defined
in (d) below), or a contribution made in accordance with the terms of a Simplified Employee Pension (SEP) as described in
IRC Section 408(k), no contribution will be accepted unless it is in cash and the total of such contributions to all the
owner's IRAs for a taxable year does not exceed the applicable amount (as defined in a(ii) below), or the owner's
compensation (as defined in (e) below), if less, for that taxable year. The contribution described in the previous sentence
that may not exceed the lesser of the applicable amount or the owner's compensation is referred to as a "regular
contribution."
- Single Premium Payment. For annuity contracts that permit one single premium payment, only a single IRA contribution (subject
to the IRA maximum permissible contribution amount) and/or a single premium qualified rollover contribution (as permitted by
IRC Sections 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) and 457(e)(16)), or a single premium
contribution made in accordance with the terms of a Simplified Employee Pension (SEP) as described in IRC Section 408(k),
may be made to this contract. Any such contribution shall be in cash.
- SIMPLE IRA Limits. No contributions will be accepted under a SIMPLE IRA plan established by any employer pursuant to
IRC 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 two-year period beginning on the date the owner first participated in that employer's SIMPLE
IRA plan.
- Recharacterization. A regular contribution to a Xxxx XXX may be recharacterized pursuant to the rules in Section
1.408A-5 of the Income Tax Regulations as a regular contribution to this IRA, subject to the limits in (a) above.
- Compensation. "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 IRC Section 401(c)(2) (reduced by the deduction the self-employed owner takes for contributions made to a
self-employed retirement plan). For purposes of this definition, IRC Section 401(c)(2) shall be applied as if the term trade
or business for purposes of IRC Section 1402 included service described in IRC subsection (c)(6). Compensation also
includes any amount includable in the owner's gross income under IRC Section 71 with respect to a divorce or separation
instrument described in subparagraph (A) of IRC Section 71(b)(2).
Compensation does not include amounts derived from or received as earnings or profits from property (including but not limited to interest and dividends), amounts not includable in gross income, or any amount received as a pension or annuity or as deferred compensation.
- Flexible Premium Payments. For annuity contracts that permit flexible premium payments, the following provisions apply:
- DIVIDENDS/SURPLUS REFUNDS. Any dividends or surplus refunds under this contract (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 premiums or the purchase of additional benefits.
- PREMIUM PAYMENTS. This provision only applies to an annuity contract that has the option of a fixed premium payment
schedule. If premium payments under this contract are interrupted, this contract will be reinstated at any date prior to
maturity upon payment of a premium to us of not less than $25, however, we may at our option either accept additional future
payments or terminate the contract by payment in cash of the then present value of the paid up benefit if no premiums have
been received for two full consecutive contract years and the paid up annuity benefit at maturity would be less than $20.00
per month.
- DISTRIBUTIONS BEFORE DEATH.
- Distribution Requirements. Notwithstanding any provision of this IRA to the contrary, the distribution of the owner's
interest in the IRA shall be made in accordance with the requirements of IRC 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 section 7(c)) must satisfy the requirements of IRC Section 408(a)(6) and the regulations thereunder,
rather than paragraphs (b), (c) and (d) below and section 7.
- Required Minimum Distributions. 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 the owner attains age 70 1/2 (the "required beginning date") over (i)
the life of the owner or the lives of the owner and his or her designated beneficiary or (ii) a period certain 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 payments at intervals of no longer than one year and must be
either nonincreasing 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 or successor provisions. In addition, any distribution must satisfy the incidental benefit
requirements specified in Q&A-2 of Section 1.401(a)(9)-6T or successor provisions.
- Distribution Period. The distribution periods described in paragraph (b) above cannot exceed the periods specified in
Section 1.401(a)(9)-6T of the Temporary Income Tax Regulations or successor provisions.
- Payment Deadlines. The first required payment can be made as late as April 1 of the year following the year the owner 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.
- Distribution Requirements. Notwithstanding any provision of this IRA to the contrary, the distribution of the owner's
interest in the IRA shall be made in accordance with the requirements of IRC 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 section 7(c)) must satisfy the requirements of IRC Section 408(a)(6) and the regulations thereunder,
rather than paragraphs (b), (c) and (d) below and section 7.
- DISTRIBUTIONS UPON DEATH.
- Death On or After Required Distributions Commence. 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 option chosen.
- Death Before Required Distributions Commence. If the owner dies before required distributions commence, his or her
entire interest will be distributed at least as rapidly as follows:
- 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 (b)(iii) below.
- 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 (b)(iii) below. If the surviving spouse dies before 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 remaining life
expectancy determined using such 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 (b)(iii) 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.
- If there is no designated beneficiary, or if applicable by operation of paragraph (b)(i) or (b)(ii) 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)(ii) above).
- 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 (b)(i) or (ii) and reduced by one for each subsequent year.
- 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 (b)(iii) below.
- Interest in the IRA. The "interest" in the IRA includes the amount of any outstanding rollovers, transfers and
recharacterizations 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.
- Distribution Commencement Date. For purposes of paragraphs (a) and (b) 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 (b)(ii) 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 or successor provisions, then required distributions
are considered to commence on the annuity starting date.
- Surviving Spouse Election. 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.
- Death On or After Required Distributions Commence. 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 option chosen.
- NONFORFEITABLE INTEREST. The entire interest of the owner of this contract is nonforfeitable.
- INFORMATION FOR IRS REPORTS. The owner shall provide information to us at such time and in such manner and containing
such information as may be necessary for us to prepare any reports required pursuant to IRC Section 408(i) and the
regulations thereunder.
- ANNUAL REPORTING. We will furnish annual calendar year reports concerning the status of this contract and such
information concerning required minimum distributions as is prescribed by the Internal Revenue Commissioner.
- AMENDMENTS. We may amend this contract from time to time to comply with the IRC provisions and regulations thereunder.
Signed for Aid Association for Lutherans
President
Secretary
AM-AI-IRA (02)
