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
