RELIASTAR
LIFE INSURANCE COMPANY 403(b) RIDER
OF NEW YORK
A Stock Company
--------------------------------------------------------------------------------
The following language amends and takes precedence over contrary language in the
Contract to which it is attached. The Effective Date of this Rider shall be the
later of January 1, 2002, or the Contract Date.
On the basis of the application for which this Contract is issued and to which
this Rider is attached, the Contract is intended to qualify under Section 403(b)
of the Internal Revenue Code. In the event of any conflict between the
provisions of this Rider and the Contract, the provisions of this Rider will
control.
1. All references in this Rider to:
(a) "IRC" means the Internal Revenue Code of 1986, as amended from time to
time.
(b) "Contract" means the Contract to which this Rider is
attached.
(c) "Employee or Owner" means the Owner of the Contract to which this
Rider is attached.
(d) "Designated Beneficiary" means the beneficiary named by the Owner in
the Contract.
(e) "We", "our", and "us" means Reliastar Life Insurance Company of New
York.
2. This Contract is nontransferable. Other than to us, it 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.
3. This Contract is valid only if it is purchased:
(a) for an Employee by an employer as described in IRC Section 501(c)(3)
which is exempt from income tax under IRC Section 501(a); or
(b) for an Employee who performs services for an educational organization
described in IRC Section 170(b)(1)(A)(ii), by an employer which is a
state, a political subdivision of a state, or an agency or
instrumentality of a state or political subdivision thereof; or
(c) by an individual in a rollover as permitted by IRC Sections 402(c)(1),
403(b)(8), 403(b)(10) and 408(d)(3); or
(d) by an individual in a direct transfer meeting the requirements of
Internal Revenue Service Rev. Rul. 90-24.
4. The premium payments applicable to this contract must be attributable to
the Employee's salary reduction agreement, or to permitted employer
contributions, except in the case of a rollover contribution or direct
transfer. The premium payments must be in cash. Except as provided in
Paragraph 5 below, the total of applicable premium payments made pursuant
to a salary reduction agreement for any tax year shall not exceed the
lesser of:
(a) $11,000 (or such higher amount as may be permitted under IRC Section
402(g)(1) in effect for such tax year, except to the extent of any
alternative limitation permitted under IRC Section 402(g)(7)); or
(b) the applicable limit described in IRC Section 415.
Except as provided in Paragraph 5 below or in the case of a rollover
contribution or direct transfer, total premium payments in any tax year,
whether attributable to the Employee's salary reduction agreement, or to
permitted employer contributions, shall not exceed the applicable limit
described in IRC Section 415.
In addition, premium payments under this Contract may not exceed those
permitted under the incidental death benefit rules of Treasury Regulations
Section 1.401-1(b)(1)(i), as interpreted by applicable Revenue Rulings.
Accordingly, in no event shall the aggregate amount of premiums under this
Contract, at any time, exceed fifty percent (50%) of the aggregate amount
of the cumulative employer contributions (including salary reduction
contributions) allocated to the Employee under the tax sheltered annuity
program with respect to which this Contract is purchased.
We reserve the right to refund premiums when necessary to comply with the
foregoing limits.
RLNY-RA-1036 1
5. An Employee who is eligible to make contributions to this Contract pursuant
to a salary reduction agreement for any year and who has attained age 50
before the close of the year shall be eligible to make catch-up
contributions in accordance with, and subject to the limitations of, IRC
Section 414(v). Such catch-up contributions shall not be taken into account
for purposes of the provisions of the Contract implementing the required
limitations of IRC Sections 402(g), 403(b) and 415. The Contract shall not
be treated as failing to satisfy the requirements of IRC Section 403(b)(12)
by reason of the making of such catch-up contributions.
6. To the extent attributable to contributions made pursuant to salary
reduction agreements, distribution of the assets of this Contract may not
be made before the Owner:
(a) attains age 591/2;
(b) has a severance from employment;
(c) dies;
(d) becomes disabled; or
(e) incurs a financial hardship (limited to contributions only,
not earnings).
The above restrictions do not apply with respect to that portion of the value of
the Contract that is equal to the value of the Contract as of December 31, 1988.
7. (a) Notwithstanding any provision of this Contract to the contrary, the
distribution of the Owner's interest in the Contract shall be made in
accordance with the requirements of IRC Sections 403(b)(10) and 401(a)(9)
and the regulations thereunder, the provisions of which are herein
incorporated by reference, including Section 1.403(b)-3 of the Income Tax
Regulations. The portion of this Contract that is equal to the
undistributed value of the Contract as of December 31, 1986, shall be
distributed in accordance with the incidental benefit requirements
described in Q&A-3 of Section 1.403(b)-3 of the Income Tax Regulations. The
required minimum distributions for this Contract may be withdrawn from
another IRC 403(b) contract of the Owner in accordance with Q&A-4 of
Section 1.403(b)-3 of the Income Tax Regulations.
(b) If distributions are made in the form of an annuity on an irrevocable basis
(except for acceleration), then distributions must satisfy the requirements
of Q&A-4 of Section 1.401(a)(9)-6T of the Temporary Income Tax Regulations,
rather than Paragraphs 7(c), 7(d), 7(e), and 8 below.
(c) The Owner's entire interest in the Contract will commence to be distributed
no later than the Owner's "required beginning date." The Owner's "required
beginning date" will be the first day of April following the later of: (i)
the calendar year in which the Owner attains age 70 1/2, or (ii) the
calendar year in which the Owner retires from employment with the employer
maintaining the plan applicable to this Contract. The Owner's "first
distribution calendar year" will be the calendar year immediately preceding
the Owner's required beginning date.
(d) The amount to be distributed each year, beginning with the Owner's first
distribution calendar year and continuing through the year of death, shall
not be less than the quotient obtained by dividing the value of the
Contract as of the end of the preceding year by the distribution period in
the Uniform Lifetime Table in Q&A-2 of Section 1.401(a)(9)-9 of the Income
Tax Regulations, using the Owner's age as of his or her birthday in the
year. However, if the Owner's sole designated beneficiary is his or her
spouse and such spouse is more than 10 years younger than the Owner, then
the distribution period is determined under the Joint and Last Survivor
Table in Q&A-3 of Section 1.401(a)(9)-9 of the Income Tax Regulations,
using the ages as of the Owner's and spouse's birthdays in the year.
(e) The required minimum distribution for the first distribution calendar year
can be made as late as the Owner's required beginning date. The required
minimum distribution for any other year must be made by the end of such
year.
RLNY-RA-1036 2
8. (a) Death On or After Required Distributions Commence. If the Owner dies on
or after the required beginning date, the remaining portion of his or her
interest will be distributed at least as rapidly as follows:
(i) If the designated beneficiary is someone other than the Owner's
surviving spouse, the remaining interest will be distributed 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 over the period described in Paragraph 8(a)(iii) if longer.
(ii) If the Owner's sole designated beneficiary is the Owner's surviving
spouse, the remaining interest will be distributed over such spouse's
life or over the period described in Paragraph 8(a)(iii) if longer.
Any interest remaining after such spouse's death will be distributed
over such spouse's remaining life expectancy determined using the
spouse's age as of his or her birthday in the year of the spouse's
death, or, if the distributions are being made over the period
described in Paragraph 8(a)(iii), over such period.
(iii)If there is no designated beneficiary, or if applicable by operation
of Paragraph 8(a)(i) or 8(a)(ii), the remaining interest will be
distributed over the Owner's remaining life expectancy determined in
the year of the Owner's death.
(iv) The amount to be distributed each year under Paragraph 8(a)(i),
8(a)(ii) or 8(a)(iii), beginning with the calendar year following the
calendar year of the Owner's death, is the quotient obtained by
dividing the value of the Contract as of the end of the preceding year
by the remaining life expectancy specified in such paragraph. 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
or Owner's age, as the case may be, in the year specified in Paragraph
8(a)(i), 8(a)(ii) or 8(a)(iii) and reduced by 1 for each subsequent
year.
(b) Death Before Required Beginning Date. If the Owner dies before the
required beginning date, his or her entire interest will be
distributed at least as rapidly as follows:
(i) 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 8(b)(iii).
(ii) 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
8(b)(iii). If the surviving spouse dies before distributions are
required to begin, 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 8(b)(iii). If the surviving spouse dies
after the distributions are required to begin, any remaining
interest will continue to be distributed over the spouse's
remaining life expectancy determined using the spouse's age as of
his or her birthday in the year of the spouse's death.
(iii)If there is no designated beneficiary, or if applicable by
operation of Paragraph 8(b)(i) or 8(b)(ii), 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 8(b)(ii)).
RLNY-RA-1036 3
(iv) The amount to be distributed each year under Paragraph 8(b)(i) or
8(b)(ii) is the quotient obtained by dividing the value of the
Contract as of the end of the preceding year by the remaining
life expectancy specified in such paragraph. 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 8(b)(i) or 8(b)(ii) and reduced by 1 for each
subsequent year.
(c) The "value" of the Contract includes the amount of any outstanding
rollover and transfer under Q&As-7 and -8 of Section 1.408-8 of the
Income Tax Regulations.
9. Notwithstanding any provision of this Contract to the contrary that would
otherwise limit an Owner's election under this Contract, an Owner may
elect, at any 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 Owner in a Direct Rollover.
For the purpose of this paragraph, the following definitions apply:
(a) Eligible Rollover Distribution is any distribution of all or
any portion of the assets of the Contract, not including:
(i) 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 Owner or the
joint lives (or joint life expectances) of the Owner and the
Owner's designated beneficiary, or for a specified period of
ten years or more;
(ii) any distribution to the extent such distribution is required
under IRC Sections 401(a)(9) or 403(b)(10); and
(iii) any amount that is distributed on account of hardship.
In addition, the portion of any distribution that is not
includible in the gross income of the Owner may be considered
part of an Eligible Rollover Distribution; provided, however,
such portion may be transferred only to an individual retirement
account or annuity described in IRC Section 408(a) or (b), or to
another annuity described in Section 403(b) that agrees to
separately account for amounts so transferred, including
separately accounting for the portion of such distribution which
is includible in gross income and the portion of such
distribution which is not so includible.
(b) Eligible Retirement Plan is:
(i) an annuity described in IRC Section 403(b);
(ii) an individual retirement account described in IRC Section
408(a);
(iii) an individual retirement annuity described in IRC Section
408(b);
(iv) an employee's qualified trust described in IRC Section
401(a) which is exempt from tax under IRC Section 501(a);
(v) an annuity plan described in IRC Section 403(a); or
(vi) an eligible deferred compensation plan under IRC Section
457(b) which is maintained by a state, political subdivision
of a state, or any agency or instrumentality of a state or
political subdivision of a state and which agrees to
separately account for amounts transferred into such plan
from this Contract.
(c) Direct Rollover is a payment by us to the Eligible Retirement
Plan specified by the Owner.
(d) Owner, for the purposes of this paragraph, includes the Owner's
surviving spouse and the Owner's spouse or former spouse who is an
alternate payee under a qualified domestic relations order, as defined
in IRC Section 414(p).
RLNY-RA-1036 4
10. This Contract shall be for the exclusive benefit of the Owner or his or her
beneficiary. The Owner's rights under this Contract will be
non-forfeitable.
11. We reserve the right to amend or administer the Contract and Rider as
necessary to comply with the provisions of the IRC, Internal Revenue
Service Regulations or published Internal Revenue Service Rulings. We will
send a copy of such amendment to the Owner. It will be mailed to the last
post office address known to us. Any such changes will apply uniformly to
all Policies that are affected and the Owner will have the right to accept
or reject such changes.
12. Except in the case of a Contract purchased by a church, no premium payments
applicable to this Contract can be made unless all employees of the
employer may elect to have the employer make contributions of more than
$200 under a salary reduction agreement. For purposes of this paragraph any
Employee who is a participant in (a), (b) or (c) below may be excluded. (a)
an eligible deferred compensation plan under IRC Section 457(b); (b) a
qualified cash or deferred arrangement; or (c) another IRC Section 403(b)
annuity.
In addition, any non-resident aliens and students who normally work less
than twenty (20) hours per week may be excluded.
13. The Owner may make a cash loan using the value of the Contract as security
for the loan subject to the limits and conditions stated below and the
limits defined under IRC regulations.
(a) The loan must be taken prior to the Annuity Commencement Date;
(b) The Owner must complete an application, on a form acceptable to us,
for each loan;
(c) A loan must be for a minimum of $1,000.00;
(d) The Owner has not attained age 70 1/2;
(e) The Owner may not have more than 2 loans outstanding on the Contract
at any time;
(f) No loan value is available prior to the end of the Right to Examine
Contract provision; and (g) Loans are not available on Contracts
issued under ERISA plans.
Subject to the requirements of the IRC, we may waive in whole or in part
any of the above stated limits or conditions. Any such waiver will be
applied to all Contracts having the same Issue Date on a uniform basis.
Loan Security
A portion of the Contract's Accumulation Value will be transferred to the
General Account as security for a loan. Unless directed otherwise by the
Owner, such amount will be transferred from the Contracts's Separate
Account Divisions on a prorata basis, based on the Owner's investments in
the Divisions at the time of the loan. Should the Accumulation Value in the
Separate Account Divisions be less than the amount of the loan, the
remaining amount will be transferred from the Accumulation Value in the
Guaranteed Interest Division. Transfers from the Guaranteed Interest
Division will be made first from those allocations nearest their Maturity
Date.
The amount of Accumulation Value held in the General Account as security
for loans will equal the total loan balance when a loan is taken.
Periodically, the amount held in the General Account as security for the
loan is readjusted to equal the then current loan balance. Total loan
balance includes accrued interest on the loan amount.
Loan Interest
We charge loan interest on the outstanding loan balance at 6% interest in
arrears. Interest not paid when due shall be added to the loan balance.
Interest on the loan is included with each repayment. If the Contract
terminates, interest will be due based on the interest accrued to date.
The portion of the Accumulation Value which is security for the loans may
earn less interest than is credited to the unloaned portion. Interest
credited to the General Account will not be less than 3%.
RLNY-RA-1036 5
Loan Repayment
Loans shall be repaid in substantially equal payments over a period not to
exceed 5 years. If a loan is used to purchase the Owner's principal
residence, the Owner may take up to a maximum of 15 years to repay the
loan, or longer, subject to our approval. The loan period may not extend
beyond the Annuity Commencement Date. Xxxxxxx transferred that were
securing a loan in the General Account as a result of loan repayments will
be allocated prorata to the Owner's current allocation among the Separate
Account divisions. Should there be no current allocations to a Separate
Account division, such repayment will be allocated to the [Liquid Asset
Division].
A grace period will be granted for the payment of each installment payment.
The grace period ends on the last day of the calendar quarter following the
calendar quarter in which an installment payment is due. If a required
installment payment is not made within the grace period, a default will
occur. In the event of default:
(a) The entire balance of the loan will be treated as a distribution; and
(b) The Accumulation Value of the Contract will be reduced by the loan
balance, to the extent permitted by law.
In the event such a distribution is prohibited, we will treat the loan
balance as permitted by federal tax law. Any applicable surrender charges
will apply.
Any outstanding loan balance, whether or not in default, will be deducted
from the amount under the Contract payable upon death of the Owner (or
Annuitant), surrender, or will be deducted from the amount applied to an
income option.
Effect Of Loans on Partial Withdrawals Under The Contract
Partial withdrawals based on a percentage of Accumulation Value without
surrender charge will be based on Accumulation Value minus outstanding loan
at the time of withdrawal. Partial withdrawals without surrender charge
based on earnings will have earnings eligible for withdrawal reduced by any
outstanding loans at time of withdrawal. Systematic withdrawal limits based
on a percent of Accumulation Value will be based on Accumulation Value
minus outstanding loans.
The maximum withdrawal amount available will be based on Cash Surrender
Value less loan balance on the date of withdrawal. Any test to determine
whether an administrative fee is due will use Accumulation Value minus the
amount of the outstanding loan.
If at any time, the loan balance equals or exceeds the Cash Surrender
Value, the Contract may terminate without value. The Contract's Cash
Surrender Value will be used to repay the loan balance. The Contract is
assigned to us as security for any loan. Our interest is superior to the
claim of any assignee or other person.
Signed: /s/J.R. Gelder
President
