Cova Financial Services Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
TAX SHELTERED ANNUITY ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the issue date of the Contract. The following provisions apply
to a Contract which is issued under the Internal Revenue Code of 1986, as
amended, ("Code") section 403(b). In the case of a conflict with any provision
in the Contract and any other Endorsements or Riders, the provisions of this
Endorsement will control. The Contract is amended as follows:
1. Owner. The Owner must be either an organization described in section
403(b)(1)(A) of the Code or an individual employee of such an organization.
If the Owner is an organization described in section 403(b)(1)(A) of the
Code, then the individual employee for whose benefit the organization has
established an annuity plan under section 403(b) of the Code must be the
Annuitant under the Contract. If the Owner is an employee of an
organization described in section 403(b)(1)(A) of the Code, then such
employee must be the Annuitant under the Contract.
2. The interest of the Annuitant in the Contract shall be nonforfeitable.
3. Non-transferability. Other than in a transaction with the Company, or as
provided below, the interest of the Annuitant under this Contract cannot be
transferred, sold, assigned, discounted, or used as collateral for a loan
or as security for any other purpose. These requirements shall not apply to
a "qualified domestic relations order" (as defined in Code section 414(p)).
4. Purchase Payments must be made by an organization described in Code section
403(b)(1)(A), except in the case of a rollover contribution under Code
sections 403(b)(8) or 408(d)(3), or a nontaxable transfer from another
contract qualifying under Code section 403(b) or a custodial account
qualifying under Code section 403(b)(7). All Purchase Payments must be made
in cash.
If Purchase Payments are made pursuant to a salary reduction agreement, the
maximum contribution when combined with all other plans, contracts or
arrangements may not exceed the amount of the limitation provided for in
Code section 402(g). Purchase Payments must not exceed the amount allowed
by section 415 and section 403(b) of the Code.
5. Distributions During Annuitant's Life. Distributions under this Contract
must commence by April 1 of the calendar year following the later of: (a)
the calendar year the Annuitant attains age 70 1/2 or (b) the calendar year
in which the Annuitant retires. Payments shall be made over: (a) the life
of the Annuitant or the lives of the Annuitant and his or her designated
Beneficiary (within the meaning of section 401(a)(9) of the Code); or (b) a
period certain 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 payments under an Annuity Option in the Contract are to be made for a
definite or fixed period, said period cannot, at the time payments are to
commence, exceed the life expectancy of the Annuitant or, if applicable,
the joint and last survivor expectancy of the Annuitant and a designated
Beneficiary, nor may it exceed the applicable maximum period under section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Payments must be made in periodic payments at intervals of no longer than
one year. In addition, payments must either be nonincreasing or may
increase only as provided in Q & A F-3 of section 1.401(a)(9)-1 of the
Proposed Income Tax Regulations.
All distributions under this Contract are subject to the distribution
requirements of section 403(b)(10) of the Code and will be made in
accordance with the requirements of section 401(a)(9) of the Code,
including the incidental death benefit requirements of section 401(a)(9)(G)
of the Code, and the regulations thereunder, including the minimum
distribution incidental benefit requirement of section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations.
6. Minimum Distribution Requirements -- After Death. If the Annuitant dies
after required distributions under this Contract are deemed to have begun,
all amounts payable under this Contract must be distributed to the
Beneficiary or to such other person entitled to receive them at least as
rapidly as under the method of distribution in effect prior to the
Annuitant's death.
If the Annuitant dies before required distributions have begun, the entire
interest will be distributed by December 31 of the calendar year containing
the fifth anniversary of the Annuitant's death, except that:
(a) if the interest is payable to an individual who is the Annuitant's
designated Beneficiary, the designated Beneficiary may elect to receive
the entire interest over the life of the designated Beneficiary or over
a period not extending beyond the life expectancy of the designated
Beneficiary, commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Annuitant dies; or
(b) if the designated Beneficiary is the Annuitant's surviving spouse, the
surviving spouse may elect to receive the entire interest 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; or
(ii) December 31 of the calendar year in which the Annuitant would have
attained age 70 1/2.
If the surviving spouse dies before distributions begin, the
limitations of this section (without regard to this paragraph (b)) will
be applied as if the surviving spouse were the Annuitant.
An irrevocable election of the method of distribution by a designated
Beneficiary who is 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 this paragraph (b). If no election is
made, the entire interest will be distributed in accordance with the
method of distribution in this paragraph (b).
An irrevocable election of the method of distribution by a designated
Beneficiary who is not the surviving spouse must be made within one year of
the Annuitant's death. If no such election is made, the entire interest
will be distributed by December 31 of the calendar year containing the
fifth anniversary of the Annuitant's death.
Required distributions under this section are considered to have begun if
distributions are made on account of the Annuitant reaching his or her
required beginning date or if prior to the required beginning date
distributions irrevocably commence to the Annuitant over a period permitted
and in an annuity form acceptable under section 1.401(a)(9) of the Proposed
Income Tax Regulations. All distributions made after the death of the
Annuitant will be made in accordance with section 401(a)(9) of the Code.
7. Life Expectancy Calculations. 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.
If benefits under the Contract are payable in accordance with the Annuity
Options set forth in the Contract, life expectancy will not be
recalculated. If required distributions are payable in a form other than
under such Annuity Options, life expectancy will not be recalculated unless
permitted by the Company and annual recalculation is elected at the time
distributions are required to begin (a) by the Annuitant, or (b) for
purposes of distributions beginning after the Annuitant's death, by the
surviving spouse. Such an election will be irrevocable as to the Annuitant
and the surviving spouse, and will apply to all subsequent years.
The life expectancy of a non-spouse designated Beneficiary (a) may not be
recalculated, and (b) will be calculated using the attained age of such
designated Beneficiary during the calendar year in which distributions are
required to begin pursuant to this Endorsement. Payments for any subsequent
calendar year will be calculated based on such life expectancy reduced by
one for each calendar year which has elapsed since the calendar year in
which life expectancy was first calculated.
8. Annuity Options. All Annuity Options under the Contract must meet the
requirements of section 403(b)(10) of the Code, including the requirement
that payments to persons other than the Annuitant are incidental. The
provisions of this Endorsement reflecting the requirements of sections
401(a)(9) and 403(b)(10) of the Code override any Annuity Option,
systematic withdrawal plan or other settlement option which is inconsistent
with such requirements.
If a guaranteed period of payments is chosen under an Annuity Option, the
length of the period over which the guaranteed payments are to be made must
not exceed the shorter of (a) 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 (b) the applicable maximum period
under section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
All payments made under a joint and survivor Annuity Option after the
Annuitant's death while the Joint Annuitant is alive must be made to the
Joint Annuitant.
Except to the extent Treasury regulations allow the Company to offer
different Annuity Options that are agreed to by the Company, only the
Annuity Options set forth in the Contract will be available. In the event a
Joint Annuitant is named who is not the Annuitant's spouse, the percentage
level of payments during the remaining lifetime of the Joint Annuitant can
not exceed the amount allowed under section 1.401(a)(9)-2 of the Proposed
Income Tax Regulations.
9. Premature Distribution Restrictions. Any amounts in the Contract
attributable to contributions made pursuant to a salary reduction agreement
after December 31, 1988, and the earnings on such contributions and on
amounts held on December 31, 1988, may not be distributed unless the
Annuitant has reached age 59 1/2, separated from service, died, become
disabled (within the meaning of Code section 72(m)(7)) or incurred a
hardship as determined by the organization described in Section 1 of this
Endorsement; 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 section 414(p) of the Code.
Purchase payments made by a nontaxable transfer from a custodial account
qualifying under section 403(b)(7) of the Code, and earnings on such
amounts, will not be paid or made available before the Annuitant dies,
attains age 59 1/2, separates from service, becomes 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, encounters financial hardship; provided, that
amounts permitted to be paid or made available in the event of hardship
will be limited 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 section 414(p) of the Code.
10. Direct Rollovers. The Annuitant subject to the terms of the Contract, may
elect to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the Annuitant. An
eligible rollover distribution is any distribution of all or any portion of
the balance to the credit of the Annuitant, except that an eligible
rollover distribution does not include: 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 Annuitant or the
joint lives (or joint life expectancies) of the Annuitant and the
Annuitant's Beneficiary, or for a specified period of ten years of more;
any distribution required under Code section 401(a)(9); hardship
distributions; and the portion of any distribution that is not includible
in gross income. 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), or another Code section 403(b)
tax-sheltered annuity, that accepts the Annuitant's eligible rollover
distribution. However, in the case of an eligible rollover distribution to
the surviving spouse, an eligible retirement plan is only 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
Annuitant or other eligible distributee under the Code.
11. If this Contract is part of a plan which is subject to Title 1 of the
Employee Retirement Income Security Act of 1974 ("ERISA"), any payments and
distributions under this Contract (whether as income, as proceeds payable
at the Annuitant's death, upon partial redemption or full surrender or
otherwise), and any Beneficiary designation, shall be subject to the joint
and survivor annuity and preretirement survivor annuity requirements of
ERISA section 205.
12. The Company will furnish annual calendar year reports concerning the status
of the annuity.
13. The Company will not assess a withdrawal charge on required minimum
distributions made under Section 5 of this endorsement but only as to
amounts required to be distributed from only this Contract.
14. Amendments. The Company may further amend this Contract from time to time
in order to meet any requirements which apply to it under Code section
403(b) or ERISA.
Cova Financial Services Life Insurance Company has caused this Endorsement to be
signed by its President and Secretary.
Form 7026 (11/00)
