Cova Financial Life Insurance Company
4100 Newport Place Drive, Suite 840
Newport Beach, CA 92600
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the same as the date of issue shown on the
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Contract Data Page.
The term "Contract", wherever used herein, shall also mean "Policy".
THE FOLLOWING PROVISIONS APPLY TO A CONTRACT WHICH IS ISSUED ON A QUALIFIED
BASIS IF THE APPLICATION INDICATES IT IS TO BE ISSUED UNDER THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, ("CODE") SECTION 408. THE PROVISIONS OF THE APPLICABLE
QUALIFIED RETIREMENT PLAN TAKE PRECEDENCE OVER THE PROVISIONS OF THIS CONTRACT.
IN THE CASE OF A CONFLICT WITH ANY PROVISION IN THE CONTRACT OR ANY OTHER
ENDORSEMENTS OR RIDERS, THE PROVISIONS OF THIS ENDORSEMENT WILL CONTROL. THE
CONTRACT IS AMENDED AS FOLLOWS:
1. The Owner is the Annuitant.
2 This Contract is not transferable.
3. This Contract, and the benefits under it, cannot be sold, assigned 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 to the issuer
of the Contract.
4. The Annuitant's entire interest in this Contract is nonforfeitable.
5. This Contract is established for the exclusive benefit of the Annuitant and
the Annuitant's beneficiary(ies).
6. Except in the case of a rollover contribution (as permitted by Code
ss.402(c), 403(a)(4), 403(b)(8), or 408(d)(3)) or a contribution made in
accordance with the terms of a Simplified Employee Pension (SEP) as
described in Code ss.408(k), no contributions will be accepted unless they
are in cash, and the total of such contributions shall not exceed $2,000
for any taxable year.
7. No contribution will be accepted under a SIMPLE plan established by any
employer pursuant to Code ss.408(p). No transfer or rollover of funds
attributable to contributions made by a particular employer under its
SIMPLE plan will be accepted from a SIMPLE IRA, that is, an IRA used in
conjunction with a SIMPLE plan, prior to the expiration of the 2-year
period beginning on the date the individual first participated in that
employer's SIMPLE plan.
8. Distributions under the annuity payment options in the Contract must
commence to be distributed, no later than the first day of April following
the calendar year in which the Annuitant attains age 70 1/2 (required
beginning date), over (a) the life of the Annuitant, or the lives of the
Annuitant and his or her designated beneficiary, 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. Payments must be made in periodic payments at intervals of no
longer than one year. In addition, payments must be either nonincreasing or
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they may increase only as provided in Q & A F-3 of ss.1.401(a)(9)-1 of the
Proposed Income Tax Regulations.
All distributions made hereunder shall be made in accordance with the
requirements of ss.401(a)(9) of the Code, including the incidental death
benefit requirements of ss.401(a)(9)(G) of the Code, and the regulations
thereunder, including the minimum distribution incidental benefit
requirement of ss.1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of ss.1.72-9 of the Income Tax Regulations. Life expectancy
for distributions under an annuity payment option may not be recalculated.
9. If required distributions are to be made in a form other than one of the
annuity payment options contained in the Contract, then the entire value of
the Contract will commence to be distributed no later than the first day of
April following the calendar year in which the Annuitant attains age 70 1/2
(required beginning date), over (a) the life of the Annuitant, or the lives
of the Annuitant and his or her designated beneficiary, 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.
The amount to be distributed each year, beginning with the first calendar
year for which distributions are required and then for each succeeding
calendar year, shall not be less than the quotient obtained by dividing the
Annuitant's benefit by the lesser of (a) the applicable life expectancy or
(b) if the Annuitant's spouse is not the designated beneficiary, the
applicable divisor determined from the table set forth in Q & A-4 or Q &
A-5, as applicable, of ss.1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Distributions after the death of the Annuitant shall be
distributed using the applicable life expectancy as the relevant divisor
without regard to Proposed Income Tax Regulation ss.1.401(a)(9)-2.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of ss.1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Annuitant by the time distributions are required
to begin, life expectancies shall be recalculated annually. Such election
shall be irrevocable by the Annuitant and shall apply to all subsequent
years. The life expectancy of a non-spouse beneficiary may 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.
10. An Annuitant shall be permitted to withdraw the required distribution in
any year from another individual retirement account or annuity maintained
for the benefit of the Annuitant in accordance with Notice 88-38. The
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Annuitant shall be responsible in such instance for determining whether the
minimum distribution requirements are met, and the Company shall have no
responsibility for such determination.
11. If the Annuitant dies after distribution of benefits has commenced, the
remaining portion of such interest will continue to be distributed at least
as rapidly as under the method of distribution being used prior to the
Annuitant's death or as otherwise allowed under Code Section 401(a)(9) and
the regulations thereunder. If the Annuitant dies before distribution of
benefits commences, the entire amount payable to the beneficiary will be
distributed no later than December 31 of the calendar year which contains
the fifth anniversary of the date of the Annuitant's death except to the
extent that an election is made to receive distributions in accordance with
(a), (b) or (c) below:
(a) if any portion of the Contract proceeds is payable to a designated
beneficiary, distributions may be made in installments over the life or
over a period not extending beyond the life expectancy of the
designated beneficiary commencing no later than December 31 of the
calendar year immediately following the calendar year in which the
Annuitant died;
(b) if the designated beneficiary is the Annuitant's surviving spouse, and
benefits are to be distributed in accordance with (a) above,
distributions must begin 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;
(c) if the designated beneficiary is the Annuitant's surviving spouse, the
spouse may treat the Contract as his or her own IRA. This election will
be deemed to have been made if such surviving spouse makes a regular
IRA contribution to the Contract, makes a rollover to or from such
Contract, or fails to elect any of the above provisions.
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. For
purposes of distributions beginning after the Annuitant's death, unless
otherwise elected by the surviving spouse by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable by the surviving spouse and shall apply to
all subsequent years. In the case of any other designated beneficiary, life
expectancies shall be calculated using the attained age of such beneficiary
during the calendar year in which distributions are required to begin
pursuant to this section, and payments for any subsequent calendar year
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. Life expectancy for distributions under an annuity
payment option in the Contract may not be recalculated.
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Distributions under this section are considered to have begun if
distributions are made on account of the individual reaching his or her
required beginning date or if prior to the required beginning date
distributions irrevocably commence to an individual over a period permitted
and in an annuity form acceptable under ss.1.401(a)(9)-2 of the Proposed
Income Tax Regulations.
12. The Company shall furnish annual calendar year reports concerning the
status of the annuity.
13. Any reference or restrictions, limitations or requirements in the Contract
regarding misstatement of sex or proof of sex is hereby deleted.
14. The Company may at its option either accept additional future payments or
terminate the Contract by a lump sum payment 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 per month.
15. The Company will not assess a withdrawal charge on required minimum
distributions made under Sections 8 or 9 of this endorsement but only as to
amounts required to be distributed from only this Contract.
All other terms and conditions of the Contract remain unchanged.
Cova Financial Life Insurance Company has caused this Endorsement to be signed
by its President and Secretary.
Form 7023 (11/00)
