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EXHIBIT 4(d)
[LOGO OF PACIFIC LIFE]
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
403(b) TAX-SHELTERED ANNUITY RIDER
This rider is a part of the Contract to which it is attached by PL (the
"Contract").
The Contract is hereby modified as specified below to qualify as a Tax-Sheltered
Annuity ("TSA") under Code Section 403(b).
The provisions of this rider will take precedence over any contrary provisions
of the Contract.
A. Definitions
Add-In Amount - Any amount added by PL to the Contract Value on the Notice Date
to set the Contract Value equal to the death benefit proceeds that would have
been payable to the Owner's surviving spouse, when such spouse is the deemed
sole Designated Beneficiary of the death benefit under part D below.
Annuitant - is an individual named as a measuring life for periodic payments
under this Contract.
Annuity Start Date - The date shown in the Contract Specifications, or the date
you have most recently elected under the Contract, if any, for the start of
annuity payments if the Annuitant is still living and the Contract is in force;
or if earlier, the date that annuity payments actually begin.
Code - is the Internal Revenue Code of 1986, as amended.
Designated Beneficiary - is an individual designated as a beneficiary by the
Owner.
Notice Date - The day on which PL receives, in a form satisfactory to PL, proof
of death and instructions satisfactory to PL regarding payment of death benefit
proceeds.
Owner or You - is the Owner of the Contract.
Qualified Plan - is any tax-qualified retirement plan whose terms govern this
Contract as a TSA.
Regulation - is a regulation issued or proposed pursuant to the Code.
Required Beginning Date - is April 1 of the calendar year following the year in
which the Annuitant reaches age 70 1/2.
Surviving Spouse - is the surviving spouse of a deceased Owner.
TSA - is a tax-sheltered annuity under Code Section 403(b).
B. Tax-Sheltered Annuity Provisions
To ensure treatment as a TSA, this Contract will be subject to the requirements
of Code Section 403(b), which include the following:
1. The Annuitant shall at all times be the Owner of the Contract (or its
beneficial Owner where a fiduciary is its legal Owner). Such
individual Owner's rights under this Contract shall be nonforfeitable,
and this Contract shall be for the exclusive benefit of such Owner and
his or her beneficiaries.
2. No benefits under this Contract may be transferred, 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 PL, except as permitted in the case of a transfer or
distribution pursuant to a qualified domestic relations order referred
to in Code Section 414(p).
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3. Premiums paid pursuant to a salary reduction agreement and applied to
this Contract under a "plan" (within the meaning of Code Section
403(b)) are subject to the annual limitation on "elective deferral"
contributions under Code Section 401(a)(30) and Section 402(g)(1) for
the applicable year.
4. Premiums applied to this Contract which exceed the applicable
"exclusion allowance" (within the meaning of Code Section 403(b)(2))
may not be excludable from gross income.
5. If the Owner is married on the Annuity Start Date, a joint and
survivor annuity for the Owner and his or her spouse will be selected
automatically as a settlement option as of such date if no other
option has been timely and validly elected as of such date.
6. Distributions attributable to premiums made pursuant to a salary
reduction agreement may be made only when the Owner attains age 59
1/2, separates from service, dies, becomes "disabled" (within the
meaning of Code Section 72(m)(7)), or incurs a hardship. A
distribution made due to a hardship is limited to premiums and may not
include income thereon.
7. This Contract and all distributions made under it are subject to the
minimum distribution and incidental death benefit rules of Code
Section 401(a)(9) and the Regulations thereunder and shall comply with
such rules. Accordingly:
(a) The entire interest under the Contract shall be distributed to
the Owner:
(i) Not later than April 1 next following the close of the
calendar year in which the Owner attains age 70 1/2 (the
"Required Beginning Date"), or
(ii) Commencing not later than the Required Beginning Date, over
the Owner's life or over the lives of the Owner and his or
her Designated Beneficiary (or over a period not extending
beyond the Owner's life expectancy or the joint and last
survivor life expectancy of the Owner and his or her
Designated Beneficiary).
(b) For purposes of this Section 7, life expectancy is computed by
use of the expected return multiples in Tables V and VI of
Regulation Section 1.72-9. Unless otherwise elected by the Owner
by the Required Beginning Date, life expectancy for the Owner
shall be recalculated annually, but shall not be recalculated
annually for any spouse Designated Beneficiary. Any election by
the Owner to recalculate (or not) the life expectancy of the
Owner or of a spouse Designated Beneficiary shall be irrevocable
and shall apply to all subsequent years. The life expectancy of
a non-spouse Designated Beneficiary may not be recalculated.
Instead where the life expectancy of a Designated Beneficiary (or
Owner) is not recalculated annually, such a life expectancy shall
be calculated using the attained age of such Beneficiary (or
Owner) during the calendar year in which the Owner attains age
70 1/2, and payments for subsequent years shall be calculated
based on such life expectancy reduced by one year for each
calendar year which has elapsed since the calendar year life
expectancy was first calculated.
(c) The method of distribution selected also shall comply with the
"minimum distribution incidental benefit" or "MDIB" rule of Code
Section 401(a)(9) and proposed Regulation Section 1.401(a)(9)-2.
This MDIB rule includes the following requirements:
(i) if the Owner's only Designated Beneficiary is the spouse,
the minimum amount that must be distributed in a
distribution calendar year is the amount determined under
the regular minimum distribution requirements in this
Section 7;
(ii) if distributions are not made as substantially equal
annuity payments under an annuity contract that has been
purchased on or before the Owner's Required Beginning Date
and if the Owner's spouse is not the only Designated
Beneficiary, the minimum amount that must be distributed in
a distribution calendar year is the quotient obtained by
dividing the Owner's entire interest by
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the applicable divisor specified in proposed Regulation
Section 1.401(a)(9)-2, Q & A-4; or
(iii) if distribution is being made under an annuity contract
with substantially equal annuity payments that has been
purchased on or before the Owner's Required Beginning Date
and if the owner's spouse is not the only Designated
Beneficiary, the minimum amount that must be distributed is
determined as follows:
(A) Period certain annuity without a life contingency: The
period certain may not exceed the maximum period
specified in proposed Regulation Section 1.401(a)(9)-2,
Q & A-5;
(B) Life annuity or a joint and survivor annuity: A life
annuity on the Owner's life which satisfies the regular
minimum distribution requirements satisfies the MDIB
rule. The periodic annuity payment to the survivor
under a joint and survivor annuity may not exceed the
applicable percentage of the annuity payment to the
Owner, as provided in proposed Regulation Section
1.401(a)(9)-2, Q & A-6(b); or
(C) Life annuity with period certain: The distribution must
satisfy the requirements for a single life (or joint
and survivor) annuity, and the period certain may not
exceed the period determined for non-annuity
distributions, as provided in proposed Regulation
Section 1.401(a)(9)-2, Q & A-6(c).
(d) Required annuity payments must be made at intervals of no longer
than one year and may not be in increasing amounts, except as
allowed by proposed Regulation Section 1.401(a)(9)-1, Q & A, F-3.
(e) Only a method of distribution offered by PL that satisfies the
conditions set out in this Section 7 may be selected. You must
make this selection before the end of the calendar year in which
You attain age 70 1/2.
8. On the death of the Owner, distributions shall be made in accordance
with the annuity options described in this Contract. Selection of an
annuity option which does not satisfy the conditions of this Section
shall not be permitted.
(a) If the Owner dies before distribution of his or her interest in
the Contract has begun in accordance with paragraph 7(b) above,
the entire Interest shall be distributed by December 31st of the
fifth calendar year which follows the year of the Owner's death
except to the extent that paragraph 8(b) below applies or: (i)
such Interest is paid over a period not exceeding the lifetime,
or the life expectancy, of the Designated Beneficiary; and (ii)
payments begin by December 31st of the calendar year which
follows the year of the Owner's death.
(b) To the extent that the Designated Beneficiary of the Owner's
interest is the Surviving Spouse, such spouse may elect to
receive payments over the life or life expectancy of such spouse
commencing at any date prior to the later of: (i) December 31 of
the calendar year immediately following the calendar year in
which the Owner died; and (ii) December 31 of the calendar year
in which the Owner would have attained age 70 1/2. Such
election must be made no later than the earlier of December 31 of
the calendar year containing the fifth anniversary of the Owner's
death or the date distributions are required to begin pursuant to
the preceding sentence. Such Surviving Spouse may accelerate
these payments at any time, i.e., increase the frequency or
amount of such payments.
(c) For purposes of this Section 8, life expectancy is computed by
use of the expected return multiples in Tables V and VI of
Regulation Section 1.72-9. For purposes of distributions
beginning after the Owner's death, unless otherwise elected by
the
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Surviving Spouse by the time distributions are required to begin,
such spouse's life expectancy shall not be recalculated annually.
Such election shall be irrevocable as to such spouse and shall
apply to all subsequent years. In such a case of non-
recalculation for the Surviving Spouse and 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 year for each calendar year which has elapsed
since the calendar year which has elapsed since the calendar year
life expectancy was first calculated.
(d) Any amount paid to a minor child of the Owner shall be treated as
if it had been paid to the Surviving Spouse if the remainder of
the interest becomes payable to such spouse when the child
reaches the age of majority.
(e) If the Owner dies after distribution of his or her interest in
the Contract has begun in accordance with paragraph 7(b) above
but before his or her entire interest has been distributed, the
remaining interest shall be distributed at least as rapidly as
under the method of distribution being used immediately prior to
the Owner's death.
(f) Distributions under this Section 8 are considered to have begun
if distributions are made on account of the Owner reaching the
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
proposed Regulation Section 1.401(a)(9)-2.
9. PL shall furnish annual calendar year reports concerning the status of
this Contract.
10. If the Owner or Annuitant is eligible to receive a distribution from
this Contract that qualifies as an "eligible rollover distribution"
(within the meaning of Code Section 402(f)(2)(A)) and elects to have
such distribution paid directly to an "eligible retirement plan"
(within the meaning of Code Section 402(c)), such distribution shall
be paid directly to such eligible retirement plan. PL may establish
reasonable administrative rules applicable to such direct rollovers or
direct transfers.
C. Tax Qualification Provisions
This rider is intended to qualify the Contract as a TSA under Code Section
403(b) for federal income tax purposes. To that end, the provisions of this
rider and the Contract (including any other rider or endorsement) shall be
interpreted to ensure or maintain such tax qualification, despite any other
provision to the contrary. PL reserves the right to amend this rider or the
Contract to comply with any future changes in the Code or any regulations,
rulings or other published guidance under the Code, or to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification, without consent (except for the states of Michigan, Oregon,
Pennsylvania, South Carolina and Washington, where affirmative consent is
required). PL shall provide the Owner with a copy of any such amendment.
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D. Spousal Continuation Provisions
If the Owner dies before the Annuity Start Date and the Surviving Spouse is
deemed the sole Designated Beneficiary of the death benefit, the Surviving
Spouse shall become the Owner and Annuitant effective on the date of death of
the deceased Owner, unless such treatment is inconsistent with the death
benefit payment option that has been elected as of the Notice Date.
1. On the Notice Date, if the Surviving Spouse is deemed to have
continued or rolled over this Contract by becoming the Owner and
Annuitant thereof, PL shall set the Contract Value equal to the death
benefit proceeds that would have been payable to the Surviving Spouse
as the deemed sole Designated Beneficiary of the death benefit, and no
such proceeds shall be paid to the Surviving Spouse. The amount by
which the death benefit proceeds payable exceeds the Contract Value
shall be added to the Contract Value in the form of an Add-In Amount
on the Notice Date. There will be no adjustment to the Contract Value
if the Contract Value is equal to the death benefit proceeds payable
as of the Notice Date.
2. The Add-In Amount shall be shall be treated as earnings under the
Contract, and shall be allocated among any Investment Options under
the Contract in accordance with the current allocation instructions
for the Contract.
E. Contract Loan Provisions
If your Qualified Plan permits, You may request a loan secured by a portion of
your Contract Value ("Contract Debt") after your first Contract Year and before
your Annuity Start Date. Adverse tax consequences may result if you fail to
meet the repayment requirements of your loan. If the request is received on the
29th, 30th or 31st day of any month, the loan effective date will be the first
business day of the following month. Such a failure could result in a withdrawal
or a "Deemed Distribution" (described below) that could be considered a
currently taxable distribution, and may be subject to federal tax withholding
and a federal early withdrawal penalty tax, regardless of when such unpaid
amounts are repaid. The tax and other qualified retirement plan rules relating
to Contract loans are complex and in many cases unclear. For these reasons, and
because the rules vary depending on the individual circumstances of each
Contract, PL advises that You consult with a qualified tax adviser before
exercising the loan provisions of this Contract.
1. Loan Procedures - Your loan request must be submitted on our Loan
Request Form. You may submit a loan request at any time after your
first Contract Anniversary and before your Annuity Start Date;
however, before requesting a new loan, You must wait thirty (30) days
after the last payment of a previous loan. If approved, your loan
will usually be effective as of the end of the Business Day on which
PL receive all necessary documentation in a form satisfactory to us.
PL will normally forward proceeds of your loan to You within seven
calendar days after the effective date of your loan.
2. Loan Account - On the effective date of your loan, PL will transfer
an amount equal to the principal amount of your loan into an account
called the Loan Account. If your Contract has Variable Investment
Options, PL will transfer amounts to the Loan Account on a pro rata
basis from your Fixed and Variable Investment Options based on your
Account Value in each. For a Contract issued under a Qualified Plan
that is exempt from the requirements of Title 1 of the Employee
Retirement Income Security Act of 1974 ("ERISA"), PL will credit
interest on amounts in the Loan Account at an annual rate equal to
3.0%. For a Contract issued under a Qualified Plan that is subject to
the requirements of Title 1 of ERISA, PL will credit interest on
amounts in the Loan Account at an annual rate that is two percentage
points lower than the annual loan interest rate charged on your loan.
Interest earned will accrue daily beginning on the day following the
effective day of the loan. If your Contract has Variable Investment
Options, the interest credited and any loan repayment amounts will be
transferred from the Loan Account to your Fixed and Variable
Investment Options on a pro rata basis relative to your most recent
allocation instructions.
3. Loan Terms - You may have only one loan outstanding at any time. The
minimum loan amount is $1,000 and the maximum loan amount is the
lesser of:
(a) 50% of your Contract Value; or
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(b) $50,000 less your highest outstanding Contract Debt during the
12-month period immediately preceding the effective date of your
loan; or
(c) if your Contract contains Guaranteed Interest Options ("GIOs"),
100% of your Contract Value, excluding your GIO Value.
You should refer to the terms of your particular Qualified Plan for
any additional loan restrictions. If You have other loans outstanding
pursuant to other tax-qualified retirement plans, the amount You may
borrow under this Contract may be further restricted. PL is not
responsible for making any determinations (including loan amounts
permitted) or any interpretations with respect to your Qualified Plan.
4. Loan Interest Rate - For a Contract issued under a Qualified Plan that
is exempt from the requirements of Title 1 of ERISA, You will be
charged interest on your Contract Debt at an annual rate equal to 5%.
For a Contract issued under a Qualified Plan that is subject to the
requirements of Title 1 of ERISA, You will be charged interest on your
Contract Debt at an annual rate, set at the time the loan is made,
equal to the higher of 5% or the Moody's Corporate Bond Yield Average-
Monthly Average Corporates, as published by Moody's Investors Service,
Inc., or its successor, for the most recent available month. If this
Moody's Corporate Bond Yield Average-Monthly Average Corporates is no
longer available, PL will use a substantially similar average, subject
to compliance with applicable state regulations. PL will notify You of
the loan interest rate when You make a Contract loan. Interest charged
will accrue daily beginning on the day your loan is effective.
5. Repayment Terms - You must repay principal and interest of any loan
within five years after its effective date. If you have certified to
us that your loan proceeds will be used to acquire a principal
residence for yourself, You may request a loan for a term of thirty
(30) years. In either case, You must repay your loan in full prior to
the Annuity Start Date.
(a) Your loan, including principal and accrued interest, must be
repaid in quarterly installments that are substantially level.
An installment will be due each quarter on the date corresponding
to your loan effective date, beginning with the first such date
following the effective date of your loan. You may, however,
repay your entire loan at any time. If You do so, PL will bill
You for any accrued interest. Your loan will be considered
repaid only when the interest due also has been paid. Subject to
any necessary approval of state insurance authorities, PL will
treat all payments You send us as purchase payments, unless You
specifically indicate that your payment is a loan repayment. To
the extent permitted by law, any loan repayments in excess of the
amount then due will be applied to the principal balance of your
loan. Such repayments will not change the due dates or the
periodic repayment amount due for future periods. If a loan
repayment is in excess of the principal balance of your loan, any
excess repayment will be refunded to You. Repayments received
that are less than the amount then due will be returned to You,
unless otherwise required by law.
(b) If a loan repayment is not made when due, PL will declare the
entire remaining loan balance in default. At that time, PL will
provide written notification of the amount needed to bring the
loan back to the current status. You will have sixty (60) days
from the date on which the loan is declared in default (the
"grace period") to make the required repayment.
(c) If the required repayment is not received by the end of the grace
period, the defaulted loan balance plus accrued interest will be
repaid by a withdrawal from your Contract Value to the extent
that such value is then eligible for distribution. In order for
an amount to be eligible for distribution from a Qualified Plan
generally, You must meet one of six triggering events, i.e.,
attainment of age 59 1/2, separation from service, death,
disability, plan termination, or financial hardship. To the
extent your Contract Value is not then eligible for distribution,
the defaulted loan balance plus accrued interest will be
considered a "Deemed Distribution," and any amount of Contract
Value needed to repay the Contract Debt will be withdrawn as such
amount of Contract Value becomes eligible
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for distribution. The withdrawal will be subject to any
applicable withdrawal charge and tax withholding.
(d) If there is a "Deemed Distribution" under your Contract, any
future withdrawals will first be applied as repayment of the
defaulted Contract Debt, including accrued interest and
withdrawal charges and charges for applicable taxes, to the
extent allowed by law. Any amounts withdrawn and applied as
repayment of Contract Debt will be withdrawn first from your Loan
Account and then from any of your Investment Options on a
proportionate basis relative to the Account Value in each
Investment Option. If You have an outstanding loan that is in
default, the defaulted Contract Debt will be considered a
withdrawal for the purpose of calculating any death benefit
proceeds payable under this Contract.
6. Tax Provisions - The terms of any loan made pursuant to this rider are
intended to qualify for the exception in Code Section 72(p)(2) so that
the distribution of the loan proceeds will not constitute a
distribution that is taxable to You. To that end, these loan
provisions shall be interpreted to ensure and maintain such tax
qualification, despite any other provision to the contrary. PL
reserves the right to amend this rider or the Contract to comply with
any future changes in the Code or any regulations, rulings or other
guidance published under the Code or to reflect any clarifications
that may be needed or are appropriate to maintain such tax
qualification, without consent (except for the states of Michigan,
Oregon, Pennsylvania, South Carolina and Washington, where affirmative
consent is required). PL shall provide the Owner with a copy of any
such amendment.
PACIFIC LIFE INSURANCE COMPANY
/s/ THOMAS C. SUTTON /s/ AUDREY L. MILFS
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Thomas C. Sutton Audrey L. Milfs
Chairman and Chief Executive Officer Secretary
Form No. 20-13300 7
