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Exhibit 4.(c)
[LOGO] 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
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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).
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;
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(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 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
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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 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.
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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
(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
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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 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
Chairman and Chief Executive Officer Secretary
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