Common use of Loan Default Clause in Contracts

Loan Default. The IRS requires that loan repayments be made on a regular and level amortization schedule. To comply with this requirement, each loan repayment must be paid within the 27-day grace period before or after the due date. A repayment received after this grace period is considered a missed repayment. If you qualify for a distribution under the terms of your plan, funds will be taken from your contract value to cover the missed loan repayment. A distribution to cover a missed repayment or defaulted loan is considered taxable income. If you do not qualify for a distribution and miss four repayments, the entire loan will be in default and considered both a deemed distribution and taxable event in the year the default occurred. Please be aware that at the point of the 27-day grace period, (after the due date of the 4th missed payment), extends over the calendar quarter, you loan will default on the last day of the quarter. Please consult your tax advisor for additional information. A defaulted loan will remain outstanding on your account and affect the values for future loans. A defaulted loan will continue to accrue interest which may result in a depletion of your contract value. You may continue to make loan repayments after a loan has been reported as a deemed distribution, as long as those payments are equal to or greater than the required minimum periodic repayment amount. These repayments are treated as after-tax repayments which give you a cost basis (after-tax contributions). Any cost basis is not taxed at annuitization or withdrawal. On the day you attain age 59 1/2, or we are notified that you have separated from service, a partial withdrawal will be processed for the total outstanding loan balance and accrued interest and costs and this amount will be retained by the Company in order to pay off your defaulted loan. For all ReliaStar Life Insurance Company contracts issued on or after January 1, 2004, if you have an outstanding defaulted loan, you will not be permitted to take a subsequent loan until the outstanding defaulted loan and any accrued interest is repaid. This will not apply to ReliaStar Life Insurance Company contracts issued on or before December 31, 2003. For these contracts, subsequent loans are permitted, subject to the terms of your Employer’s plan, when there is an outstanding defaulted loan.

Loan Default. The IRS requires that loan regular repayments be made on a regular and level amortization scheduleof loans from plans. To comply be in compliance with this requirementregulation, each loan repayment payment must be paid within the 27-day grace period before or after the due date. A repayment payment received after this grace period is considered a missed repaymentpayment. If you qualify for a distribution under the terms of your plandistribution, according to IRS regulations, funds will be taken from your contract value to cover the missed loan repayment. A distribution to cover a missed repayment or defaulted loan is considered taxable incomepayment. If you do not qualify for a distribution and miss four repaymentspayments, the entire loan will be in default and considered both a deemed distribution and be taxable event in income for the year the default in which it occurred. Please be aware that at the point of the 27-day grace period, period (after the due date of the 4th your fourth missed payment), ) extends over the calendar quarter, you the entire loan will default on the last day of the quarterbe considered in default. A distribution to cover a missed payment or defaulted loan is considered taxable income. Please consult your tax advisor for additional information. A defaulted loan will remain outstanding on your account and affect the values for future loans. A defaulted loan will continue to accrue interest which may result in a depletion of your contract valuecontract. You may continue to make loan repayments payments after a loan has been reported as a deemed distribution, as long as those payments are equal to or greater than the required minimum periodic repayment amountamount prior to the loan’s default. These repayments are treated as post-default payments will be considered after-tax repayments which give you a cost basis (after-tax contributions). Any cost basis is not taxed at annuitization or withdrawalcontributions to your contract. On the day you attain age 59 1/2, or we are notified that you have separated from service, a partial withdrawal will be processed for the total outstanding loan balance amount due and accrued interest and costs and this amount will be retained by the Company in order to pay off your defaulted loan. For all ReliaStar Life Insurance Company contracts issued on or after January 1, 2004, if you have an outstanding defaulted loan, you will not be permitted to take a subsequent loan until the outstanding defaulted loan and any accrued interest is repaid. This will not apply to ReliaStar Life Insurance Company contracts issued on or before December 31, 2003. For these contracts, subsequent loans are permitted, subject to the terms of your Employer’s plan, when there is an outstanding defaulted loan.

Loan Default. The IRS requires that loan regular repayments be made on a regular and level amortization scheduleof loans from plans. To comply be in compliance with this requirementregulation, each loan repayment payment must be paid within the 27-day grace period before or after the due date. A repayment payment received after this grace period is considered a missed repaymentpayment. If you qualify for a distribution under the terms of your plandistribution, according to IRS regulations, funds will be taken from your contract value to cover the missed loan repayment. A distribution to cover a missed repayment or defaulted loan is considered taxable incomepayment. If you do not qualify for a distribution and miss four repaymentspayments, the entire loan will be in default and considered both a deemed distribution and be taxable event in income for the year the default in which it occurred. Please be aware that at the point of the 27-day grace period, period (after the due date of the 4th your fourth missed payment), ) extends over the calendar quarter, you the entire loan will default on the last day of the quarterbe considered in default. A distribution to cover a missed payment or defaulted loan is considered taxable income. Please consult your tax advisor for additional information. A defaulted loan will remain outstanding on your account and affect the values for future loans. A defaulted loan will continue to accrue interest which may result in a depletion of your contract valuecontract. You may continue to make loan repayments payments after a loan has been reported as a deemed distribution, as long as those payments are equal to or greater than the required minimum periodic repayment amountamount prior to the loan’s default. These repayments are treated as post-default payments will be considered after-tax repayments which give you a cost basis (after-tax contributions). Any cost basis is not taxed at annuitization or withdrawalcontributions to your contract. On the day you attain age 59 1/259½, or we are notified that you have separated from service, a partial withdrawal will be processed for the total outstanding loan balance amount due and accrued interest and costs and this amount will be retained by the Company in order to pay off your defaulted loan. For all ReliaStar Life Insurance Company contracts issued on or after January 1, 2004, if you have an outstanding defaulted loan, you will not be permitted to take a subsequent loan until the outstanding defaulted loan and any accrued interest is repaid. This will not apply to ReliaStar Life Insurance Company contracts issued on or before December 31, 2003. For these contracts, subsequent loans are permitted, subject to the terms of your Employer’s plan, permitted when there is an outstanding defaulted loan.