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EXHIBIT 4(b)
[Letterhead of The Variable Annuity Life Insurance Company]
Herein called VALIC
Houston, Texas
[LOGO]
*An American General Company
Agrees to pay benefits as provided herein with respect to any person insured
hereunder as an employee of
This contract is issued to
(Herein called the Contract Owner)
in consideration of the application therefore and of the payment by the
Contract Owner of contributions as provided herein.
The Effective Date of this contract is
This contract is delivered in and is subject to the laws
of that jurisdiction.
Provisions contained in subsequent pages hereof form a part of this contract as
fully as if recited in their entirety over the signature hereto affixed.
IN WITNESS WHEREOF, VALIC has caused this contract to be executed at its Home
Office in Houston, Texas, this day of 19
Countersigned
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------- -----------------------------
Secretary President
Group Retirement Annuity Contract
Active Life Fund in Separate Account
and General Account
Individual Allocations
[SPECIMEN]
Group Annuity Contract No.
2
TABLE OF CONTENTS
SECTION PAGE
------- ----
ARTICLE I - DEFINITION OF CERTAIN TERMS................................. 2
ARTICLE II - RETIREMENT ANNUITY PROVISIONS.............................. 3
2.01 Notice to Effect an Annuity............................................. 3
2.02 Optional Annuity Forms.................................................. 3
2.03 Allocation of Annuities, Variable and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.................. 3
A. Variable Annuity.................................................... 3
B. Fixed Dollar Annuity................................................ 3
TABLES
2.04 Description of Tables................................................... 4
Options A, B, C, D and E................................................ 4
2.05 Frequency of Payments................................................... 4
ARTICLE III - CONTRIBUTIONS, VALUATION, AND DISCONTINUANCE.............. 5
CONTRIBUTIONS
3.01 Contributions........................................................... 5
3.02 Application of Contributions............................................ 5
3.03 Participant's Individual Accounts, Inactive Participants................ 5
3.04 Active Life Fund........................................................ 5
VALUATION
3.05 Net Investment Rate and Net Investment Factor........................... 5
3.06 Accumulation Unit Value................................................. 5
3.07 Annuity Unit Value...................................................... 6
3.08 Additional Units, Experience Rating..................................... 6
DISCONTINUANCE OF CONTRIBUTIONS
3.09 Suspension.............................................................. 6
3.10 Change to Paid-Up Contract.............................................. 6
3.11 Transfer of Active Life Fund............................................ 6
ARTICLE IV - GENERAL PROVISION.......................................... 7
4.01 Change of Contract by VALIC............................................. 7
4.02 Change of Contract by Mutual Agreement - Retroactive Changes............ 7
4.03 Contract................................................................ 7
4.04 Individual Certificates................................................. 7
4.05 Designation of Beneficiary.............................................. 7
4.06 Facility of Payment..................................................... 7
4.07 Evidence of Survival.................................................... 8
4.08 Misstatements and Adjustments........................................... 8
4.09 Assignments............................................................. 8
4.10 Basis of Reserves....................................................... 8
4.11 Termination of Contract................................................. 8
4.12 Data to be Furnished to VALIC........................................... 8
4.13 Relation of this Contract to the Separate Account....................... 8
ARTICLE V - THE PLAN.................................................... 9
5.01 Plan Description........................................................ 9
5.02 Eligibility............................................................. 9
5.03 Annuity Commencement Date................................................ 9
5.04 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Election of Optional Annuities........................ 9
5.05 Death Benefit........................................................... 9
5.06 Termination Benefits.................................................... 9
5.07 Contributions by Contract Owner......................................... 9
5.08 Rates of Contribution................................................... 9
5.09 Allocation of Contributions............................................. 9
5.10 Vesting................................................................. 9
[SPECIMEN]
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ARTICLE I
DEFINITION OF CERTAIN TERMS
1. CONTRACT ANNIVERSARY -- any anniversary of the Effective Date of the
Contract.
2. CONTRACT YEAR -- the period of 12 months commencing with Effective Date
hereof.
3. PLAN -- the retirement plan described or defined in Article V.
4. PARTICIPANT -- an eligible employee who participates in the Plan.
5. ANNUITANT -- a Participant who is receiving retirement annuity payments
hereunder.
6. INACTIVE PARTICIPANT -- a Participant for whom contributions have ceased
before his Annuity Commencement Date, but whose Individual Account is not
terminated at such time.
7. PARTICIPANT'S INDIVIDUAL ACCOUNT -- the sum of the accumulation units
credited to a Participant.
8. RETIREMENT ANNUITY -- a series of income payments purchased under this
Contract for a Participant by application of the dollar value of the
accumulation units in his Individual Account.
9. ANNUITY COMMENCEMENT DATE -- the date on which retirements annuity payments
commence under the terms of the Plan.
10. ACTIVE LIFE FUND -- the fund maintained by VALIC with respect to this
Contract.
11. SEPARATE ACCOUNT -- those assets of VALIC in the separate account
established by VALIC pursuant to Article 3.72 of the Insurance Code of the
State of Texas, for this class of contracts which provides variable
benefits.
12. GENERAL ACCOUNT -- all assets of VALIC other than those in the Separate
Account.
[SPECIMEN]
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ARTICLE II
RETIREMENT ANNUITY PROVISIONS
SECTION 2.01 -- NOTICE TO EFFECT AN ANNUITY. When a Participant is eligible for
Retirement Annuity payments in accordance with the Plan, the Contract Owner
shall notify VALIC to effect an annuity for such Participant, and on the date
such annuity is to commence, VALIC shall allocate all accumulation units in the
Participant's Individual Account, reduced by any applicable premium taxes, and
apply them to provide a Retirement Annuity on any one of the Optional Annuity
Forms. In the absence of written notice of election by the Participant in
accordance with the Plan, and given to VALIC at least 30 days prior to the date
annuity payments are to commence, the Retirement Annuity will be a Life Annuity
with 120 Monthly Payments Guaranteed as described in Option B of Section 2.02.
SECTION 2.02 -- OPTIONAL ANNUITY FORMS
OPTION A -- LIFE ANNUITY -- An annuity payable monthly during the lifetime of
an Annuitant, ceasing with the last payment due prior to the death of the
Annuitant.
OPTION B -- LIFE ANNUITY WITH 60, 120 OR 180 MONTHLY PAYMENTS GUARANTEED -- An
annuity payable monthly during the lifetime of an Annuitant, with a guarantee
that if, at the death of the Annuitant, payments have been made for less than
60, 120 or 180 months as selected, annuity payments will be continued
thereafter to a beneficiary designated by the Participant during the remainder
of said period. If a beneficiary dies while receiving annuity payments, the
then present value of the current dollar amount of the remaining guaranteed
number of annuity payments, commuted on the basis of 3 1/2% Interest compounded
annually, shall be paid in a lump sum to the estate of the beneficiary
OPTION C -- UNIT REFUND LIFE ANNUITY -- An annuity payable monthly during the
lifetime of the Annuitant, ceasing with the last payment due prior to the death
of the Annuitant, provided that, at the death of the payee, the beneficiary
will receive an additional payment of the then dollar value of the number of
annuity units equal to the excess, if any, of (a) over (b) where (a) is the
total amount applied under the option divided by the annuity unit value at the
effective date of annuity payments and (b) is the number of annuity units
represented by each payment multiplied by the number of payments made.
OPTION D -- JOINT AND LAST SURVIVOR ANNUITY -- An annuity payable monthly
during the joint lifetime of the Annuitant and a designated second person and
thereafter during the remaining lifetime of the survivor.
The first payment under any of these options will be determined in accordance
with Section 2.04. No payments will be made under any of these options prior to
receipt by VALIC of satisfactory evidence of the date of birth of the Annuitant
and any joint annuitant.
OPTION E -- PAYMENT FOR A DESIGNATED PERIOD -- An amount payable monthly for
the number of years selected, which may be from 1 to 15 years.
SECTION 2.03 -- ALLOCATION OF ANNUITY, VARIABLE AND FIXED ANNUITIES. In the
absence of any notification of the Contract Owner to the contrary, when a
Retirement Annuity is effected for a Participant, General Account accumulation
units in the Participant's Individual Account will be used to provide a fixed
dollar annuity (annuity units in the General Account) and Separate Account
accumulation units will provide a variable annuity (annuity units in the
Separate Account).
A. VARIABLE ANNUITY -- A variable annuity is an annuity with payments varying
in amount in accordance with the net investment result of the Separate Account
as described in the Valuation Provision of Article III. After the first
monthly payment for a variable annuity has been determined in accordance with
the provisions of the Contract, a number of Separate Account annuity units is
determined by dividing the first monthly payment by the Separate Account
annuity unit value at the effective date of the annuity payments. Once variable
annuity payments have begun, the number of annuity units remains fixed.
The dollar amount of the second and subsequent variable annuity payments is not
predetermined and may change from month to month. The actual amount of each
variable annuity payment after the first is determined by multiplying the
number of Separate Account annuity units by the Separate Account annuity unit
value as described in the Valuation Provisions for the calendar month in which
the payment is due.
VALIC guarantees that the dollar amount of variable annuity payments shall not
be affected by variation in the actual mortality experience of payees from the
mortality assumption, including any age adjustments, as used in determining the
first monthly payment.
B. FIXED DOLLAR ANNUITY -- A fixed dollar annuity is an annuity with payments
which remain fixed as to dollar amount throughout the payment period. As in the
case of the variable annuity, a number of annuity units is determined when
payments commence. Since the General Account annuity unit value is always
$1.00, payments after the first will never be less than the first monthly
payment.
VALIC may, from time to time, by action of its Board of Directors,
increase the number of General Account annuity units, to the extent that such
units are applicable to a guaranteed period of benefits, and the value of such
additional units will be payable only during the guaranteed period.
[SPECIMEN]
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TABLES
SECTION 2.04 - DESCRIPTION OF TABLES. The Tables contained herein show the
dollar value of accumulation units required to purchase a first monthly
payment of $1.00, and the accumulation units applied to effect an annuity for
an Annuitant will be at the accumulation unit value on the tenth day
immediately preceding the date annuity payments commence. Amounts shown in the
Tables are based on the Progressive Annuity Table with interest at the rate of
3 1/2% per annum and assume births in the year 1900. The amount of each payment
will depend upon the sex of the Annuitant and the Annuitant's adjusted age at
the time the first payment is due, where adjusted age shall be determined in
accordance with the following:
Calendar Year of Birth Before 1901 1901-1915 1916 -1935 1936-1955 1956-1975
Adjusted Age is Actual Age plus 1 minus 0 minus 1 minus 2 minus 3
Actual Age, as used above, shall mean nearest birthday at the time the first
payment is due.
If it would produce greater benefits, VALIC agrees that the first monthly
payment to an Annuitant will be determined on the same mortality and interest
basis used in determining rates for immediate annuities then being issued for
this class of Annuitant.
DOLLAR VALUE OF ACCUMULATION UNITS REQUIRED TO PURCHASE AN ANNUITY
WITH A FIRST MONTHLY PAYMENT OF $1.00
Options A, B and C - Single Life Annuities
Adjusted Age Monthly Payments Guaranteed
------------ ------------------------------------------------------------
Male Female None 60 120 180 Unit Refund
------------ ---------- ------- ------- ---------- ----------- ------------
50 54 $210.85 $211.36 $213.06 $216.23 $220.90
51 55 206.73 207.30 209.18 212.68 217.38
52 56 202.54 203.17 205.26 209.12 213.91
53 57 198.27 198.97 201.28 205.55 210.30
54 58 193.93 194.70 197.26 201.96 206.62
55 59 189.51 190.37 193.20 198.39 202.99
56 60 185.03 185.98 189.11 194.82 199.23
57 61 180.48 181.54 185.00 191.28 195.40
58 62 175.87 177.04 180.87 187.77 191.64
59 63 171.21 172.50 176.73 184.31 187.75
60 64 166.49 167.93 172.59 180.91 183.78
61 65 161.73 163.32 168.47 177.58 179.90
62 66 156.93 158.69 164.37 174.34 175.90
63 67 152.09 154.05 160.30 171.19 171.81
64 68 147.23 149.40 156.28 168.16 167.86
65 69 142.35 144.75 152.31 165.25 163.76
66 70 137.46 140.11 148.42 162.48 159.58
67 71 132.57 135.50 144.62 159.86 155.59
68 72 127.67 130.91 140.92 157.40 151.42
69 73 122.79 126.37 137.32 155.12 147.16
70 74 117.93 121.89 133.86 153.01 143.19
71 75 113.11 117.47 130.54 151.09 138.97
72 76 108.32 113.13 127.37 149.36 134.66
73 77 103.57 108.88 124.37 147.82 130.74
74 78 98.89 104.73 121.55 146.46 126.52
75 79 94.27 100.69 118.92 145.29 122.18
Option D - Joint and Last Survivor Annuity
Adjusted Age of Annuitant
Adjusted Age of -----------------------------------------------------------------------
Secondary Annuitant M-51 M-56 M-58 M-61 M-63 M-66 M-71
Male Female F-55 F-60 F-62 F-65 F-67 F-70 F-75
------------ ---------- ---------- -------- -------- -------- -------- -------- ---------
50 54 $237.79 $229.86 $227.15 $223.59 $221.57 $218.92 $215.73
55 59 229.05 218.34 214.55 209.38 206.35 202.42 197.39
57 61 225.97 214.14 209.85 204.01 200.50 195.93 190.01
60 64 221.91 208.43 203.38 196.39 192.18 186.50 179.02
62 66 219.55 204.99 199.50 191.72 186.96 180.56 171.88
65 69 216.52 200.49 194.31 185.42 179.85 172.21 161.64
70 74 212.71 194.65 187.42 176.84 170.06 160.43 146.43
Option E - Payment for a Designated Period
Years of Payment Years of Payment Years of Payment
---------------- ---------------- ----------------
1 $ 11.81 6 $ 65.15 11 $110.01
2 23.23 7 74.74 12 118.20
3 34.26 8 84.03 13 125.94
4 44.90 9 93.02 14 133.51
5 55.19 10 101.73 15 140.85
SECTION 2.05 - FREQUENCY OF PAYMENTS. Annuity payments under this Contract will
be made monthly, except that, if such payments would amount to less than $25
each, VALIC reserves the right to make payment at less frequent intervals;
provided, however, that if at any time the annual rate of payment to any payee
is less than $100, VALIC may make such other settlement as may be equitable to
the Annuitant.
[SPECIMEN]
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ARTICLE III
CONTRIBUTIONS, VALUATION, AND DISCONTINUANCE
CONTRIBUTIONS
SECTION 3.01 -- CONTRIBUTIONS. Each Contract Year VALIC shall receive such
contributions from the Contract Owner as are made in accordance with the
requirements of the Plan. Such contributions will be applied by VALIC to
provide accumulation units for each Participant in accordance with Section 3.02
and the instructions of the Contract Owner.
SECTION 3.02 -- APPLICATION OF CONTRIBUTIONS. The net contribution shall be
equal to the total contribution less 5% thereof and less any premium taxes
applicable at the time each contribution is received by VALIC. The net
contribution shall be applied as of the end of the valuation period in which
the payment is received by VALIC, to provide accumulation units on the basis
of the then current value of such units, such application being made separately
for net contributions allocated to the General Account and the Separate Account.
The number of accumulation units provided in each Account and credited to a
Participant's individual Account by any such application shall be determined by
dividing the net contribution for that Account applicable to that Participant
by the dollar value of one accumulation unit in that Account. The number of
accumulation units so determined will not be affected by any subsequent changes
in the dollar value of the accumulation units. The dollar value of an
accumulation unit in the General Account will increase uniformly each valuation
period; the value of an accumulation unit in the Separate Account may vary from
one valuation period to the next.
SECTION 3.03 -- PARTICIPANT'S INDIVIDUAL ACCOUNT, INACTIVE PARTICIPANTS. A
Participant's Individual Account under this Contract shall, at any time,
consist of a number of accumulation units equal to the number provided by the
application of the net contributions described in Section 3.02 in accordance
with the Plan, plus any additional units credited in accordance with Section
3.08.
If for any reason whatever, contributions cease for a Participant before his
Annuity Commencement Date, the Contract Owner will notify VALIC as to the
manner in which the then value of the Participant's Individual Account is to be
disbursed.
As of the day a Participant becomes an Inactive Participant, the number of
accumulation units to be continued in his Individual Account shall be
determined in accordance with instructions from the Contract Owner, and such
number will remain constant until an annuity is purchased for such inactive
Participant on his Annuity Commencement Date, except for any additional units
credited in accordance with Section 3.08.
SECTION 3.04 -- ACTIVE LIFE FUND. The Active Life Fund under this Contract
shall, at any time, consist of the sum of all Participants' Individual
Accounts, plus all Inactive Participant's Individual Accounts. At least once in
each Contract Year after the first, VALIC shall inform the Contract Owner of
the then dollar value of an accumulation unit, and the number of such units in
the Active Life Fund.
VALUATION
SECTION 3.05 -- NET INVESTMENT RATE AND NET INVESTMENT FACTOR.
(a) The net investment rate for any period for the General Account is
guaranteed, and is equivalent to an investment rate of 3 1/2% compounded
annually.
(b) The net investment rate for any valuation period for the Separate Account
is equal to the gross investment rate for that Account for said period less
a margin deduction computed for the period at the rate of .0000394 per day
of said period and less any applicable income taxes. Such gross investment
rate shall be computed on each day during which the New York Stock Exchange
is open for trading, not less frequently than once daily as of the time of
the close of trading on such Exchange, and shall cover the valuation
period since the next prior computation. Such gross investment rate is
equal to (i) the investment income and capital gains and losses, both
realized and unrealized, on the assets of the Separate Account during said
period, divided by (ii) the amount of such assets at the beginning of said
period. Such gross investment rate may be either positive or negative.
SECTION 3.06 -- ACCUMULATION UNIT VALUE. The value of a Separate Account
accumulation unit on December 31, 1960 was fixed at $1.00. The value of a
General Account accumulation unit on July 31, 1969 was fixed at $1.00. The value
of an accumulation unit in each Account for any valuation period is determined
by multiplying such value for the immediately preceding valuation period by the
net investment factor for that Account for the current valuation period.
[SPECIMEN]
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SECTION 3.07 -- ANNUITY UNIT VALUE. The value of the General Account annuity
unit is fixed at $1.00. The value of the Separate Account annuity unit for
February 1961 was fixed at $1.00 and for subsequent periods is determined by
multiplying the value of the Separate Account Annuity Unit for the preceding
period by the product of (a) .9999 and (b) the Net Investment Factor of the
Separate Account for the tenth day immediately preceding the period for which
the value is being calculated.
SECTION 3.08 -- ADDITIONAL UNITS, EXPERIENCE RATING. Each month during the
first 10 Contract Years, VALIC will increase the number of General Account
accumulation units by a number which is equivalent to a 1/2% additional net
investment rate per annum. By action of its Directors, VALIC may credit
additional General Account accumulation units at any time.
This Contract is subject to experience rating by VALIC with respect to any
Participant's Individual Account.
DISCONTINUANCE OF CONTRIBUTIONS
SECTION 3.09 -- SUSPENSION. This Contract may be suspended by VALIC on a
Contract Anniversary if:
(a) The Contract Owner gives prior written notice to VALIC that another
insurance company will be permitted to install a Tax Deferred Annuity
Program qualified under Section 403(b) of the Internal Revenue Code.
(b) The Contract Owner fails to assent to any modification of this Contract
initiated by VALIC as provided in Section 4.01, which modification would
have been effective on that Contract Anniversary.
This Contract may also be suspended, or terminated as to new Participants, upon
written notice by the Contract Owner given to VALIC at its Home Office 90
days in advance of the effective date of such suspension.
Effective with such suspension, no new Participants may enter the Plan but
further contributions will be accepted by VALIC under the Contract as they are
applicable to Participants in the Plan prior to such suspension.
SECTION 3.10 -- CHANGE TO PAID-UP CONTRACT. This contract shall become paid-up
automatically on a Contract Anniversary if:
(a) During the Contract Year immediately preceding such anniversary, the
Contract Owner shall have failed to remit to VALIC contributions as provided
in the Plan, or has given written notice at lease 90 days in advance of its
intention to discontinue all contributions on such anniversary.
(b) VALIC has given written notice to the Contract Owner of suspension because
the total number of active Participants at any time is less than 25.
Effective with such change to a paid-up contract, no further contributions of
any kind shall be accepted by VALIC, and each Participant remaining in the Plan
shall be considered an inactive Participant until his Annuity Commencement Date.
SECTION 3.11 -- TRANSFER OF ACTIVE LIFE FUND. This Contract may not be assigned
nor may the Active Life Fund be transferred.
[SPECIMEN]
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ARTICLE IV
GENERAL PROVISIONS
SECTION 4.01 -- CHANGE OF CONTRACT BY VALIC. On the first anniversary of the
Effective Date and the first day of any Contract Year thereafter, VALIC, upon
written notice given 90 days in advance to the Contract Owner, may, from time to
time, change any or all of the terms of this Contract, provided that (a) any
such change will not affect in any way the amount or terms of any Retirement
Annuity purchased prior to the effective date of such change and (b) any such
change shall not affect Sections 2.04, 3.02, 3.05, 3.06, 3.07 and 3.08 as they
apply to accumulation unit purchases by contributions made on behalf of
Participants who were in the Plan prior to the effective date of such change to
the extent that such contributions in any year are not in excess of twice the
first annual contributions made on behalf of such Participant.
SECTION 4.02 -- CHANGE OF CONTRACT BY MUTUAL AGREEMENT -- RETROACTIVE CHANGES
A. By agreement in writing, the Contract Owner and VALIC may change, from time
to time, any or all of the terms of this Contract provided that any such
change will not in any way affect the amount or terms of any Retirement
Annuity already purchased prior to the effective date of such change.
B. Notwithstanding any of the terms of this Contract, the Contract Owner and
VALIC, by an agreement in writing on any date agreed upon by the Contract
Owner and VALIC may change, from time to time, any or all terms of this
Contract if it is deemed advisable to do so in order to conform the Contract
to requirements of Section 403 of the Federal Internal Revenue Code or such
section or sections as may from time to time revise or replace said Section
403.
C. Consent of any Participant or beneficiary shall not be requisite to any
change in this Contract.
SECTION 4.03 -- CONTRACT. This Contract and the application of the Contract
Owner, a copy of which is attached hereto and made a part hereof, will
constitute the entire Contract. All statements made by the Contract Owner will
be deemed representations and not warranties, and no statement will void any
payment under this Contract or be used in defense of a claim unless it is
contained in the application of the Contract Owner. Only the President, a Vice
President, the Secretary or an Assistant Secretary has power on behalf of VALIC
to make or modify this Contract.
SECTION 4.04 -- INDIVIDUAL CERTIFICATES. VALIC shall issue a certificate to the
Contract Owner for delivery to each Participant. Each such certificate shall set
forth in substance the benefits to which such Participant is entitled under this
Contract. Certificates described in this section shall not constitute a part of
this Contract.
SECTION 4.05 -- DESIGNATION OF BENEFICIARY. Each Participant shall have the sole
right to designate the beneficiary to which any death benefit hereunder will be
payable and, from time to time, without the consent of such beneficiary, change
the beneficiary designated by filing written notice of such change with VALIC on
a written form satisfactory to VALIC. After such notice is so filed the change
will relate back to and take effect as of the date the Participant signed such
written notice, whether or not the Participant is living on the date such notice
is received by VALIC, but without prejudice to VALIC on account of any payment
made by it before such notice. If at the death of a Participant there is more
than one beneficiary designated and in such designation the Participant has
failed to specify their respective interests, the beneficiaries will share
equally. If any designated beneficiary predeceases the Participant the rights
and interests of such beneficiary will thereupon terminate.
In the event the designated beneficiary predeceases the Participant or if no
beneficiary has been named, the amount of any death benefit will be paid to the
executors or administrators of the Participant's estate except that VALIC may in
such case, as its option, pay such amount to the wife or the husband, if living;
if not living, in equal shares to the then living children of the Participant;
if none, to either parent of the Participant, or to both equally, if both are
living; if neither parent is living, equal shares to the then living brothers
and sisters of such Participant.
SECTION 4.06 -- FACILITY OF PAYMENT. If any payee under this Contract is, in the
opinion of VALIC, physically or mentally incapable of giving valid receipt and
discharge for any payment due under this Contract, then VALIC may, at its
option, make payment thereof in installments of not more than $50 per month to
the person or persons who, in its opinion, are caring for and supporting such
payee until claim is made by a duly appointed guardian or other legal
representative of such payee. Payment to such person or persons will constitute
a complete discharge of the liability of VALIC to the extent of such payments
and it will assume no responsibility for the proper application of the money
paid.
[SPECIMEN]
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SECTION 4.07 -- EVIDENCE OF SURVIVAL. VALIC will have the right to require of
any person entitled to a payment under this Contract, satisfactory evidence that
he is living on each and every date when such payment is due.
SECTION 4.08 -- MISSTATEMENTS AND ADJUSTMENTS. If the age, sex or any other
relevant fact relating to any person is found to be misstated, the amount of
annuity payable by VALIC shall be that which is provided by the number of
accumulation units allocated to effect such annuity on the basis of the
corrected information without changing the date of first payment of such
annuity, unless an equitable adjustment satisfactory to the Contract owner and
VALIC is made with respect to such misstatement.
Any adjustment made in accordance with this Section shall be conclusive upon any
person affected thereby. The dollar amount of any underpayment made by VALIC
shall be paid in full on the next payment due such person. The dollar amount of
any overpayment by VALIC due to any misstatement shall be deducted from
amounts thereafter otherwise payable to such person. If there are no further
payments due such person, or if the total of such deductions made is less than
the overpayments, any remainder of such overpayments shall be charged against
the value of any experience credits becoming available thereafter.
SECTION 4.09 -- ASSIGNMENTS. Except insofar as may be contrary to any applicable
laws, all payments under this Contract of benefits arising under the Plan are
not assignable nor subject to any claims of any creditor.
No assignment of this Contract will be binding on VALIC unless and until such
assignment is accepted by VALIC at its Home Office.
SECTION 4.10 -- BASIS OF RESERVES. Reserves held under this Contract will be at
least equal to 100% of Active Life Fund, plus the reserve for such Retirement
Annuities as have been purchased under this Contract. The dollar amount of the
reserve held for the Active Life Fund shall be the dollar value, as of such
date, of the accumulation units then constituting the Active Life Fund plus the
required reserve for any guaranteed minimum death benefit. The dollar amount of
the reserves at the end of any month for one unit of annuity purchased under
this Contract shall be at least equal to the reserve for a similar fixed annuity
of $1.00 payable at like times, determined on the same actuarial basis as the
tables set forth in Article II hereof, multiplied by the dollar value of an
annuity unit for the second month following the date of determination.
SECTION 4.11 -- TERMINATION OF CONTRACT. This Contract will terminate at the
close of the first day upon which the performance and fulfillment by VALIC of
all its duties and obligations arising hereunder have been completed.
SECTION 4.12 -- DATA TO BE FURNISHED TO VALIC. The Contract Owner shall furnish
all information which VALIC may reasonably require for the administration of
this Contract. If the Contract Owner cannot furnish any required item of
information, VALIC may request the person concerned to furnish such information.
VALIC shall not be liable for the fulfillment of any obligations in any way
dependent on such information until it receives such information in form
satisfactory to it.
Information furnished to VALIC may be corrected for demonstrated errors therein
unless VALIC has already acted to its prejudice by relying on such information.
Any records prepared by VALIC from information furnished to VALIC as described
above shall constitute prima facie evidence as to the truth of the information
recorded thereon.
SECTION 4.13 -- RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNT. VALIC shall
have exclusive and absolute ownership and control of the assets of both its
General Account and its Separate Account. Neither the Contract owner nor any
Participant shall have any individual or equitable ownership of any investments
or other assets of either of said Accounts and the records and accounts kept by
VALIC in connection with this Contract shall not be deemed to constitute any
recognition of any ownership by the Contract Owner or any Participant of any
portion of any said Accounts. All funds attributable to this Contract and
becoming part of either Account shall be invested or reinvested by VALIC in such
class or classes of investments, and to such extent as VALIC at its sole
discretion may determine. The method of determination by VALIC of the value of
an accumulation unit will be conclusive upon the Contract Owner and any
Participant.
[SPECIMEN]
-8-
10
ARTICLE V
THE PLAN
SECTION 5.01 -- PLAN DESCRIPTION -- The Plan shall mean the Voluntary
retirement Annuity Plan for employees of ______ together with all amendments
thereto, which Plan shall be a part of this Contract and effective on the
effective date of the Contract.
SECTION 5.02 -- ELIGIBILITY -- All full-time employees of _____ are eligible to
become Participants in the Plan. After the first Contract Year, any employee
who does not enroll within 60 days of becoming eligible, may enroll only on a
subsequent Contract Anniversary.
SECTION 5.03 -- ANNUITY COMMENCEMENT DATE -- The date elected by the
participant for the commencement of annuity payments. Such date may be the
first day of any calendar month following the Participant's 50th birthday but
may not be later than the Participant's 75th birthday.
SECTION 5.04 -- ANNUITY BENEFITS, ELECTION OF OPTIONAL ANNUITIES -- The
Retirement Annuity payments commencing on the Annuity Commencement Date will be
determined by applying the dollar value of a Participant's Individual account
as of that date to the table shown in Article II. A Participant may elect to
have his payments made under any of the optional annuity forms provided such
election is received by VALIC at least 30 days prior to his Annuity
Commencement Date.
A Participant may elect to have any portion of his Individual Account applied
to provide either a variable annuity or a fixed dollar annuity or a combination
of both; provided that where a transfer of accumulation units from one Account
to the other is required, such election must be received by VALIC at least one
year prior to the Annuity Commencement Date and the first payment provided by
each account must be at least $25. Upon receipt of notification of an election
which will require a transfer of units, VALIC will transfer in approximately
equal amounts at the end of each month, the number of accumulation units
required to provide such benefits.
SECTION 5.05 -- DEATH BENEFIT -- In the event of the death of a Participant
before Retirement Annuity payments commence, the beneficiary of the Participant
will receive the accumulated value of his Individual Account determined within
30 days of the date of death, or if greater, 100% of all contributions made on
behalf of the Participant. This death benefit may be taken in one lump sum or
under any of the settlement options available in VALIC's Individual annuities
then being issued.
SECTION 5.06 -- TERMINATION BENEFITS -- Upon termination of participation in
the Plan, the Participant:
(a) if he is at least 50 years of age, may elect to have the accumulated value
of his Individual Account applied to provide Retirement Annuity payments
under one of the annuity forms described in Article II.
(b) may elect to leave his accumulated value in the Contract, in which case the
number of accumulation units in his Individual Account will remain fixed
unless increased in accordance with Section 3.08, but the value thereof
will vary as described in Article III;
(c) may elect to receive the accumulated value of his Individual Account on the
basis of the accumulation unit value determined with 30 days of his
application for surrender;
(d) may elect to convert to an individual annuity contract of the form then
currently issued for this class of Annuitant, at a duration equivalent to
the number of full years he has been in the Plan. If the method of
determining accumulation unit values in the individual contract is the same
as set forth in Sections 3.05, 3.06 and 3.07 of this Contract, then all
accumulation units in the Participant's Individual Account will be
transferred to the individual contract and become the initial value
thereunder. If any accumulation units are not transferred to the individual
contract, they will be retained in the Contract unless the Participant
makes election to the contrary.
(e) May take a part of the accumulated value of his Individual Account and
continue to participate in the Plan provided
(i) the amount taken must be at least $300 and must leave a remaining
balance of at least $300, and
(ii) only one such withdrawal may be made in any twelve-month period.
SECTION 5.07 -- CONTRIBUTIONS BY CONTRACT OWNER -- Once each month the Contract
Owner will remit to VALIC all contributions required on behalf of the
Participant for that month in accordance with the individual agreements between
the Contract Owner and the Individual Participant.
SECTION 5.08 -- RATES OF CONTRIBUTION -- The rate of contribution shall be
specified for each Participant by the Contract Owner and shall not be less than
$15.00 per month in a single account or $25.00 per month for a combination
benefit. The Contract Owner may elect to modify his rate of contribution with
respect to any Participant on any Contract Anniversary, and if contributions on
behalf of a given Participant are suspended and the Individual Account is not
withdrawn, contributions may be resumed on any Contract Anniversary following
one full year of suspended contributions.
SECTION 5.09 -- ALLOCATION OF CONTRIBUTIONS -- The Contract Owner will specify
in the case of each Participant what portion of the contributions with respect
to that Participant will be allocated to the Separate Account and what portion
will be allocated to the General account. A Participant may elect allocation of
100%, 80%, 65% or 50% in either account with the balance being allocated in the
other account, but may not make an election which would result in an allocation
of less than $10 per month to either Account.
SECTION 5.10 -- VESTING -- While the Employer will hold the Contract, each
Participant will at all times have a 100% vested an non-forfeitable interest in
his Individual Account.
[SPECIMEN]
-9-
11
RIDER
Attached to and made a part of Group Contract No. GUP-64 as of the effective
date of the policy.
Section 2.02 -- Optional Annuity Forms is amended by adding the following:
Level Payment Varying Annually. An alternative mode of payment may be used in
combination with one of the four variable annuity options. Fixed annuity
payments will be made monthly during each annuity year at a level determined
for that year based on the investment performance of the Separate Account.
The amount of the annual variable annuity payments shall be determined in the
same manner as monthly variable annuity payments except that annual rather than
monthly purchase rates are used. The amount of this first annual variable
annuity payment is divided by the then annuity unit value to determine the
number of annuity units in each subsequent annual variable annuity payment. In
any subsequent annuity year, the dollar amount of the annual variable annuity
payment is determined by multiplying this constant number of annuity units by
the then annuity unit value.
The amount of each certain monthly payment during a given annuity year shall be
no less than the annual variable annuity payment otherwise payable times
.084654, which includes an interest element of 3 1/2%. This factor may be
changed at the sole discretion of VALIC to reflect an interest rate greater
than 3 1/2%.
If an Annuitant dies prior to receiving all twelve payments during any one
annuity year, the payments remaining during that annuity year will be paid
either to his estate or the named Beneficiary.
Section 2.06 -- Assumed Investment Rate -- Separate account
Each Annuitant may select an Assumed Investment Rate permitted by state law or
regulations other than the 3 1/2% rate described in the Contract as follows;
4 1/2%, 5% or 6%. The foregoing Assumed Investment Rates are used merely to
determine the first monthly payment per thousand dollars of value.
The choice of the Assumed Investment Rate affects the pattern of annuity
payments. A higher Assumed Investment Rate will produce a higher initial
payment, but a more slowly rising series of subsequent payments (or a more
rapidly falling series of subsequent payments) than a lower Assumed Investment
Rate.
Subsequent payments will be smaller than, equal to or greater than the first
payment, depending upon whether the actual net investment rate is smaller than,
equal to or greater than the Assumed Investment Rate.
The effective date of this Endorsement is the later of the Policy Issue Date or
December 27, 1973.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel
[SPECIMEN]
12
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
Houston, Texas
RIDER
Attached to and made a part of Group Contract No. GUP-64 as of the effective
date of the policy.
SECTION 5.06 -- TERMINATION BENEFITS IS AMENDED BY ADDING THE FOLLOWING
SUB-SECTION:
(1) May surrender his Certificate of participation during the first
Contract Year, provided the Account consists solely of General
Account values which are not the result of a transfer of Separate
Account values. The amount payable upon such surrender will be no
less than 100% of all Purchase Payments made under the Contract by
or on behalf of the Participant reduced by any withdrawals.
Effective this 22nd day of March 1974,
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel
[SPECIMEN]
13
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
Houston, Texas
DEATH BENEFIT ENDORSEMENT
This Endorsement is made a part of the Contract or Certificate.
Section 5.05 (Death Benefit) is amended as follows:
In the event of the death of a Participant before Retirement Annuity
Payments commence, the Beneficiary of the Participant will receive the
accumulated value of his Individual Account determined, as of the date
VALIC receives proof of death or if greater, 100% of all contributions made
on behalf of the Participant. The death benefit may be taken in one lump
sum or under any of the settlement options available in VALIC's individual
annuities then being used.
Proof of death may be made by sending VALIC a certified copy of the death
certificate, a certified copy of a decree of a court of competent
jurisdiction as to death, a written statement by an attending physician, or
any other proof satisfactory to VALIC.
The effective date of this Endorsement is the Policy Issue Date.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel
[SPECIMEN]
14
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
Houston, Texas
ENDORSEMENT
Made a part of the Contract or Certificate to which it is attached.
The Annuity Tables of the Contract or Certificate are amended for Contract
accumulations on or after July 1, 1987.
The following tables show the dollar amount required to purchase an annuity
with a first monthly payment of $1.00. The Tables are computed by using an
interest rate of 3 1/2% per year and a mortality table produced from the 1983
Table a. The amount applied to effect an annuity will be the Annuity Value on
the tenth day prior to the date the first payment is due. The amount of each
payment will be based on the Annuitant's age at the birthday nearest to the
time the first payment is due.
If it would yield greater benefits for Fixed Annuities, the amounts of the
Annuitant's monthly payment will be the monthly payment produced by a then
currently issued immediate annuity of the same form.
DOLLAR AMOUNT REQUIRED TO PURCHASE AN ANNUITY
WITH A FIRST MONTHLY PAYMENT OF $1.00
Options A(1), B(2), and C(3) -- Single Life Annuities
Monthly Payments Guaranteed
-------------------------------------------
Age None 60 120 180 Cash Refund
50 $ 233.36 $ 233.71 $ 234.82 $ 236.75 $ 240.70
51 229.87 230.25 231.45 233.54 237.65
52 226.30 226.72 228.01 230.29 234.54
53 222.65 223.10 224.51 226.98 231.36
54 218.93 219.41 220.93 223.62 228.12
55 215.11 215.64 217.28 220.22 224.82
56 211.21 211.78 213.57 216.77 221.45
57 207.23 207.84 209.79 213.28 218.02
58 203.15 203.81 205.94 209.76 214.53
59 198.98 199.70 202.03 206.21 210.96
60 194.73 195.51 198.06 202.64 207.33
61 190.38 191.24 194.04 199.05 203.63
62 185.95 186.90 189.97 195.47 199.85
63 181.45 182.50 185.86 191.89 195.89
64 176.88 178.03 181.73 188.35 192.18
65 172.25 173.52 177.57 184.84 188.25
66 167.56 168.95 173.41 181.39 184.24
67 162.81 164.34 169.24 178.00 180.31
68 158.01 159.70 165.09 174.70 176.25
69 153.16 155.01 160.95 171.49 172.11
70 148.26 150.30 156.85 168.40 168.10
71 143.31 145.57 152.79 165.44 163.94
72 138.33 140.83 148.81 162.62 159.70
73 133.32 136.10 144.91 159.98 155.66
74 128.31 131.39 141.11 157.51 151.45
75 123.30 126.73 137.44 155.22 147.15
[SPECIMEN]
C/C-787E-M
15
Option D(4) -- Joint and Survivor Life Annuity
Number of Years Younger Than Older Annuitant
Younger Annuitant 0 1 2 3 4 5 6 7 8 9 10
Age of Older
Annuitant
50 $256.95 $258.82 $260.70 $262.61 $264.53 $266.46 $268.39 $270.33 $272.26 $274.19 $276.10
51 253.87 255.79 257.73 259.69 261.67 263.66 265.66 267.65 269.65 271.64 273.61
52 250.69 252.67 254.67 256.69 258.73 260.78 262.84 264.90 266.96 269.00 271.04
53 247.42 249.45 251.52 253.60 255.70 257.81 259.93 262.06 264.18 266.29 268.39
54 244.06 246.15 248.27 250.41 252.58 254.75 256.94 259.13 261.31 263.49 265.66
55 240.59 242.75 244.93 247.14 249.36 251.60 253.85 256.11 258.36 260.61 262.85
56 237.03 239.25 241.49 248.36 246.05 248.36 250.68 253.00 255.32 257.64 259.94
57 233.37 235.64 237.95 240.29 242.65 245.02 247.41 249.80 252.19 254.57 256.95
58 229.60 231.94 234.31 236.72 239.14 241.59 244.04 246.50 248.96 251.42 253.87
59 225.73 228.13 230.57 233.04 235.54 238.05 240.58 243.11 245.64 248.17 250.70
60 221.75 224.22 226.72 229.26 231.83 234.41 237.01 239.62 242.23 244.83 247.43
61 217.66 220.19 222.77 225.38 228.02 230.68 233.35 236.06 238.71 241.39 244.07
62 213.47 216.07 218.71 221.39 224.10 226.83 229.58 232.34 235.10 237.86 240.61
63 209.17 211.84 214.55 217.30 220.08 222.89 225.71 228.55 231.39 234.23 237.05
64 204.78 207.50 210.28 213.10 215.96 218.84 221.74 224.66 227.57 230.49 233.40
65 200.28 203.07 205.91 208.80 211.73 214.69 217.67 220.66 223.66 226.66 229.65
66 195.69 198.54 201.45 204.40 207.40 210.43 213.49 216.57 219.65 222.73 225.80
67 191.01 193.92 196.89 199.91 202.98 206.08 209.22 212.37 215.53 218.70 221.86
68 186.24 189.21 192.24 195.33 198.46 201.64 204.84 208.07 211.32 214.56 217.81
69 181.38 184.41 187.50 190.65 193.85 197.10 200.38 203.68 207.00 210.33 213.66
70 176.44 179.52 182.68 185.99 189.16 192.47 195.82 199.20 202.60 206.01 209.42
71 171.42 174.55 177.77 181.04 184.37 187.75 191.17 194.02 198.10 201.59 205.08
72 166.33 169.51 172.78 176.11 179.51 182.95 186.44 189.96 193.51 197.07 200.65
73 161.17 164.40 167.71 171.10 174.56 178.07 181.63 185.22 188.83 192.47 196.12
74 155.97 159.22 162.58 166.92 169.53 173.11 176.73 180.39 184.08 187.79 191.51
75 150.73 154.01 157.39 160.87 164.44 168.07 171.75 175.48 179.24 183.02 186.82
Option E(5) -- Payment for a Designated Period
Years of Payment Years of Payment
---------------- ----------------
1 $11.81 9 $ 93.02
2 23.23 10 101.73
3 34.26 11 110.01
4 44.90 12 118.20
5 55.19 13 125.94
6 65.15 14 133.51
7 74.74 15 140.85
8 84.03
For Contract accumulations between August 1, 1983 and June 30, 1987,
annuity payments will be the monthly payments based on the male rates under the
Annuity Tables in the Contract or Certificate.
The effective date of this Endorsement is the Policy Issue Date.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
BY: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President and Chief Actuary
[SPECIMEN]
16
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
Houston, Texas
ENDORSEMENT
Attached to and made a part of the Group Unit Purchase Retirement Annuity
Contract.
The following provision replaces the similarly numbered and labeled provision of
said Contract:
SECTION 3.02 - APPLICATION OF CONTRIBUTIONS. The net contribution shall be equal
to the total contribution less: 5% thereof for the first $5,000 of total
contributions to the Participant's Individual Account: 4% thereof for the next
$5,000 of total contributions to the Participant's individual Account: 3.5% for
the next $5,000 of total contributions to the Participant's Individual Account:
and 3% thereof for any contributions in excess of $15,000 of total contributions
to the Participant's Individual Account. Additionally, premium taxes may be
deducted either from premium payments as received or from the value of the
account at retirement or surrender. The net contribution shall be applied as of
the end of the valuation period in which the payment is received by VALIC, to
provide accumulation units on the basis of the then current value of such units,
such application being made separately for net contributions allocated to the
General Account and the Separate Account.
Net single lump sum contributions received by VALIC that represent amounts
accumulated in retirement programs shall be equal to the total single lump sum
contribution less 2% thereof. Any additional contributions received after the
single lump sum contribution shall be equal to the total contribution less 5%
thereof for the first $5,000 of total contributions to the Participant's
Individual Account, including the single lump sum contribution; 4% thereof for
the next $5,000 of total contributions to the Participant's Individual Account,
including the single lump sum contribution; 3.5% for the next $5,000 of total
contributions to the Participant's Individual Account, including the single lump
sum contributions: and 3% for any contributions in excess of $15,000 of total
contributions to the Participant's Individual Account, including the single lump
sum contribution.
The number of accumulation units provided in each Account and credited to a
Participant's Individual Account by any such application shall be determined by
dividing the net contribution for that Account applicable to that Participant
by the dollar value of the accumulation unit in that Account. The number of
accumulation units so determined will not be affected by any subsequent changes
in the dollar value of the accumulation units. The dollar value of an
accumulation unit in the General Account will increase uniformly each valuation
period; the value of an accumulation unit in the Separate Account may vary
from one valuation period to the next.
The effective date of this Endorsement is May 1, 1981 or the Policy Issue
Date, whichever is later.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel
[SPECIMEN]
17
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
HOUSTON, TEXAS
ENDORSEMENT
The Endorsement is made a part of the Contract or Certificate to which it is
attached.
DEFINITIONS
"Separate Account" -- the segregated asset account referred to as Separate
Account A was established by VALIC under the Texas Insurance Code to receive
and invest purchase payments under variable annuity contracts. The term
"Separate Account A" shall be substituted for the term "Separate Account One"
wherever such term appears in the Contract.
"Division" -- a subdivision of Separate Account A. Purchase payments and
accumulated values may be applied to a Division. The Division, in turn, invests
in a variable investment with a particular investment objective and strategy.
"Fund" -- an investment portfolio which is the underlying investment medium for
net purchase payments credited to a Division of Separate Account A.
RELATION OF CONTRACT TO SEPARATE ACCOUNT A
All funds attributable to the Contract and becoming a part of Separate Account
A shall be invested and reinvested by VALIC in such class or classes of
investments and to such extent as VALIC may determine with due regard for all
applicable and/or statutory investment objectives and restrictions. If Fund
shares are not available, or if, in the judgment of VALIC, such shares are no
longer appropriate in view of the purposes of Separate Account A, shares of
another open-end investment company, or a portfolio of the same, may be
substituted for Fund shares held in a Division of Separate Account A or to be
purchased in the future by purchase payments or transfers under the Contract.
In the event any substitution occurs, VALIC will notify the Contract Owner
within five days and will issue an Endorsement to the Contract reflecting such
change.
CHARGE TO THE SEPARATE ACCOUNT
The total daily reduction of Separate Account A assets attributable to the
Contract for mortality and expense risk charges shall not be increased. The
current charge is set at an annual rate of 1.00% of the average daily net asset
value of Separate Account A Divisions attributable to the Contract (.00274% on
a daily basis).
GROSS INVESTMENT RATE
The gross investment rate for a Division shall not be reduced by investment
advisory fees above .42% on an annual basis (.001139% on a daily basis), the
ratio of the actual fee to total net assets of Separate Account One on April 1,
1987. The gross investment rate will not be reduced by any expense items other
than those which could have reduced the investment rate under Separate Account
One.
CALCULATION OF ACCUMULATION AND ANNUITY UNIT VALUES
The method of determination by VALIC of the value of an accumulation unit and
of an annuity unit will be conclusive upon the Contract Owner and any
Participant or Beneficiary.
The effective date of this Endorsement is the Policy Issue Date.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel
[SPECIMEN]
18
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
HOUSTON, TEXAS
TAX REFORM ACT OF 1986 ENDORSEMENT
This Endorsement is part of Contracts or Certificates issued for retirement
plans and annuity contracts. These plans and contracts are subject to special
Internal Revenue Code ("Code") requirements.
Section references are to the Code in effect on January 1, 1989. The term
"Participant" includes the Contractholder, Certificateholder, or Annuitant. The
Term "Contributions" includes Purchase Payments. The following provisions are
part of the "plan", if so required. Notwithstanding other Contract or
Certificate provisions, the following applies are required by the Code.
1. MINIMUM PAYMENTS AFTER AGE 70 1/2.
The following rules apply to Contracts and Certificates issued under these
programs: a section 401(a), 401(k), or 403(a) pension plan, 403(b) tax deferred
annuity, a 457 deferred compensation plan, or a 408(b) individual retirement
annuity.
Payments from this Contract will comply with section 401(a)(9). Annuity
payments or yearly minimum payments are generally required after the
Participant is age 70 1/2 or death. The rules of section 401(a)(9) are made
a part of this Contract.
The yearly payment amount is set each year. These payments are based on
life expectancy. The life expectancies of the Participant and Beneficiary
will be computed each year. The Participant may instead elect to use the
life expectancies at the first payment only. (The election may be made for
self, for a spouse, Beneficiary, or both.)
If the Participant dies before these payments have begun, a death benefit
is payable. The Beneficiary may receive the whole benefit by 5 years after
the Participant's death. Otherwise, payments may be made over the life or
life expectancy of the Beneficiary if they start within 1 year of death. A
spouse Beneficiary may delay payments until the Participant would have been
70 1/2. For 408(b), a spouse may wait until the spouse reaches 70 1/2.
If the Participant dies after these payments start, a death benefit is
payable. The benefit must be paid at least as fast as the method used by
the Participant.
For 403(b), the rules above apply only to amounts added to the account
after December 31, 1986. Pre-January 1987 amounts must begin to be paid
when the Participant is age 75. For these older 403(b) amounts, payments
must meet the following rule. The present value of payments to the
Participant, over life, must exceed 50% of the present value of all
payments. This 50% rule will not apply to joint annuities if the spouse is
the named survivor.
2. CONTRIBUTION LIMITS.
For 403(b), the following Contribution rules will apply.
Elective contributions under section 402(g) (usually made by salary
reduction) are allowed only under the following condition. A Participant's
elective Contributions under all the employer's plans cannot exceed the
section 402(g)(1), limit for that calendar year.
Elective Contributions can be made hereunder only under the following
condition. All employees of the employer must be able to make such elective
Contributions. The employer may require a yearly minimum of at least $200.
3. WITHDRAWAL RESTRICTIONS BEFORE AGE 59 1/2.
For 403(b), the following distribution rules will apply.
The portion of an account made up of elective Contributions and the income
thereon, cannot be paid out unless the following has occurred. The
Participant is (i) 59 1/2, (ii) separated from service with the employer,
(iii) deceased (iv) disabled, or (v) incurring a hardship.
[SPECIMEN]
19
The term "disabled" shall mean an individual who is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration. An individual shall not be considered
to be disabled unless he furnishes proof the existence thereof in such form and
manner as the Secretary may require.
These payment rules do not apply to amounts credited to the Participant's
account on December 31, 1988. Such amounts can be paid in 1989 and later years.
All payments are subject to the employer's plan terms under which this Contract
or Certificate was purchased.
If hardship occurs, only Contributions may be paid out; income on those
Contributions cannot be paid. Hardship payments will be made only if the need
meets the following standard. There must be an immediate and heavy financial
need of the Participant and the payment must be required to meet that need. The
decision will be based on legal requirements and on the Participant's
statements at the time of the request.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel
[SPECIMEN]