IDS Life Insurance Company, et al., Notice of Application, 1914-1925 [E5-42]
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1914
Federal Register / Vol. 70, No. 7 / Tuesday, January 11, 2005 / Notices
be submitted to OMB within 30 days of
this notice.
Dated: January 5, 2005.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 05–463 Filed 1–10–05; 8:45 am]
BILLING CODE 8010–01–M
Washington, DC 20503, or send an email to: David_Rostker@omb.eop.gov;
and (ii) R. Corey Booth, Director/Chief
Information Officer, Office of
Information Technology, Securities and
Exchange Commission, 450 Fifth Street,
NW., Washington, DC 20549. Comments
must be submitted to OMB within 30
days of this notice.
January 3, 2005.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–50 Filed 1–10–05; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
BILLING CODE 8010–01–P
Upon Written Request; Copies Available
From: Securities and Exchange
Commission, Office of Filings and
Information Services, Washington, DC
20549.
SECURITIES AND EXCHANGE
COMMISSION
Extension:
Form CB; OMB Control No. 3235–0518;
SEC File No. 270–457.
IDS Life Insurance Company, et al.,
Notice of Application
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
request for extension of the previously
approved collection of information
discussed below.
Form CB (OMB Control No. 3235–
0518; SEC File No. 270–457) is a tender
offer statement filed in connection with
a tender offer for a foreign private
issuer. This form is used to report an
issuer tender offer conducted in
compliance with Exchange Act Rule
13e–4(h)(8) and a third-party tender
offer conducted in compliance with
Exchange Act Rule 14d–1(c). It also is
used by a subject company pursuant to
Exchange Act Rule 14e–2(d). This
information is made available to the
public. Information provided on Form
CB is mandatory. Approximately 200
respondents file Form CB at an
estimated .5 hours per response for a
total annual burden of 100 hours. It is
estimated that 25% of the total burden
hours (25 reporting burden hours) is
prepared by the filer. The remaining
75% of the burden hours is prepared by
outside counsel.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Written comments regarding the
above information should be directed to
the following persons: (i) Desk Officer
for the Securities and Exchange
Commission, Office of Information and
Regulatory Affairs, Office of
Management and Budget, Room 10102,
New Executive Office Building,
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[Release No. IC–26719; File No. 812–13110]
January 5, 2005.
The Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
amended order pursuant to section 11(a)
of the Investment Company Act of 1940,
as amended (‘‘Act’’) approving the terms
of an offer of exchange.
AGENCY:
IDS Life Insurance
Company (‘‘IDS Life’’), IDS Life Variable
Account 10 (‘‘Account 10’’) and IDS Life
Accounts F, G, H, IZ, JZ, KZ, LZ, MZ,
N, PZ, QZ, RZ, SZ and TZ (‘‘Old
Accounts’’ and collectively with
Account 10, ‘‘Accounts’’) (collectively,
‘‘Applicants’’).
SUMMARY OF APPLICATION: Applicants
seek an order to amend an Existing
Order (described below) (‘‘Amended
Order’’) pursuant to section 11(a) of the
Act to approve extending the terms of
an existing offer of exchange of certain
outstanding annuity contracts issued by
IDS Life and made available through the
Old Accounts (‘‘Old Contracts’’) for new
American Express Retirement Advisor
Advantage Plussm Variable Annuity
contracts issued by IDS Life and made
available through Account 10 (‘‘RAVA
Advantage Plus’’ and collectively with
the Old Contracts, ‘‘Contracts’’).
FILING DATE: The Application was filed
on July 19, 2004 and amended and
restated on December 20, 2004.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
APPLICANTS:
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by 5:30 p.m. on January 31, 2005 and
should be accompanied by proof of
service on the applicants, in the form of
an affidavit or, for lawyers, a certificate
of service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 450 Fifth Street,
NW., Washington, DC 20549–0609.
Applicants, Mary Ellyn Minenko, Vice
President and Group Counsel, American
Express Financial Advisors Inc., 50607
AXP Financial Center, Minneapolis, MN
55474.
FOR FURTHER INFORMATION CONTACT:
Mark Cowan, Senior Counsel, or Zandra
Bailes, Branch Chief, Office of Insurance
Products, Division of Investment
Management, at (202) 942–0670.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained for a fee from the SEC’s
Public Reference Branch, 450 Fifth
Street, NW., Washington, DC 20549–
0102 (telephone (202) 942–8090).
Applicants’ Representations
1. IDS Life is a stock life insurance
company organized in 1957 under the
laws of the State of Minnesota. It
conducts a conventional life insurance
business. IDS Life is registered with the
Commission as a broker-dealer under
the Securities Exchange Act of 1934, as
amended, and is a member of the
National Association of Securities
Dealers. IDS Life is a wholly owned
subsidiary of American Express
Financial Corporation (‘‘AEFC’’). IDS
Life is the issuer and principal
underwriter of the Contracts funded
through the Accounts.
2. Account 10 is a segregated asset
account of IDS Life. Account 10 funds
the variable benefits available under
RAVA Advantage Plus. Account 10 and
its component subaccounts are
registered together with the Commission
as a single unit investment trust under
the Act (File No. 811–07355).
3. The Old Accounts are segregated
asset accounts of IDS Life. The Old
Accounts fund the variable benefits
available under the IDS Life Variable
Retirement Annuity (‘‘VRA’’), the IDS
Life Combination Retirement Annuity
(‘‘CRA’’), the IDS Life Flexible Annuity
(‘‘Flex’’) and the IDS Life Employee
Benefit Annuity (‘‘EBA’’). The Old
Accounts are registered together with
the Commission as a single unit
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investment trust under the Act (File No.
811–3217).
4. Applicants assert that in recent
years the variable annuity marketplace
has become increasingly competitive.
Many of the purchasers of variable
annuity contracts in the 1980s and early
1990s are at, or close to, the expiration
of their contingent deferred sales charge
(‘‘CDSC’’) periods, and the contract
values of many contracts are no longer
subject to a CDSC. Holders of such
contracts have become prime targets for
competitors’ variable annuity sales
efforts. One feature offered to variable
annuity purchasers is a ‘‘bonus’’ or
‘‘credit’’ funded from the insurer’s
general account, generally ranging from
1–4% of contract value. IDS Life has
experienced the effects of these ‘‘bonus
offers’’ through the loss of a portion of
its Old Contracts.
5. IDS Life states that its competitors
are permitted to make bonus offers to
IDS Life’s Old Contract owners because
offers of exchange to contract owners of
unaffiliated insurance companies are
not prohibited by Section 11 of the Act
by virtue of a no-action position granted
to Alexander Hamilton Funds (pub.
avail. July 20, 1994) (‘‘Alexander
Hamilton’’). Applicants state that
Alexander Hamilton stands for the
proposition that, except for limited
exceptions, exchange offers between
unaffiliated investment companies are
not prohibited under section 11.
Consistent with section 11(a), therefore,
a fund may impose a CDSC on shares
purchased by investors with proceeds of
shares from an unaffiliated fund.
6. Applicants assert that, but for the
existence of the affiliated nature of the
exchange, IDS Life would be able to
offer an exchange program to its existing
Old Contract owners that is similar to its
competitors’ programs. However, unlike
its competitors who may make bonus
offers to Old Contract owners, IDS Life
is constrained from making a similar
offer without first obtaining
Commission approval of the terms of the
exchange.
Existing Exchange Offer
7. Applicants state that in response to
this competitive dilemma, IDS Life
developed an offer of exchange. On
March 12, 2002, the Commission issued
an order approving the terms of the offer
of exchange (‘‘Existing Exchange Offer’’)
that permits eligible contract owners to
exchange Old Contracts for American
Express Retirement Advisor
Advantagesm Variable Annuity (‘‘RAVA
Advantage’’) contracts issued by IDS
Life and made available through
Account 10 (‘‘Existing Order’’). RAVA
Advantage is an enhanced contract that
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offers a lower mortality and expense
risk (‘‘M&E’’) charge than the Old
Contracts, credits (‘‘Purchase Payment
Credits’’) on certain payments to the
contracts (initial payments and
subsequent additional payments to the
contracts are referred to herein
individually as a ‘‘Purchase Payment’’
and collectively as ‘‘Purchase
Payments’’), more subaccounts investing
in corresponding funds or portfolios
(collectively, ‘‘Investment Funds’’) and
optional enhanced death benefits. IDS
Life applies a credit to certain
exchanges (‘‘Exchange Credit’’ and
collectively with Purchase Payment
Credits, ‘‘Credits’’) that is in addition to
any Purchase Payment Credit for which
the contract owner would otherwise be
eligible under the RAVA Advantage
contract.
8. When a contract owner exchanges
into a RAVA Advantage contract, he or
she can allocate the Purchase Payment
to any of the Investment Funds available
under RAVA Advantage. If a contract
owner exercises the free look option,
IDS Life reverses either the RAVA
Advantage contract value (less any
Credits) or the Purchase Payment made
to the RAVA Advantage contract,
depending on applicable law. IDS Life
applies this amount to restore the Old
Contract to the extent possible. IDS Life
allocates this amount to the selected Old
Contract investments in the proportions
that existed just prior to the exchange.
Any adjustments made due to
investment experience are allocated or
deducted according to the selected
investment percentage allocations under
the Old Contract just prior to the
exchange. Withdrawals made after the
free look period under RAVA Advantage
has expired are governed by the terms
of the RAVA Advantage contract,
including application of the CDSC. To
the extent a death benefit or surrender
payment included any Credit amounts
applied within twelve months
preceding: (i) The date of death that
results in a lump sum death benefit
under RAVA Advantage; or (ii) a request
for a CDSC waiver due to the owner or
annuitant’s confinement to a nursing
home, IDS Life will recapture the
Credits.
Extended Exchange Offer
9. In February 2004, IDS Life began
selling RAVA Advantage Plus in
approved States. RAVA Advantage Plus
is an enhanced version of RAVA
Advantage and is available as a
nonqualified annuity for after-tax
contributions only, or as a qualified
annuity under certain retirement plans.
RAVA Advantage Plus—Band 3 is
available to current or retired employees
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of AEFC and their spouses (collectively,
‘‘Employees’’); current or retired
financial advisors who are registered
representatives of IDS Life and their
spouses (collectively, ‘‘Advisors’’); or
individuals who, with IDS Life’s
approval, invest an initial Purchase
Payment of $1,000,000 or more
(collectively, ‘‘Band 3 Contracts’’).
RAVA Advantage Plus offers an
additional death benefit, additional
Purchase Payment Credits under Band 3
Contracts, different Investment Funds,
guarantee period accounts (‘‘GPAs’’), an
optional guaranteed minimum
withdrawal benefit (‘‘Withdrawal
Benefit’’), different transfer provisions
and additional features such as a special
dollar-cost averaging program. If an Old
Contract owner exchanged into a RAVA
Advantage Plus contract, he or she
could allocate Purchase Payments to
any of the Investment Funds available
under RAVA Advantage Plus, including
most of the Investment Funds available
under the Old Contract, as well as
Investment Funds that are not available
under the Old Contract. To the extent a
death benefit or surrender payment
included any Credit amounts applied
within twelve months preceding: (i) The
date of death that results in a lump sum
death benefit under RAVA Advantage
Plus; (ii) a request for a CDSC waiver
due to the owner or owner’s spouse’s
confinement to a nursing home or
hospital or the owner’s terminal illness;
or (iii) the owner’s settlement under an
annuity payout plan, IDS Life will
recapture the Credits. If a non-natural
person owns the RAVA Advantage Plus
contract, the benefits and distributions
under the contract are based on the life
of the annuitant.
10. Applicants now seek an Amended
Order to approve extending the terms of
the Existing Exchange Offer to permit
the exchange of the Old Contracts for
new RAVA Advantage Plus contracts in
those states where RAVA Advantage
Plus is approved (‘‘Extended Exchange
Offer’’). The terms of the Extended
Exchange Offer would be substantially
similar to those described in the
Existing Order. Applicants state that the
Extended Exchange Offer, like the
Existing Exchange Offer, is designed to
respond to IDS Life’s competitive
dilemma and to assure that persisting
contract owners who accept the
Extended Exchange Offer receive an
immediate and enduring economic
benefit.
Comparison of RAVA Advantage and
RAVA Advantage Plus
11. The primary differences between
RAVA Advantage and RAVA Advantage
Plus are as follows:
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a. Purchase Payments
Both RAVA Advantage and RAVA
Advantage Plus may be issued as a nonqualified annuity for after-tax
contributions only, or as a qualified
annuity under the following retirement
plans: (i) Individual Retirement
Annuities, including Roth IRAs
(collectively, ‘‘IRAs’’); (ii) SIMPLE IRAs;
(iii) Simplified Employee Pension
(‘‘SEP’’) plans; (iv) plans under Section
401(k) of the Internal Revenue Code of
1986, as amended (‘‘Code’’) (‘‘section
401(k) Plans’’); (v) custodial and
trusteed plans under section 401(a) of
the Code (‘‘section 401(a) Plans’’); or (vi)
Tax-Sheltered Annuities under section
403(b) of the Code (‘‘TSAs’’). Under
RAVA Advantage, the owner may
allocate Purchase Payments to
subaccounts or the fixed account in
even 1% increments. Under RAVA
Advantage Plus, if the owner has not
selected the Withdrawal Benefit, the
owner may allocate Purchase Payments
to the subaccounts, GPAs (in approved
States), the fixed account and/or the
special dollar cost averaging account
(when available) in even 1%
increments. If the owner has selected
the Withdrawal Benefit, the owner must
allocate Purchase Payments in
accordance with an available asset
allocation program. IDS Life reserves the
right to not accept Purchase Payments
allocated to the fixed account for twelve
months following either a partial
surrender from the fixed account or a
lump sum transfer from the fixed
account to a subaccount.
b. Investment Funds and Other
Investment Options
Owners of RAVA Advantage contracts
currently may allocate their Purchase
Payments among 53 Investment Funds
from 17 fund families. Owners of RAVA
Advantage Plus contracts currently may
allocate their Purchase Payments among
56 Investment Funds from 17 fund
families. RAVA Advantage also offers a
fixed account investment option with a
guaranteed minimum interest rate of 3%
on an annual basis. RAVA Advantage
Plus offers a fixed account investment
option with a guaranteed minimum
interest rate ranging from 1.5% to 3%
on an annual basis depending on the
State in which the contract is issued. In
addition, RAVA Advantage Plus offers
GPAs (in approved States). The owner
may allocate Purchase Payments and
Purchase Payment Credits to one or
more of the GPAs with guarantee
periods that IDS Life declares. Each
GPA pays an interest rate that IDS Life
declares when the owner makes an
allocation to the account.
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c. Optional Withdrawal Benefit
RAVA Advantage Plus contains a new
optional living benefit that currently is
not available under RAVA Advantage.
The Withdrawal Benefit is available (in
approved States) if the owner is age 75
or younger at contract issue. The
Withdrawal Benefit gives the owner the
right to take limited partial withdrawals
in each contract year that ultimately
equal Purchase Payments plus Purchase
Payment Credits, as adjusted for certain
excess withdrawals. The Guaranteed
Benefit Payment is the amount that the
owner is entitled to take through partial
withdrawals each contract year. An
annual Elective Step up option is
available that allows the owner to step
up the Guaranteed Benefit Amount to
100% of the contract anniversary value,
subject to certain rules. The Withdrawal
Benefit requires that the owner
participate in an available asset
allocation program. The current cost of
the Withdrawal Benefit is 0.60%. IDS
Life reserves the right to increase this
cost up to a maximum of 2.50% for new
RAVA Advantage Plus contract owners.
However, any change to the cost will
only apply to an existing RAVA
Advantage Plus contract owner if: (i) He
or she changes asset allocation models
and the current cost for new owners is
higher than the cost currently paid by
the existing owner; or (ii) the existing
RAVA Advantage Plus contract owner
chooses the annual Elective Step up and
the current cost for new owners is
higher than the cost currently paid by
the existing owner. IDS Life also
reserves the right to charge a fee that
varies by the asset allocation model
selected.
d. Transfers
Under RAVA Advantage the owner
may transfer contract values between
the subaccounts, or from the
subaccounts to the fixed account.
However, certain restrictions apply with
respect to the timing of transfers from
the fixed account. Under RAVA
Advantage Plus, if required to
participate in the asset allocation
program in connection with the
Withdrawal Benefit, the owners may not
make transfers except among the various
asset allocation models then available.
Otherwise, the owner may transfer
contract values between the
subaccounts. The owner also may
transfer contract values from the
subaccounts to the GPAs and the fixed
account. However, certain restrictions
apply with respect to the timing of
transfers from the fixed account. The
owner may transfer contract values from
any GPA to the subaccounts, fixed
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account or another GPA any time after
60 days of transfer or Purchase Payment
allocation into that GPA. Transfers
made more than 30 days before the end
of the guarantee period will receive a
market value adjustment, which may
result in a gain or loss of contract value.
e. Purchase Payment Credits
Under RAVA Advantage, the
Purchase Payment Credits are: 1% of
each Purchase Payment received if the
owner selected the ten-year CDSC
schedule and the initial Purchase
Payment is under $100,000 or if the
owner selected the seven-year CDSC
schedule and the initial Purchase
Payment is at least $100,000; and 2% of
each Purchase Payment received if the
owner selected the ten-year CDSC
schedule and the initial Purchase
Payment is at least $100,000.
Under RAVA Advantage Plus, the
Purchase Payment Credits are: 1% of
each Purchase Payment received if the
owner selected the ten-year CDSC
schedule and the initial Purchase
Payment is under $100,000 or if the
owner selected the seven-year CDSC
schedule and the initial Purchase
Payment is at least $100,000 but less
than $1,000,000; and 2% of each
Purchase Payment received if the owner
selected the ten-year CDSC schedule
and the initial Purchase Payment is at
least $100,000 but less than $1,000,000.
For Band 3 Contracts, the Purchase
Payment Credits are: 2% of each
Purchase Payment received if the owner
selected the seven-year CDSC schedule;
and 3% of each Purchase Payment
received if the owner selected the tenyear CDSC schedule.
f. Recapture of Purchase Payment
Credits
Under RAVA Advantage, IDS Life
currently recaptures Purchase Payment
Credits if the owner returns the RAVA
Advantage contract during the free look
period. IDS Life also may recapture
Purchase Payment Credits if they were
applied within twelve months
preceding: the date of death that results
in a lump sum death benefit; or a
request for a surrender due to the owner
or annuitant’s confinement to a nursing
home. See, IDS Life Insurance
Company, et al., Investment Company
Act Release Nos. 24220 (December 23,
1999) (Notice) and 24257 (January 19,
2000) (Order).
Under RAVA Advantage Plus, IDS
Life currently recaptures Purchase
Payment Credits if the owner returns the
RAVA Advantage Plus contract during
the free look period. IDS Life also may
recapture Purchase Payment Credits if
they were applied within twelve months
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preceding: the date of death that results
in a lump sum death benefit; a request
for a surrender due to the owner or
owner’s spouse’s confinement to a
nursing home or hospital or the owner’s
terminal illness; or settlement under an
annuity payout plan. See, IDS Life
Insurance Company, et al., Investment
Company Act Release Nos. 26338
(January 22, 2004) (Notice) and 26354
(February 20, 2004) (Order).
g. Surrender Options
Under RAVA Advantage, the owner
can access contract values at any time
through partial or full surrender and the
owner has a Free Withdrawal Amount
equal to earnings or up to 10% of the
prior anniversary contract value per
contract year (if not already included in
earnings).
Under RAVA Advantage Plus, the
owner can access contract values at any
time through partial or full surrender. If
the owner has not selected the
Withdrawal Benefit, the owner has a
Total Free Amount equal to earnings or
up to 10% of the prior anniversary
contract value per contract year (if not
already included in earnings). If the
owner selected the Withdrawal Benefit,
the owner may withdraw up to the
Guaranteed Benefit Payment each
contract year. Amounts withdrawn in
excess of Guaranteed Benefit Payment
may reduce future amounts available
under the Withdrawal Benefit.
h. All Standard and Optional Death
Benefits
Under RAVA Advantage, payment to
the beneficiary occurs upon the earlier
of the owner or annuitant’s death, and
benefits are based on the age of both the
owner and annuitant. Under RAVA
Advantage Plus, payment to the
beneficiary occurs upon the owner’s
death, and benefits are based on the age
of the owner.
i. Standard Death Benefit
Under RAVA Advantage, if the owner
and annuitant are age 80 or younger on
date of death, the death benefit is the
greatest of: The contract value; the
contract value as of most recent sixth
contract anniversary plus subsequent
Purchase Payments less adjusted partial
surrenders; or Purchase Payments less
adjusted partial surrenders. If either the
owner or annuitant is age 81 or older on
the date of death, the death benefit is
the greatest of: The contract value; or
Purchase Payments less adjusted partial
surrenders. The benefit provided under
the optional Return of Purchase
Payments Death Benefit (‘‘ROPP Death
Benefit’’) described below is included in
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the RAVA Advantage standard death
benefit at no extra cost.
Under RAVA Advantage Plus, if the
owner is age 75 or younger at contract
issue, the death benefit is the greater of:
the contract value, less any Purchase
Payment Credits subject to recapture
and less a pro rata portion of any rider
fees; or Purchase Payments less adjusted
partial surrenders. If the owner is age 76
or older at contract issue, the death
benefit is: The contract value, less any
Purchase Payment Credits subject to
recapture and less a pro rata portion of
any rider fees.
j. Optional Return of Purchase Payment
(‘‘ROPP’’) Death Benefit
Under RAVA Advantage Plus, the
ROPP Death Benefit is available (in
approved states) if the owner is age 76
or older at contract issue. The benefit
provided by the ROPP Death Benefit is
included in the standard death benefit
if the owner is age 75 or younger at
contract issue at no additional cost. The
ROPP Death Benefit states that, upon
the owner’s death before annuity
payouts begin and while the contract is
in force, IDS Life will pay the
designated beneficiary the greater of:
The contract value, less Purchase
Payment Credits subject to recapture
and less a pro rata portion of any rider
fees; or Purchase Payments minus
adjusted partial surrenders. The current
cost of the ROPP Death Benefit is
0.20%. IDS Life reserves the right to
increase the cost after the tenth rider
anniversary to a maximum of 0.30% and
to discontinue offering the ROPP Death
Benefit for new RAVA Advantage Plus
contracts.
k. Optional Maximum Anniversary
Value (‘‘MAV’’) Death Benefit
The optional MAV Death Benefit is
available under both RAVA Advantage
and RAVA Advantage Plus. Under
RAVA Advantage, the MAV Death
Benefit is available (in approved States)
if both the owner and annuitant are age
75 or younger at contract issue. The
MAV Death Benefit states that, upon the
earlier of the owner or annuitant’s death
before annuity payouts begin and while
the contract is in force, IDS Life will pay
the designated beneficiary the
Maximum Anniversary Value (‘‘MAV’’).
Under RAVA Advantage Plus, the
MAV Death Benefit is available (in
approved States) if the owner is age 75
or younger at contract issue. The MAV
Death Benefit states that, upon the
owner’s death before annuity payouts
begin and while the contract is in force,
IDS Life will pay the designated
beneficiary the greatest of: The contract
value, less Purchase Payment Credits
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subject to recapture and less a pro rata
portion of any rider fees; Purchase
Payments minus adjusted partial
surrenders; or the MAV as calculated on
the most recent contract anniversary
plus subsequent Purchase Payments
made and minus adjustments for partial
surrenders since that contract
anniversary. The current cost of the
MAV Death Benefit under RAVA
Advantage Plus is 0.25%. IDS Life
reserves the right to increase this cost
after the tenth rider anniversary to a
maximum of 0.35% and to discontinue
offering the MAV Death Benefit for new
RAVA Advantage Plus contracts. A fee
discount of 0.10% applies if the owner
purchases the MAV Death Benefit with
either the EEB or EEP (described below).
l. Optional Maximum Five-Year
Anniversary Value (‘‘5-Year MAV’’)
Death Benefit
RAVA Advantage Plus contains a new
optional death benefit that currently is
not available under RAVA Advantage.
The 5-Year MAV Death Benefit is
available (in approved states) if the
owner is age 75 or younger at contract
issue. The 5-Year MAV Death Benefit
states that, upon the owner’s death
before annuity payouts begin and while
the contract is in force, IDS Life will pay
the designated beneficiary the greatest
of: The contract value, less Purchase
Payment Credits subject to recapture
and less a pro rata portion of any rider
fees; Purchase Payments minus adjusted
partial surrenders; or the MAV as
calculated on the most recent fifth
contract anniversary plus subsequent
Purchase Payments made and minus
adjustments for partial surrenders since
that contract anniversary. The current
cost of the 5-Year MAV Death Benefit is
0.10%. IDS Life reserves the right to
increase this cost after the tenth rider
anniversary to a maximum of 0.20% and
to discontinue offering the 5-Year MAV
Death Benefit for new RAVA Advantage
Plus contracts. A fee discount of 0.05%
applies if the owner purchases the 5Year MAV Death Benefit with either the
EEB or EEP (described below).
m. Optional Enhanced Earnings Death
Benefit (‘‘EEB’’)
The optional EEB is available under
both RAVA Advantage and RAVA
Advantage Plus. Under RAVA
Advantage, the EEB is available (in
approved States) if both the owner and
annuitant are age 75 or younger at the
rider effective date. The EEB states that,
upon the earlier of the owner or
annuitant’s death after the first contract
anniversary but before annuity payouts
begin and while the contract is in force,
IDS Life will pay the designated
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beneficiary the standard death benefit or
the MAV Death Benefit, if applicable,
plus: 40% of earnings at death if the
owner and the annuitant were under age
70 on the rider effective date, up to a
maximum of 100% of Purchase
Payments not previously surrendered
that are one or more years old; or 15%
of earnings at death if the owner or the
annuitant were age 70 to 75 on the rider
effective date, up to a maximum of
37.5% of Purchase Payments not
previously surrendered that are one or
more years old. The cost of the EEB
under RAVA Advantage is 0.30%.
Under RAVA Advantage Plus, the
EEB is available (in approved States) if
the owner is age 75 or younger at the
rider effective date. The EEB states that,
upon the owner’s death after the first
contract anniversary but before annuity
payouts begin and while the contract is
in force, IDS Life will pay the
designated beneficiary the standard
death benefit or the MAV Death Benefit
or 5-Year MAV Death Benefit, if
applicable, plus: 40% of earnings at
death if the owner was under age 70 on
the rider effective date, up to a
maximum of 100% of Purchase
Payments not previously surrendered
that are one or more years old; or 15%
of earnings at death if the owner was age
70 to 75 on the rider effective date, up
to a maximum of 37.5% of Purchase
Payments not previously surrendered
that are one or more years old. The
current cost of the EEB under RAVA
Advantage Plus is 0.30%. IDS Life
reserves the right to increase this cost
after the tenth rider anniversary to a
maximum of 0.40% and to discontinue
offering the EEB for new RAVA
Advantage Plus contracts. A fee
discount of 0.10% applies if the owner
purchases the MAV Death Benefit with
the EEB and a fee discount of 0.05%
applies if the owner purchases the 5Year MAV Death Benefit with the EEB.
n. Optional Enhanced Earnings Plus
Death Benefit (‘‘EEP’’)
The optional EEP is available under
both RAVA Advantage and RAVA
Advantage Plus. Under RAVA
Advantage, this benefit is available (in
approved states) if both the owner and
annuitant are age 75 or younger at
contract issue, and the contract is
purchased through an exchange. The
EEP states that, upon the earlier of the
owner or annuitant’s death, after the
first contract anniversary but before
annuity payouts begin and while the
contract is in force, IDS Life will pay the
designated beneficiary: EEP Part I
benefits, which equal the benefits
payable under the EEB described above;
plus EEP Part II benefits, which equal a
percentage of exchanged Purchase
Payments identified at issue and not
previously surrendered as follows:
Percentage if
owner and
annuitant are
under age 70
on the rider
effective date
Contract year date
One and Two ...................................................................................................................................................
Three and Four ................................................................................................................................................
Five or more ....................................................................................................................................................
The cost of the EEP under RAVA
Advantage is 0.40%.
Under RAVA Advantage Plus, the EEP
is available (in approved States) if the
owner is age 75 or younger at contract
issue. The EEP states that, upon the
owner’s death after the first contract
anniversary but before annuity payouts
begin and while the contract is in force,
IDS Life will pay the designated
beneficiary: EEP Part I benefits, which
equal the benefits payable under the
0
10
20
Percentage if
owner is
under age 70
on the rider
effective date
One and Two ...................................................................................................................................................
Three and Four ................................................................................................................................................
Five or more ....................................................................................................................................................
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o. Annuity Payout Options
There are five annuity payout options
under both RAVA Advantage and RAVA
Advantage Plus: (A) Life annuity—no
refund; (B) life annuity with five, ten or
15 years certain; (C) life annuity—
installment refund; (D) joint and last
survivor life annuity—no refund; and
(E) payouts for a specified period. These
five annuity payouts are available on a
fixed or variable basis, or a combination
of both. A sixth annuity payout option,
the Remaining Benefit Amount Payout
Option, is available only under the
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0
3.75
7.5
EEB described above; plus EEP Part II
benefits, which equal a percentage of
exchanged Purchase Payments
identified at issue and not previously
surrendered as follows:
Contract year
The current cost of the EEP under
RAVA Advantage Plus is 0.40%. IDS
Life reserves the right to increase this
cost after the tenth rider anniversary to
a maximum of 0.50% and to
discontinue offering the EEP for new
RAVA Advantage Plus contracts. A fee
discount of 0.10% applies if the owner
purchases the MAV Death Benefit with
the EEP and a fee discount of 0.05%
applies if the owner purchases the 5Year MAV Death Benefit with the EEP.
Percentage if
owner or
annuitant
are 70–75
on the rider
effective date
0
10
20
Percentage if
owner is
age 70–75
on the rider
effective date
0
3.75
7.5
Withdrawal Benefit under RAVA
Advantage Plus. This sixth annuity
payout is available on a fixed basis only.
IDS may also agree to other payout
arrangements.
p. Asset Rebalancing
Under both RAVA Advantage and
RAVA Advantage Plus, if the owner has
not selected the Withdrawal Benefit, the
owner can elect to have the variable
subaccount portion of the contract value
automatically rebalanced on either a
quarterly, semi-annual or annual basis,
based on the allocations chosen by the
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contract owner. Under RAVA
Advantage Plus, if the owner has
selected the Withdrawal Benefit and
therefore is required to participate in an
asset allocation program, IDS rebalances
contract values quarterly. There is no
additional cost for asset rebalancing.
q. Other Features
Both RAVA Advantage and RAVA
Advantage Plus provide for dollar-cost
averaging. In addition, RAVA
Advantage Plus provides for a special
dollar-cost averaging program (which
may not be available at all times). IDS
Life reserves the right to add new
contract features to RAVA Advantage
and/or RAVA Advantage Plus.
r. CDSC Schedules
Under both RAVA Advantage and
RAVA Advantage Plus, IDS Life assesses
a CDSC against partial or full surrenders
in excess of the Free Withdrawal
Amount/ Total Free Amount. IDS Life
applies a CDSC on each Purchase
Payment. The length of time from
receipt of a Purchase Payment to the
time of surrender determines the
percentage of CDSC. Under the sevenyear CDSC period, the CDSC ranges
from 7% in year 1 to 0% in year 8 and
after. Under the ten-year CDSC period,
the CDSC ranges from 8% in year 1 to
0% in year 11 and after. IDS Life does
not assess a CDSC on contract earnings,
Free Withdrawal Amounts/ Total Free
Amounts, required minimum
distributions (provided the amount is no
greater than the required minimum
distribution amount calculated under
the specific contract, currently in force),
amounts refunded during the free look
period, death benefits, or if payments
are made under any annuity payout
option (unless payouts made under
annuity payout option E are later
surrendered). Additionally, the RAVA
Advantage contract provides for a
waiver of the CDSC if the owner or
annuitant is confined to a nursing home,
and has been for the prior 90 days, and
confinement began after the contract
date. RAVA Advantage Plus provides
for a waiver of the CDSC if the owner
or the owner’s spouse is confined to a
nursing home or hospital, and has been
for the prior 60 days, and confinement
began after the contract date. RAVA
Advantage Plus also provides for a
waiver of the CDSC if the owner is
diagnosed in the second or later contract
years as disabled with a medical
condition that with reasonable medical
certainty will result in death within 12
months or less from the date of a
licensed physician’s statement.
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s. M&E Charge
During the life of the RAVA
Advantage contract, IDS life deducts an
M&E charge at an annual rate of 0.95%
of the average daily subaccount value
for nonqualified annuity contracts and
0.75% of the average daily subaccount
value for qualified annuity contracts.
During the life of the RAVA Advantage
Plus contract, IDS life deducts an M&E
charge at an annual rate of 0.95% of the
average daily subaccount value for
nonqualified annuity contracts, 0.75%
of the average daily subaccount value
for qualified annuity contracts and
0.55% of the average daily subaccount
value for Band 3 Contracts.
t. Contract Administrative Charge
Under both RAVA Advantage and
RAVA Advantage Plus, IDS Life deducts
an annual charge of $30 for
administrative expenses from the
contract value of each contract. For
RAVA Advantage Plus, IDS Life reserves
the right to increase this annual contract
administrative charge after the first
contract anniversary to a maximum of
$50. Under RAVA Advantage and
RAVA Advantage Plus, IDS Life waives
the contract administrative charge when
the contract value, or total Purchase
Payments less any Purchase Payments
surrendered, is $50,000 or more on the
current contract anniversary.
u. Premium Tax
Under both RAVA Advantage and
RAVA Advantage Plus, IDS life deducts
premium taxes of up to 3.5%, if
applicable. These taxes depend upon
the contract owner’s state of residence
or the State in which the contract was
sold. Currently IDS Life deducts any
applicable premium tax when annuity
payouts begin. However, IDS Life
reserves the right to deduct this tax at
other times such as when a contract is
surrendered.
v. Operating Expenses of the Investment
Funds
Under both RAVA Advantage and
RAVA Advantage Plus, assets invested
in the Investment Funds are charged
with the annual operating expenses of
those Investment Funds.
The Old Contracts
12. VRA and CRA are registered
together under the 1933 Act (File No. 2–
73114). IDS Life no longer offers VRA
contracts. IDS Life offers CRA contracts
only for limited purposes. VRA and
CRA both were issued as nonqualified
annuities for after-tax contributions
only, or as qualified annuities under the
following retirement plans: (i) IRAs; (ii)
SEP plans; (iii) Section 401(k) Plans; (iv)
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1919
Section 401(a) Plans; (v) TSAs, or (vi)
plans under Section 457 of the Code
(‘‘Section 457 Plans’’). VRA was
purchased with a single Purchase
Payment between $5,000 and $500,000.
No additional Purchase Payments are
allowed under VRA. CRA may be
purchased with a minimum initial
Purchase Payment of $600, or in
minimum installments of $50 per month
or $23.08 biweekly under a scheduled
payment plan. An owner may make
additional Purchase Payments to CRA,
which require a $50 minimum (unless
Purchase Payments are made by
installments under a scheduled
payment plan), subsequent to the initial
Purchase Payment. Maximum
limitations on Purchase Payments are
imposed for the first year and
subsequent years, depending on
whether the annuity is nonqualified or
qualified. Participants in the CRA Select
University of Wisconsin TSA Plan
(‘‘CRA Select’’) bought CRA with
installment payments of $200 to $25,000
annually.
13. Owners of VRA and CRA contracts
currently may allocate their Purchase
Payments among 14 Old Accounts that
invest in 14 corresponding Investment
Funds (most of which currently are
available under RAVA Advantage Plus).
CRA also offers a fixed account
investment option with a guaranteed
minimum interest rate of 3.5% to 4% on
an annual basis depending on when the
CRA contract was issued. VRA does not
have a fixed account investment option.
14. Owners of VRA and CRA contracts
may transfer contract values among the
Old Accounts without charge. Transfers
to and from CRA’s fixed account are
permitted, subject to certain restrictions
described in the prospectus for the CRA
contracts.
15. The owner of a VRA or CRA
contract can access contract values at
any time before annuity payouts begin
by means of partial surrenders or a full
surrender. In addition, VRA permits the
owner a Free Withdrawal Amount of up
to 10% of the initial Purchase Payment
amount each year after the first without
incurring a CDSC. CRA Select permits
an annual Free Withdrawal Amount of
10% of the contract value at the
beginning of each contract year. There
are no other Free Withdrawal Amounts
under CRA.
16. The death benefit under VRA and
CRA is available at no extra cost. The
death benefit provision under both VRA
and CRA states that, upon the earlier of
the owner or annuitant’s death before
annuity payouts begin and while the
contract is in force, IDS Life will pay the
following death benefits to the
designated beneficiary: (i) If death
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occurs before the annuitant’s 75th
birthday, the beneficiary receives the
greater of the contract value; or
Purchase Payments, minus any
surrenders, or (ii) if death occurs on or
after the annuitant’s 75th birthday, the
beneficiary receives the contract value.
17. The VRA and CRA contracts
contain the same annuity payout
options A through E as RAVA
Advantage Plus. Annuity payouts are
available on a fixed or variable basis, or
a combination of both.
18. Under VRA, IDS Life assesses a
CDSC against partial or full surrenders
in excess of the Free Withdrawal
Amount. The CDSC applies to
surrenders in the first seven contract
years as a percentage of the amount
surrendered. The CDSC ranges from 7%
in the first contract year to 0% after 7
contract years. Under CRA, IDS Life
assesses a CDSC against partial or full
surrenders (in excess of the Free
Withdrawal Amount for CRA Select).
The CDSC is a percentage of the amount
surrendered. Three separate CDSC
periods apply to the three different
versions of CRA. For the original CRA,
which is no longer sold, the CDSC
applies to surrenders in the first eleven
contract years and ranges from 7% in
the first contract year to 0% after 11
contract years. For CRA Select, which
funded the University of Wisconsin
TSA Plan but is no longer sold, the
CDSC applies to surrenders in the first
eight contract years and ranges from 7%
in the first contract year to 0% after 8
contract years. For the CRA version that
currently is sold for conversions from
American Express Retirement Services
or other IDS Life retirement annuities
under which conversion is available, the
CDSC applies to surrenders in the first
seven contract years and ranges from
6% in the first contract year to 0% after
7 contract years. IDS Life does not
assess a CDSC on Free Withdrawal
Amounts under any VRA or CRA Select
contract, required minimum
distributions (provided the amount is no
greater than the required minimum
distribution amount calculated under
the specific contract, currently in force),
amounts refunded during the free look
period, death benefits, or if payments
are made under any annuity payout
option (unless payouts made under
annuity payout option E are later
surrendered).
19. During the life of each VRA and
CRA contract, IDS Life deducts an M&E
charge at an annual rate of 1% of the
average daily variable account value.
20. IDS Life deducts a charge for
administrative expenses annually from
the contract value of each VRA and CRA
contract. The annual contract
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Jkt 205001
administrative charge is $20 per
contract year for VRA and $30 per
contract year for CRA.
21. IDS Life deducts premium taxes of
up to 3.5%, if applicable, and under the
same terms as RAVA Advantage Plus.
22. Assets invested in the Investment
Funds are charged with the annual
operating expenses of those Investment
Funds.
23. Flex is registered under the 1933
Act (File No. 33–4173). IDS Life no
longer offers Flex contracts. Flex was
issued as a nonqualified annuity for
after-tax contributions only, or as a
qualified annuity under the following
retirement plans: (i) IRAs; (ii) SEP plans;
(iii) Section 401(k) Plans; (iv) Section
401(a) Plans; (v) TSAs; or (vi) Section
457 Plans. Flex was purchased with a
minimum initial Purchase Payment of
$1,000 for qualified annuities or $2,000
for nonqualified annuities, or in
minimum installments of $50 per month
or $23.08 biweekly under a scheduled
payment plan. An owner may make
additional Purchase Payments, which
require a $50 minimum (unless
Purchase Payments are made by
installments under a scheduled
payment plan), subsequent to the initial
Purchase Payment. Maximum
limitations on Purchase Payments are
imposed for the first year, depending on
the age of the owner or annuitant, and
for each subsequent year.
24. Owners of Flex contracts currently
may allocate their Purchase Payments
among the 14 Old Accounts that invest
in 14 corresponding Investment Funds
(most of which currently are available
under RAVA Advantage Plus). Flex also
offers a fixed account investment option
with guaranteed minimum interest rates
ranging from 3% to 4% on an annual
basis, depending on when the Flex
contract was issued.
25. Owners of Flex contracts may
transfer contract values among the Old
Accounts without charge. Transfers to
and from the fixed account are
permitted, subject to certain restrictions
described in the prospectus for the Flex
contracts.
26. The owner of a Flex contract can
access contract values at any time before
annuity payouts begin by means of
partial surrenders or a full surrender. In
addition, Flex permits the owner a Free
Withdrawal Amount of contract
earnings without incurring a CDSC.
27. The death benefit under Flex is
available at no extra cost. The death
benefit provision states that, upon the
earlier of the owner or annuitant’s death
before annuity payouts begin and while
the contract is in force, IDS Life will pay
the following death benefits to the
designated beneficiary: (i) If death
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occurs before the annuitant’s 75th
birthday, the beneficiary receives the
greatest of the contract value; the
contract value as of the most recent
sixth contract anniversary, minus any
surrenders since that anniversary; or
Purchase Payments, minus any
surrenders; or (ii) if death occurs on or
after the annuitant’s 75th birthday, the
beneficiary receives the greater of the
contract value; or the contract value as
of the most recent sixth contract
anniversary, minus any surrenders since
that anniversary.
28. Flex contains the same annuity
payout options A through E as RAVA
Advantage Plus. Annuity payouts are
available on a fixed or variable basis, or
a combination of both.
29. Under Flex, IDS Life assesses a
CDSC against partial or full surrenders
in excess of the Free Withdrawal
Amount. IDS Life applies a CDSC of 7%
on each Purchase Payment if the
contract owner requests a surrender
within six years of making that Purchase
Payment. The Flex contract provides for
a waiver of the CDSC for amounts
surrendered after the later of the
annuitant’s attaining age 65 or the tenth
contract anniversary. Additionally, IDS
Life does not assess a CDSC on contract
earnings, required minimum
distributions (provided the amount is no
greater than the required minimum
distribution amount calculated under
the specific contract, currently in force),
death benefits, or if payments are made
under any annuity payout option
(unless payouts made under annuity
payout option E are later surrendered).
30. During the life of the Flex
contract, IDS Life deducts an M&E
charge at an annual rate of 1% of the
average daily variable account value.
31. IDS Life deducts a charge of $6 for
administrative expenses at the end of
each contract quarter from the contract
value of the Flex contract (which equals
an annual charge of $24 per contract
year).
32. IDS Life deducts premium taxes of
up to 3.5%, if applicable, and under the
same terms as RAVA Advantage Plus.
33. Assets invested in the Investment
Funds are charged with the annual
operating expenses of those Investment
Funds.
34. EBA is registered under the 1933
Act (File No. 33–52518). IDS Life no
longer offers EBA contracts. EBA was
issued only as a group TSA. EBA was
purchased with a minimum initial
Purchase Payment of $1,000 or in
minimum installments of $25 per month
or $300 annually under a scheduled
payment plan. An owner may make
additional Purchase Payments, which
require a $50 minimum (unless
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Purchase Payments are made by
installments under a scheduled
payment plan), subsequent to the initial
Purchase Payment. Maximum
limitations on Purchase Payments are
imposed for the first year, depending on
the age of the contract owner, and for
each subsequent year.
35. Owners of EBA contracts currently
may allocate their Purchase Payments
among the 14 Old Accounts that invest
in 14 corresponding Investment Funds
(most of which currently are available
under RAVA Advantage Plus). EBA also
offers a fixed account investment option
with a guaranteed minimum interest
rate of 4% on an annual basis.
36. Owners of EBA contracts may
transfer contract values among the Old
Accounts without charge. Transfers to
and from the fixed account are
permitted, subject to certain restrictions
described in the prospectus for the EBA
contracts.
37. Subject to certain restrictions
imposed by the Code, the owner of an
EBA contract can access certificate
values at any time before annuity
payouts begin by means of partial
surrenders or a full surrender.
38. The death benefit under EBA is
available at no extra cost. The death
benefit provision states that, upon the
owner/annuitant’s death before annuity
payouts begin and while the contract is
in force, IDS Life will pay the following
death benefits to the designated
beneficiary: (i) If death occurs before the
annuitant’s 75th birthday, the
beneficiary receives the greater of the
certificate value; or Purchase Payments,
minus any surrenders; or (ii) if death
occurs on or after the annuitant’s 75th
birthday, the beneficiary receives the
certificate value.
39. EBA contains the same annuity
payout options A through E as RAVA
Advantage Plus. Annuity payouts are
available on a fixed or variable basis, or
a combination of both.
40. Under EBA, IDS Life assesses a
CDSC against partial or full surrenders
in the first eleven certificate years as a
percentage of the amount surrendered.
The CDSC ranges from 8% in the first
certificate year to 0% after 11 certificate
years. The EBA contract provides for a
waiver of the CDSC for amounts
surrendered due to the owner’s
retirement under the TSA plan on or
after age 55. Additionally, IDS Life does
not assess a CDSC on required
minimum distributions (provided the
amount is no greater than the required
minimum distribution amount
calculated under the specific contract,
currently in force), amounts refunded
during the free look period, death
benefits, or if payments are made under
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any annuity payout option (unless
payouts made under annuity payout
option E are later surrendered).
41. During the life of the EBA
contract, IDS Life deducts an M&E
charge at an annual rate of 1% of the
average daily variable account value.
42. IDS Life deducts a $30 charge for
administrative expenses at the end of
each certificate year from the certificate
value of the EBA contract.
43. IDS Life deducts premium taxes of
up to 3.5%, if applicable, and under the
same terms as RAVA Advantage Plus.
44. Assets invested in the Investment
Funds are charged with the annual
operating expenses of those Investment
Funds.
45. Applicants represent that the
features and benefits of RAVA
Advantage Plus will be no less favorable
than those under the Old Contracts,
with some exceptions for differences in
the guaranteed minimum interest rate
under the fixed account investment
option, lower annuity settlement rates,
some additional transfer restrictions and
lower initial death benefits. Applicants
also represent that, with some
exceptions for the CDSC, the charge for
administrative expenses and optional
charges for optional death benefits, the
fees and charges of the RAVA
Advantage Plus contract will be no
higher than those of the Old Contracts.
Terms of the Extended Exchange Offer
46. Applicants propose to offer
eligible owners of Old Contracts the
opportunity to exchange their Old
Contracts for RAVA Advantage Plus by
means of the Extended Exchange Offer.
Partial exchanges will not be permitted.
47. To be eligible for the Extended
Exchange Offer, an Old Contract owner
must meet all of the following criteria:
(i) Have completed ten or more contract
or certificate years under the Old
Contract; (ii) have not made Purchase
Payments greater than $4,000 in any tax
year under the Old Contract in the 36
months prior to accepting the Extended
Exchange Offer (except for installment
payments made under a scheduled
payment plan); and (iii) have a
remaining CDSC of 2% or less of the
contract or certificate value of the Old
Contract. IDS Life reserves the right to
expand the Extended Exchange Offer to
owners of contracts who have
completed less than ten contract or
certificate years under the Old Contract
or who have made Purchase Payments
greater than $4,000 in any tax year
under the Old Contract in the 36 months
prior to accepting the Extended
Exchange Offer. IDS Life also reserves
the right to require a minimum contract
or certificate value (‘‘Exchange Value’’)
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1921
plus any additional transfers or
rollovers for qualified annuities or any
additional Purchase Payments or
exchanges for nonqualified annuities
(individually and collectively, the
‘‘Additional Amounts’’) for eligibility
for the Extended Exchange Offer and to
change those minimum amounts from
time to time.
48. If an owner accepts the Extended
Exchange Offer, IDS Life will allocate to
the owner’s account either a Purchase
Payment Credit or an Exchange Credit.
Under RAVA Advantage Plus, each time
IDS Life receives a Purchase Payment
from an owner, it allocates to the
owner’s account a Purchase Payment
Credit equal to 1% of each Purchase
Payment received: (i) If the owner
selected the ten-year CDSC schedule
and the initial Purchase Payment is
under $100,000; or (ii) if the owner
selected the seven-year CDSC schedule
and the initial Purchase Payment is at
least $100,000 but less than $1,000,000.
Each time IDS Life receives a Purchase
Payment from the owner, it allocates to
the owner’s account a Purchase
Payment Credit equal to 2% of each
Purchase Payment received if the owner
selected the ten-year CDSC schedule
and the initial Purchase Payment is at
least $100,000 but less than $1,000,000.
Under the Band 3 Contracts, each time
IDS Life receives a Purchase Payment
from the owner, it allocates to the
owner’s account a Purchase Payment
Credit equal to 2% of each Purchase
Payment received if the owner selected
the seven-year CDSC schedule and 3%
of each Purchase Payment received if
the owner selected the ten-year CDSC
schedule. To increase the likelihood of
remaining eligible to receive the
applicable Purchase Payment Credit
based on the initial Purchase Payment
amount, the Old Contract owner could
transfer that contract or certificate value
allocated to the Old Accounts to the Old
Account investing in the AXP VP Cash
Management Fund while the exchange
is pending to help reduce the risk of
market volatility.
49. Under the terms of the RAVA
Advantage Plus contract, if the initial
Purchase Payment is less than $100,000,
IDS Life will not allocate a 1% Purchase
Payment Credit based on the initial
Purchase Payment amount. However, in
those cases where the initial Purchase
Payment is less than $100,000, IDS Life
will provide, from its general account
assets, a 1% Exchange Credit based on
the Exchange Value of the Old Contract
applied to RAVA Advantage Plus on the
day the exchange is effected (‘‘Exchange
Date’’). This 1% Exchange Credit will
not apply to subsequent Purchase
Payments to RAVA Advantage Plus.
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However, even when the initial
Purchase Payment is less than $100,000,
IDS Life will allocate a Purchase
Payment Credit of 1% of the initial
Purchase Payment and 1% of each
subsequent Purchase Payment received
if the owner selects the ten-year CDSC
period.
50. Upon the owner’s acceptance of
the Extended Exchange Offer, IDS Life
will issue a RAVA Advantage Plus
contract with all applicable Credits. No
CDSC will be deducted upon the
surrender of an Old Contract in
connection with the exchange. The
Exchange Value of each Old Contract,
together with any applicable Additional
Amounts and Credits, will be applied to
the new RAVA Advantage Plus contract
as of the Exchange Date. The Exchange
Date will be the contract date of the new
RAVA Advantage Plus contract for
purposes of determining contract years
and anniversaries after the Exchange
Date.
51. If the owner of the new RAVA
Advantage Plus contract exercises the
free look option, IDS Life will recapture
any Credits. IDS Life will reverse either
the RAVA Advantage Plus contract
value (less any Credits and reflecting
any applicable market value adjustment)
or the Purchase Payment made to the
RAVA Advantage Plus contract,
depending on applicable law. IDS Life
will apply this amount to restore the
Old Contract to the extent possible. IDS
Life will allocate this amount to the
selected Old Contract investments in the
proportions that existed just prior to the
exchange. Any adjustments made due to
investment experience and/or market
value adjustment will be allocated or
deducted according to the selected
investment percentage allocations under
the Old Contract just prior to the
exchange. Withdrawals made after the
free look period under RAVA Advantage
Plus has expired will be governed by the
terms of the RAVA Advantage Plus
contract, including the application of
the CDSC. To the extent a death benefit
or surrender payment includes any
Credit amounts applied within twelve
months preceding: (i) The date of death
that results in a lump sum death benefit
under RAVA Advantage Plus; (ii) a
request for a CDSC waiver due to the
owner or owner’s spouse’s confinement
to a nursing home or hospital or the
owner’s terminal illness; or (iii) the
owner’s settlement under an annuity
payout plan, IDS Life will recapture the
Credits.
52. IDS Life will notify all owners of
the Old Contracts of the Extended
Exchange Offer through normal client
communications such as updated
prospectuses or prospectus supplements
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17:22 Jan 10, 2005
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(‘‘Program Announcement’’). This
Program Announcement will: (i)
Describe the terms and conditions of the
Extended Exchange Offer; (ii) suggest to
owners who may qualify that they
contact their registered representatives
to learn more about the Extended
Exchange Offer and to discuss their
individual situations (including tax,
financial planning and contract
considerations); and (iii) notify owners
that IDS Life reserves the right to cancel
the Extended Exchange Offer at any
time. In addition, IDS Life may send the
information in the Program
Announcement to some or all Old
Contract owners via additional
communications that also may include
that owner’s specific contract
information (such as Exchange Value
and applicable CDSC).
53. IDS Life, either directly or through
its registered representatives, will
provide eligible Old Contract owners
who are interested in learning more
about the Extended Exchange Offer with
an Offering Communication that
includes information outlined in the
Program Announcement and additional
information describing the Extended
Exchange Offer. The Offering
Communication will state, in clear and
plain English, that the Extended
Exchange Offer is not designed for a
contract owner who: (i) Intends to hold
the RAVA Advantage Plus contract as a
short-term investment vehicle; or (ii)
anticipates surrendering all or part (i.e.
more than the Total Free Amount on an
annual basis) of his or her RAVA
Advantage Plus contract before five to
seven years (if the Old Contract owner
would select the seven-year CDSC
period under RAVA Advantage Plus) or
eight to ten years (if the Old Contract
owner would select the ten-year CDSC
period under RAVA Advantage Plus).
IDS Life will encourage Old Contract
owners to carefully evaluate their
personal financial planning situation
when deciding whether to accept or
reject the Extended Exchange Offer.
54. In addition, the Offering
Communication will explain how the
owner of an Old Contract contemplating
an exchange may avoid the applicable
CDSC on the RAVA Advantage Plus
contract by not surrendering more than
the annual Total Free Amount and by
holding any subsequent Purchase
Payments until expiration of the CDSC
period. In this regard, IDS Life will
state, in clear and plain English, that if
the owner surrenders the RAVA
Advantage Plus contract during the
initial CDSC period: (i) The lower M&E
charges and any applicable Credits may
be more than offset by the CDSC; and
(ii) an Old Contract owner may be worse
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off than if he or she had rejected the
Extended Exchange Offer.
55. Furthermore, IDS Life will state,
in clear and plain English, that
guaranteed annuity settlement rates
generally are lower under RAVA
Advantage Plus. Therefore, if the Old
Contract owner contemplates
annuitizing the RAVA Advantage Plus
contract during the first few years, the
lower settlement factors may more than
offset the lower M&E charges and any
applicable Credits.
56. IDS Life will explain that if an
owner accepts the Extended Exchange
Offer, IDS Life will allocate to the
owner’s account either a Purchase
Payment Credit or an Exchange Credit.
If the initial Purchase Payment is at
least $100,000, IDS Life will allocate to
the owner’s account a Purchase
Payment Credit on the initial Purchase
Payment and on each subsequent
Purchase Payment received. To increase
the likelihood of remaining eligible to
receive the applicable Purchase
Payment Credit based on the initial
Purchase Payment amount, the Old
Contract owner could transfer that
contract or certificate value allocated to
the Old Accounts to the Old Account
investing in the AXP VP Cash
Management Fund while the exchange
is pending to help reduce the risk of
market volatility. If the initial Purchase
Payment to RAVA Advantage Plus is
less than $100,000, IDS Life will
provide a 1% Exchange Credit based on
the Exchange Value of the Old Contract
applied to RAVA Advantage Plus on the
Exchange Date. The 1% Exchange Credit
will not apply to subsequent Purchase
Payments. However, even when the
initial Purchase Payment is less than
$100,000, IDS Life will allocate a
Purchase Payment Credit of 1% of the
initial Purchase Payment and 1% of
each subsequent Purchase Payment
received if the owner selects the tenyear CDSC period.
57. In addition, IDS Life will
prominently disclose that the
guaranteed minimum interest rate on
RAVA Advantage Plus’ fixed account
investment option may be less than the
guaranteed minimum interest rate on
the Old Contract’s fixed account
investment option. IDS Life also will
disclose that the current death benefit
on the Old Contract may be greater than
the initial death benefit on RAVA
Advantage Plus. When applicable, IDS
Life also will explain that an owner of
an Old Contract may lose some tax
benefits. The Offering Communication
will state that certain Investment Funds
available under the Old Contracts are
not available under RAVA Advantage
Plus and that transfers to and from the
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fixed account are more restricted under
RAVA Advantage Plus than under the
Old Contract. Finally, the Offering
Communication will state that IDS Life
may terminate the Extended Exchange
Offer at any time. The Offering
Communication also will include a
prospectus for the new RAVA
Advantage Plus contract.
58. To accept the Extended Exchange
Offer, the owner of an Old Contract
must complete an internal exchange
form and application for the RAVA
Advantage Plus contract. Applicants
state that those Old Contract owners
who accept the Extended Exchange
Offer will incur no current taxes and
that the exchanges will constitute taxfree transfers, rollovers or exchanges
pursuant to Section 1035 of the Code.
59. Applicants submit that the
Extended Exchange Offer is meant to
encourage existing Old Contract owners
to remain with IDS Life rather than
surrender their contracts in exchange for
a competitor’s product. If the CDSC
under RAVA Advantage Plus did not
apply to the Exchange Value,
Applicants assert that IDS Life would
have no assurance that an Old Contract
owner who accepted the Extended
Exchange Offer would persist long
enough for any applicable Credits,
payments to registered representatives
and other relevant expenses to be
recouped through standard fees from the
ongoing operation of the RAVA
Advantage Plus contract.
60. Applicants state that the
commissions that IDS Life will pay its
registered representatives for soliciting
exchanges under the Extended
Exchange Offer are less than the normal
commissions paid for soliciting sales of
RAVA Advantage Plus contracts.
Applicants assert that compensating IDS
Life’s registered representatives for
these exchanges is necessary in order to
provide sufficient incentive for them to
compete with competitors’ registered
representatives.
61. IDS Life reserves the right to
terminate the Extended Exchange Offer
at any time. If IDS Life terminates the
Extended Exchange Offer, it will send a
notice to currently eligible Old Contract
owners (‘‘Termination Notice’’). The
Termination Notice will state that Old
Contract owners who wish to participate
in the Extended Exchange Offer must do
so within two months from the date of
the Termination Notice. The
Termination Notice will contain all of
the caveats described herein.
Applicants’ Conditions
Applicants agree to the following
conditions:
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1. The Offering Communication and
Termination Notice will contain
concise, plain English statements that:
(i) The Extended Exchange Offer is
suitable only for an Old Contract owner
who expects to hold RAVA Advantage
Plus as a long-term investment; (ii) if the
RAVA Advantage Plus contract is
partially or completely surrendered
during the initial CDSC period or
annuitized during the first few years,
the lower M&E charges and any
applicable Credits may be more than
offset by the CDSC or lower annuity
settlement rates and an Old Contract
owner may be worse off than if he or she
had rejected the Extended Exchange
Offer; (iii) IDS Life will allocate an
Exchange Credit equal to 1% of the
Exchange Value of the Old Contract
when the initial Purchase Payment to
the RAVA Advantage Plus contract is
less than $100,000 (this Exchange Credit
will not apply to subsequent Purchase
Payments received); (iv) the guaranteed
interest rate on RAVA Advantage Plus’
fixed account option may be less than
the guaranteed interest rate on the Old
Contract’s fixed account option; (v) the
current death benefit on the Old
Contract may be greater than the initial
death benefit on RAVA Advantage Plus;
(vi) certain Investment Funds available
under the Old Contract are not available
under RAVA Advantage Plus; (vii)
transfers to and from the fixed account
are more restricted under RAVA
Advantage Plus than under the Old
Contract; (viii) an Old Contract owner
may lose some tax benefits (when
applicable); and (ix) IDS Life reserves
the right to terminate the Extended
Exchange Offer.
2. The Offering Communication will
disclose in concise, plain English each
aspect of the RAVA Advantage Plus
contract that could be less favorable
than the Old Contracts.
3. IDS Life, either directly or through
its registered representatives, will send
an Offering Communication to eligible
Old Contract owners who are interested
in learning more about the Extended
Exchange Offer. An Old Contract owner
choosing to exchange will then
complete and sign an internal exchange
form and RAVA Advantage Plus
application and return it to IDS Life.
This internal exchange form will
prominently restate in concise, plain
English the caveats described above in
Condition (1). If the internal exchange
form is more than two pages long, IDS
Life will use a separate document to
obtain contract owner acknowledgment
of the caveats described in Condition
(1).
4. IDS Life will maintain the
following separately identifiable records
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Sfmt 4703
1923
in an easily accessible place for the time
periods specified below in this
Condition (4) for review by the
Commission upon request: (i) Records
showing the level of exchange activity
and how it relates to the total number
of Old Contract owners eligible to
exchange (quarterly as a percentage of
the number eligible); (ii) copies of any
form of Program Announcements,
Offering Communications, Termination
Notices and other written materials or
scripts for presentations by registered
representatives regarding the Extended
Exchange Offer that IDS Life either
prepares or approves, including the
dates that such materials were used; (iii)
records containing information about
each exchange transaction that occurs,
including the name of the contract
owner, Old Contract and RAVA
Advantage Plus contract numbers; the
amount of CDSC waived on surrender of
the Old Contract; Purchase Payment
Credits and Exchange Credits paid; the
name and CRD number of the registered
representative soliciting the exchange,
firm affiliation, branch office address,
telephone number and the name of the
registered representative’s broker-dealer;
commission paid; the internal exchange
form (and separate document, if any,
used to obtain the Old Contract owner’s
acknowledgment of the caveats required
in Condition (1)) showing the name,
date of birth, address and telephone
number of the contract owner and the
date the internal exchange form (or
separate document) was signed; amount
of contract or certificate value
exchanged; and persistency information
relating to the RAVA Advantage Plus
contract, including the date of any
subsequent surrender and the amount of
CDSC paid on the surrender; and (iv)
logs showing a record of any contract
owner complaint about the exchange,
state insurance department inquiries
about the exchange, or litigation,
arbitration, or other proceeding
regarding any exchange. The logs will
include the date of the complaint or
commencement of the proceeding, name
and address of the person making the
complaint or commencing the
proceeding, nature of the complaint or
proceeding, and the persons named or
involved in the complaint or
proceeding. Applicants will retain
records specified in (i) and (iv) for a
period of six years after the date the
records are created, records specified in
(ii) for a period of six years after the date
of last use, and records specified in (iii)
for a period of two years after the date
that the initial CDSC period of the
RAVA Advantage Plus contract ends.
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Applicants’ Legal Analysis
1. Section 11(a) of the Act makes it
unlawful for any registered open-end
company, or any principal underwriter
for such a company, to make or cause
to be made an offer to the holder of a
security of such company, or of any
other open-end investment company, to
exchange his or her security for a
security in the same or another such
company on any basis other than the
relative net asset values of the
respective securities, unless the terms of
the offer have first been submitted to
and approved by the Commission or are
in accordance with Commission rules
adopted under section 11.
2. Section 11(c) of the Act, in
pertinent part, requires, in effect, that
any offer of exchange of the securities of
a registered unit investment trust for the
securities of any other investment
company be approved by the
Commission or satisfy applicable rules
adopted under Section 11, regardless of
the basis of the exchange.
3. The purpose of section 11 of the
Act is to prevent ‘‘switching,’’ the
practice of inducing security holders of
one investment company to exchange
their securities for those of a different
investment company solely for the
purpose of exacting additional selling
charges. That type of practice was found
by Congress to be widespread in the
1930s prior to the adoption of the Act.
4. Section 11(c) of the Act requires
Commission approval (by order or by
rule) of any exchange, regardless of its
basis, involving securities issued by a
unit investment trust, because investors
in unit investment trusts were found by
Congress to be particularly vulnerable to
switching operations.
5. Applicants assert that the potential
for harm to investors perceived in
switching was its use to extract
additional sales charges from those
investors. Applicants further assert that
the terms of the proposed Extended
Exchange Offer do not present the
abuses against which section 11 was
intended to protect. The Extended
Exchange Offer is designed to allow IDS
Life to compete on a level playing field
with its competitors who are making
bonus offers to its current Old Contract
owners. No additional sales load or
other fee will be imposed at the time of
exercise of the Extended Exchange
Offer.
6. Rule 11a–2, by its express terms,
provides Commission approval of
certain types of offers of exchange of
one variable annuity contract for
another. Applicants assert that other
than the relative net asset value
requirement (which is not satisfied
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Jkt 205001
because exchanging Old Contract
owners will be given Purchase Payment
Credits and/or Exchange Credits), the
only part of Rule 11a–2 that would not
be satisfied by the proposed Extended
Exchange Offer is the requirement that
payments under the Old Contract be
treated as if they had been made under
the new RAVA Advantage Plus contract
on the dates actually made. This
provision of Rule 11a–2 is often referred
to as a ‘‘tacking’’ requirement because it
has the effect of ‘‘tacking together’’ the
CDSC expiration periods of the
exchanged and acquired contracts.
7. Applicants assert that the absence
of tacking does not mean that an
exchange offer cannot be attractive and
beneficial to investors. Applicants state
that the proposed Extended Exchange
Offer would assure an immediate and
enduring economic benefit to investors
for the following reasons: (i) RAVA
Advantage Plus has a lower M&E charge
than the Old Contracts. During the life
of the Old Contracts, IDS Life deducts
an M&E charge at an annual rate of 1%
of the average daily variable account
value. During the life of a RAVA
Advantage Plus contract, IDS Life
deducts an M&E charge at an annual
rate of 0.95% of the average daily
subaccount value for nonqualified
annuities, 0.75% of the average daily
subaccount value for qualified annuities
and 0.55% of the average daily
subaccount value for Band 3 Contracts;
(ii) RAVA Advantage Plus contract
owners receive applicable Purchase
Payment Credits and/or Exchange
Credits. Each time IDS Life receives a
Purchase Payment from an owner, it
allocates to the owner’s RAVA
Advantage Plus account a Purchase
Payment Credit equal to: (a) 1% of each
Purchase Payment received if the owner
selected the ten-year CDSC period, or if
the owner selected the seven-year CDSC
period and the initial Purchase Payment
is at least $100,000 but less than
$1,000,000; (b) 2% of each Purchase
Payment received if the owner selected
the ten-year CDSC period and the initial
Purchase Payment is at least $100,000
but less than $1,000,000; or (c) for Band
3 Contracts, 2% of each Purchase
Payment received if the owner selected
the seven-year CDSC period and 3% of
each Purchase Payment received if the
owner selected the ten-year CDSC
period. If the initial Purchase Payment
to RAVA Advantage Plus is less than
$100,000, IDS Life will provide a 1%
Exchange Credit based on the Exchange
Value of the Old Contract applied to
RAVA Advantage Plus on the Exchange
Date (but the 1% Exchange Credit will
not apply to subsequent Purchase
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Payments); (iii) RAVA Advantage Plus
has more Investment Funds. RAVA
Advantage Plus offers 56 Investment
Funds in contrast to the 14 Investment
Funds under the Old Contracts. One
small cap Investment Fund available
under the Old Contracts currently is not
available under RAVA Advantage Plus.
However, RAVA Advantage Plus
currently includes six small cap
Investment Funds to which a contract
owner can allocate Purchase Payments.
Therefore, RAVA Advantage Plus
contract owners can allocate Purchase
Payments not only to most of the
Investment Funds under the Old
Contracts, but also to many additional
Investment Funds. This gives RAVA
Advantage Plus contract owners the
opportunity for greater diversification
and asset allocation; (iv) RAVA
Advantage Plus offers an optional living
benefit. RAVA Advantage Plus contract
owners may select the Withdrawal
Benefit for an additional cost. The
Withdrawal Benefit gives the owner the
right to take limited partial withdrawals
in each contract year that ultimately
equal Purchase Payments plus Credits,
as adjusted for certain excess
withdrawals; and (v) RAVA Advantage
Plus has optional enhanced death
benefits. RAVA Advantage Plus contract
owners may elect optional death
benefits for an additional cost that
provide substantive value to
beneficiaries. A contract owner who
expects to hold RAVA Advantage Plus
as a long-term investment will receive
the economic benefits of the Extended
Exchange Offer. No sales charge will
ever be paid on the amounts exchanged
unless the RAVA Advantage Plus
contract is surrendered before
expiration of the CDSC period the
owner has selected.
8. Applicants assert that tacking
should be viewed as a useful way to
avoid the need to scrutinize the terms of
an offer of exchange to make sure that
there is no abuse. Tacking is not a
requirement of section 11. Rather, it is
a creation of a rule designed to approve
the terms of offers of exchange ‘‘sight
unseen.’’ Tacking focuses on the closest
thing to multiple deduction of sales
loads that is possible in a CDSC
context—multiple exposure to sales
loads upon surrender or redemption. If
tacking and other safeguards of Rule
11a–2 are present, there is no need for
the Commission or its staff to evaluate
the terms of the offer. The absence of
tacking in this fully scrutinized section
11 application will have no impact on
offers made pursuant to the rule on a
‘‘sight unseen’’ basis.
9. Applicants assert that the terms of
IDS Life’s Extended Exchange Offer are
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better than those of its competitors.
Unlike the Extended Exchange Offer
proposed by IDS Life, when Old
Contract owners exchange into
competitors’ contracts, they must pay
any remaining CDSC on the Old
Contracts at the time of the exchange.
No tacking is required when IDS Life’s
competitors offer their variable annuity
contracts to owners of Old Contracts or
when IDS Life makes such an offer to
competitors’ contract owners. The
Commission has previously approved
similar exchange offers to permit the
owners of older contracts to exchange
them for contracts offering an
immediate and enduring economic
benefit even where tacking did not
occur.
10. To the extent there are differences
between the Old Contracts and the
RAVA Advantage Plus contract, those
differences relate to enhanced
contractual features and charges that are
fully described in the prospectus for the
RAVA Advantage Plus contract.
Furthermore, the Offering
Communication (and any Termination
Notice) will contain concise, plain
English disclosure of each aspect of the
RAVA Advantage Plus contract that
could be less favorable than the Old
Contracts.
Conclusion
Applicants submit, for the reasons
stated herein, that the Extended
Exchange Offer is consistent with the
protections provided by section 11 of
the Act, and that approving the terms of
the Extended Exchange Offer is
necessary or appropriate in the public
interest and consistent with the
protection of investors and the purposes
fairly intended by the policies and
provisions of the Act. Applicants submit
that the requested Amended Order
approving the terms of the proposed
Extended Exchange Offer therefore
should be granted.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–42 Filed 1–10–05; 8:45 am]
BILLING CODE 8010–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 35–27935]
Filings Under the Public Utility Holding
Company Act of 1935, as Amended
(‘‘Act’’); National Fuel Gas Company
(70–10273)
January 5, 2005.
Notice is hereby given that the
following filing(s) has/have been made
with the Commission pursuant to
provisions of the Act and rules
promulgated under the Act. All
interested persons are referred to the
application(s) and/or declaration(s) for
complete statements of the proposed
transaction(s) summarized below. The
application(s) and/or declaration(s) and
any amendment(s) is/are available for
public inspection through the
Commission’s Branch of Public
Reference.
Interested persons wishing to
comment or request a hearing on the
application(s) and/or declaration(s)
should submit their views in writing by
January 31, 2005, to the Secretary,
Securities and Exchange Commission,
Washington, DC 20549–0609, and serve
a copy on the relevant applicant(s) and/
or declarant(s) at the address(es)
specified below. Proof of service (by
affidavit or, in the case of an attorney at
law, by certificate) should be filed with
the request. Any request for hearing
should identify specifically the issues of
facts or law that are disputed. A person
who so requests will be notified of any
hearing, if ordered, and will receive a
copy of any notice or order issued in the
matter. After January 31, 2005, the
application(s) and/or declaration(s), as
filed or as amended, may be granted
and/or permitted to become effective.
Notice of Proposal To Amend Restated
Certificate of Incorporation; Order
Authorizing the Solicitation of Proxies
National Fuel Gas Company
(‘‘National Fuel Gas’’), 6363 Main Street,
Williamsville, NY 14221, a registered
holding company, has filed with the
Commission a declaration
(‘‘Declaration’’) under sections 6(a)(2), 7
and 12(e) of the Act and rules 54, 62(d)
and 65 under the Act.
I. Description of National Fuel Gas
National Fuel Gas, a New Jersey
corporation, through its direct and
indirect subsidiaries is engaged in the
exploration, production, purchasing,
gathering, processing, transportation,
storage, retail distribution, and
wholesale and retail marketing of
natural gas. It owns all of the issued and
outstanding common stock of National
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1925
Fuel Gas Distribution Corporation, a
gas-utility company that distributes
natural gas at retail to approximately
732,000 residential, commercial and
industrial customers (including
transportation-only customers) in
portions of western New York and
northwestern Pennsylvania. National
Fuel Gas’ principal non-utility
subsidiaries include National Fuel Gas
Supply Corporation, Empire State
Pipeline, Seneca Resources Corporation,
National Fuel Resources, Inc., Highland
Forest Resources, Inc., Horizon Energy
Development, Inc., and Horizon LFG,
Inc. (formerly Upstate Energy Inc.).
For the twelve months that ended
September 30, 2004, National Fuel Gas
reported operating revenues of
approximately $2.0 billion, of which
$1.1 billion (56%) were attributable to
regulated utility gas sales. As of
September 30, 2004, National and its
subsidiaries owned total assets worth
approximately $3.7 billion, including
approximately $3.0 billion in net
property, plant and equipment.
II. Requests for Authority
National Fuel Gas requests authority
to amend its Restated Certificate of
Incorporation (‘‘Certificate of
Incorporation’’), as described below,
and to solicit proxies from its
shareholders in connection with the
proposed amendment. The annual
meeting of National Fuel Gas
shareholders (‘‘Annual Meeting’’) is
scheduled for February 17, 2005. To
change the Certificate of Incorporation,
the proposed amendment must be
approved by the affirmative vote of a
majority of the votes cast by the holders
of the outstanding shares of Common
Stock entitled to vote at the Annual
Meeting. Proxies may be solicited on
behalf of the directors personally, and
by mail, telephone, telecopy, and
employees of National Fuel Gas and its
subsidiaries (with no special
compensation to these employees). In
addition, National Fuel Gas has retained
Morrow & Co., Inc., to assist in the
solicitation of proxies.
The board of directors of National
Fuel Gas proposes to amend Article
EIGHTH of the Certificate of
Incorporation to revise the provisions
relating to shareholder votes on certain
actions. National Fuel Gas states that,
under the New Jersey Business
Corporation Act (‘‘BCA’’), certain
exceptions are available to the general
rule that shareholder approval is
required for certain actions (collectively,
‘‘Actions’’): (1) Amendments to the
Certificate of Incorporation; (2) plans of
merger or consolidation; (3) sales,
leases, exchanges or other dispositions
E:\FR\FM\11JAN1.SGM
11JAN1
]]>Agencies
[Federal Register Volume 70, Number 7 (Tuesday, January 11, 2005)]
[Notices]
[Pages 1914-1925]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-42]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-26719; File No. 812-13110]
IDS Life Insurance Company, et al., Notice of Application
January 5, 2005.
AGENCY: The Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an amended order pursuant to section
11(a) of the Investment Company Act of 1940, as amended (``Act'')
approving the terms of an offer of exchange.
-----------------------------------------------------------------------
Applicants: IDS Life Insurance Company (``IDS Life''), IDS Life
Variable Account 10 (``Account 10'') and IDS Life Accounts F, G, H, IZ,
JZ, KZ, LZ, MZ, N, PZ, QZ, RZ, SZ and TZ (``Old Accounts'' and
collectively with Account 10, ``Accounts'') (collectively,
``Applicants'').
Summary of Application: Applicants seek an order to amend an Existing
Order (described below) (``Amended Order'') pursuant to section 11(a)
of the Act to approve extending the terms of an existing offer of
exchange of certain outstanding annuity contracts issued by IDS Life
and made available through the Old Accounts (``Old Contracts'') for new
American Express Retirement Advisor Advantage Plus\sm\ Variable Annuity
contracts issued by IDS Life and made available through Account 10
(``RAVA Advantage Plus'' and collectively with the Old Contracts,
``Contracts'').
Filing Date: The Application was filed on July 19, 2004 and amended and
restated on December 20, 2004.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on January 31, 2005 and should be accompanied by proof of service
on the applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, NW., Washington, DC 20549-0609. Applicants, Mary Ellyn Minenko,
Vice President and Group Counsel, American Express Financial Advisors
Inc., 50607 AXP Financial Center, Minneapolis, MN 55474.
FOR FURTHER INFORMATION CONTACT: Mark Cowan, Senior Counsel, or Zandra
Bailes, Branch Chief, Office of Insurance Products, Division of
Investment Management, at (202) 942-0670.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch, 450 Fifth Street, NW., Washington,
DC 20549-0102 (telephone (202) 942-8090).
Applicants' Representations
1. IDS Life is a stock life insurance company organized in 1957
under the laws of the State of Minnesota. It conducts a conventional
life insurance business. IDS Life is registered with the Commission as
a broker-dealer under the Securities Exchange Act of 1934, as amended,
and is a member of the National Association of Securities Dealers. IDS
Life is a wholly owned subsidiary of American Express Financial
Corporation (``AEFC''). IDS Life is the issuer and principal
underwriter of the Contracts funded through the Accounts.
2. Account 10 is a segregated asset account of IDS Life. Account 10
funds the variable benefits available under RAVA Advantage Plus.
Account 10 and its component subaccounts are registered together with
the Commission as a single unit investment trust under the Act (File
No. 811-07355).
3. The Old Accounts are segregated asset accounts of IDS Life. The
Old Accounts fund the variable benefits available under the IDS Life
Variable Retirement Annuity (``VRA''), the IDS Life Combination
Retirement Annuity (``CRA''), the IDS Life Flexible Annuity (``Flex'')
and the IDS Life Employee Benefit Annuity (``EBA''). The Old Accounts
are registered together with the Commission as a single unit
[[Page 1915]]
investment trust under the Act (File No. 811-3217).
4. Applicants assert that in recent years the variable annuity
marketplace has become increasingly competitive. Many of the purchasers
of variable annuity contracts in the 1980s and early 1990s are at, or
close to, the expiration of their contingent deferred sales charge
(``CDSC'') periods, and the contract values of many contracts are no
longer subject to a CDSC. Holders of such contracts have become prime
targets for competitors' variable annuity sales efforts. One feature
offered to variable annuity purchasers is a ``bonus'' or ``credit''
funded from the insurer's general account, generally ranging from 1-4%
of contract value. IDS Life has experienced the effects of these
``bonus offers'' through the loss of a portion of its Old Contracts.
5. IDS Life states that its competitors are permitted to make bonus
offers to IDS Life's Old Contract owners because offers of exchange to
contract owners of unaffiliated insurance companies are not prohibited
by Section 11 of the Act by virtue of a no-action position granted to
Alexander Hamilton Funds (pub. avail. July 20, 1994) (``Alexander
Hamilton''). Applicants state that Alexander Hamilton stands for the
proposition that, except for limited exceptions, exchange offers
between unaffiliated investment companies are not prohibited under
section 11. Consistent with section 11(a), therefore, a fund may impose
a CDSC on shares purchased by investors with proceeds of shares from an
unaffiliated fund.
6. Applicants assert that, but for the existence of the affiliated
nature of the exchange, IDS Life would be able to offer an exchange
program to its existing Old Contract owners that is similar to its
competitors' programs. However, unlike its competitors who may make
bonus offers to Old Contract owners, IDS Life is constrained from
making a similar offer without first obtaining Commission approval of
the terms of the exchange.
Existing Exchange Offer
7. Applicants state that in response to this competitive dilemma,
IDS Life developed an offer of exchange. On March 12, 2002, the
Commission issued an order approving the terms of the offer of exchange
(``Existing Exchange Offer'') that permits eligible contract owners to
exchange Old Contracts for American Express Retirement Advisor
Advantage\sm\ Variable Annuity (``RAVA Advantage'') contracts issued by
IDS Life and made available through Account 10 (``Existing Order'').
RAVA Advantage is an enhanced contract that offers a lower mortality
and expense risk (``M&E'') charge than the Old Contracts, credits
(``Purchase Payment Credits'') on certain payments to the contracts
(initial payments and subsequent additional payments to the contracts
are referred to herein individually as a ``Purchase Payment'' and
collectively as ``Purchase Payments''), more subaccounts investing in
corresponding funds or portfolios (collectively, ``Investment Funds'')
and optional enhanced death benefits. IDS Life applies a credit to
certain exchanges (``Exchange Credit'' and collectively with Purchase
Payment Credits, ``Credits'') that is in addition to any Purchase
Payment Credit for which the contract owner would otherwise be eligible
under the RAVA Advantage contract.
8. When a contract owner exchanges into a RAVA Advantage contract,
he or she can allocate the Purchase Payment to any of the Investment
Funds available under RAVA Advantage. If a contract owner exercises the
free look option, IDS Life reverses either the RAVA Advantage contract
value (less any Credits) or the Purchase Payment made to the RAVA
Advantage contract, depending on applicable law. IDS Life applies this
amount to restore the Old Contract to the extent possible. IDS Life
allocates this amount to the selected Old Contract investments in the
proportions that existed just prior to the exchange. Any adjustments
made due to investment experience are allocated or deducted according
to the selected investment percentage allocations under the Old
Contract just prior to the exchange. Withdrawals made after the free
look period under RAVA Advantage has expired are governed by the terms
of the RAVA Advantage contract, including application of the CDSC. To
the extent a death benefit or surrender payment included any Credit
amounts applied within twelve months preceding: (i) The date of death
that results in a lump sum death benefit under RAVA Advantage; or (ii)
a request for a CDSC waiver due to the owner or annuitant's confinement
to a nursing home, IDS Life will recapture the Credits.
Extended Exchange Offer
9. In February 2004, IDS Life began selling RAVA Advantage Plus in
approved States. RAVA Advantage Plus is an enhanced version of RAVA
Advantage and is available as a nonqualified annuity for after-tax
contributions only, or as a qualified annuity under certain retirement
plans. RAVA Advantage Plus--Band 3 is available to current or retired
employees of AEFC and their spouses (collectively, ``Employees'');
current or retired financial advisors who are registered
representatives of IDS Life and their spouses (collectively,
``Advisors''); or individuals who, with IDS Life's approval, invest an
initial Purchase Payment of $1,000,000 or more (collectively, ``Band 3
Contracts''). RAVA Advantage Plus offers an additional death benefit,
additional Purchase Payment Credits under Band 3 Contracts, different
Investment Funds, guarantee period accounts (``GPAs''), an optional
guaranteed minimum withdrawal benefit (``Withdrawal Benefit''),
different transfer provisions and additional features such as a special
dollar-cost averaging program. If an Old Contract owner exchanged into
a RAVA Advantage Plus contract, he or she could allocate Purchase
Payments to any of the Investment Funds available under RAVA Advantage
Plus, including most of the Investment Funds available under the Old
Contract, as well as Investment Funds that are not available under the
Old Contract. To the extent a death benefit or surrender payment
included any Credit amounts applied within twelve months preceding: (i)
The date of death that results in a lump sum death benefit under RAVA
Advantage Plus; (ii) a request for a CDSC waiver due to the owner or
owner's spouse's confinement to a nursing home or hospital or the
owner's terminal illness; or (iii) the owner's settlement under an
annuity payout plan, IDS Life will recapture the Credits. If a non-
natural person owns the RAVA Advantage Plus contract, the benefits and
distributions under the contract are based on the life of the
annuitant.
10. Applicants now seek an Amended Order to approve extending the
terms of the Existing Exchange Offer to permit the exchange of the Old
Contracts for new RAVA Advantage Plus contracts in those states where
RAVA Advantage Plus is approved (``Extended Exchange Offer''). The
terms of the Extended Exchange Offer would be substantially similar to
those described in the Existing Order. Applicants state that the
Extended Exchange Offer, like the Existing Exchange Offer, is designed
to respond to IDS Life's competitive dilemma and to assure that
persisting contract owners who accept the Extended Exchange Offer
receive an immediate and enduring economic benefit.
Comparison of RAVA Advantage and RAVA Advantage Plus
11. The primary differences between RAVA Advantage and RAVA
Advantage Plus are as follows:
[[Page 1916]]
a. Purchase Payments
Both RAVA Advantage and RAVA Advantage Plus may be issued as a non-
qualified annuity for after-tax contributions only, or as a qualified
annuity under the following retirement plans: (i) Individual Retirement
Annuities, including Roth IRAs (collectively, ``IRAs''); (ii) SIMPLE
IRAs; (iii) Simplified Employee Pension (``SEP'') plans; (iv) plans
under Section 401(k) of the Internal Revenue Code of 1986, as amended
(``Code'') (``section 401(k) Plans''); (v) custodial and trusteed plans
under section 401(a) of the Code (``section 401(a) Plans''); or (vi)
Tax-Sheltered Annuities under section 403(b) of the Code (``TSAs'').
Under RAVA Advantage, the owner may allocate Purchase Payments to
subaccounts or the fixed account in even 1% increments. Under RAVA
Advantage Plus, if the owner has not selected the Withdrawal Benefit,
the owner may allocate Purchase Payments to the subaccounts, GPAs (in
approved States), the fixed account and/or the special dollar cost
averaging account (when available) in even 1% increments. If the owner
has selected the Withdrawal Benefit, the owner must allocate Purchase
Payments in accordance with an available asset allocation program. IDS
Life reserves the right to not accept Purchase Payments allocated to
the fixed account for twelve months following either a partial
surrender from the fixed account or a lump sum transfer from the fixed
account to a subaccount.
b. Investment Funds and Other Investment Options
Owners of RAVA Advantage contracts currently may allocate their
Purchase Payments among 53 Investment Funds from 17 fund families.
Owners of RAVA Advantage Plus contracts currently may allocate their
Purchase Payments among 56 Investment Funds from 17 fund families. RAVA
Advantage also offers a fixed account investment option with a
guaranteed minimum interest rate of 3% on an annual basis. RAVA
Advantage Plus offers a fixed account investment option with a
guaranteed minimum interest rate ranging from 1.5% to 3% on an annual
basis depending on the State in which the contract is issued. In
addition, RAVA Advantage Plus offers GPAs (in approved States). The
owner may allocate Purchase Payments and Purchase Payment Credits to
one or more of the GPAs with guarantee periods that IDS Life declares.
Each GPA pays an interest rate that IDS Life declares when the owner
makes an allocation to the account.
c. Optional Withdrawal Benefit
RAVA Advantage Plus contains a new optional living benefit that
currently is not available under RAVA Advantage. The Withdrawal Benefit
is available (in approved States) if the owner is age 75 or younger at
contract issue. The Withdrawal Benefit gives the owner the right to
take limited partial withdrawals in each contract year that ultimately
equal Purchase Payments plus Purchase Payment Credits, as adjusted for
certain excess withdrawals. The Guaranteed Benefit Payment is the
amount that the owner is entitled to take through partial withdrawals
each contract year. An annual Elective Step up option is available that
allows the owner to step up the Guaranteed Benefit Amount to 100% of
the contract anniversary value, subject to certain rules. The
Withdrawal Benefit requires that the owner participate in an available
asset allocation program. The current cost of the Withdrawal Benefit is
0.60%. IDS Life reserves the right to increase this cost up to a
maximum of 2.50% for new RAVA Advantage Plus contract owners. However,
any change to the cost will only apply to an existing RAVA Advantage
Plus contract owner if: (i) He or she changes asset allocation models
and the current cost for new owners is higher than the cost currently
paid by the existing owner; or (ii) the existing RAVA Advantage Plus
contract owner chooses the annual Elective Step up and the current cost
for new owners is higher than the cost currently paid by the existing
owner. IDS Life also reserves the right to charge a fee that varies by
the asset allocation model selected.
d. Transfers
Under RAVA Advantage the owner may transfer contract values between
the subaccounts, or from the subaccounts to the fixed account. However,
certain restrictions apply with respect to the timing of transfers from
the fixed account. Under RAVA Advantage Plus, if required to
participate in the asset allocation program in connection with the
Withdrawal Benefit, the owners may not make transfers except among the
various asset allocation models then available. Otherwise, the owner
may transfer contract values between the subaccounts. The owner also
may transfer contract values from the subaccounts to the GPAs and the
fixed account. However, certain restrictions apply with respect to the
timing of transfers from the fixed account. The owner may transfer
contract values from any GPA to the subaccounts, fixed account or
another GPA any time after 60 days of transfer or Purchase Payment
allocation into that GPA. Transfers made more than 30 days before the
end of the guarantee period will receive a market value adjustment,
which may result in a gain or loss of contract value.
e. Purchase Payment Credits
Under RAVA Advantage, the Purchase Payment Credits are: 1% of each
Purchase Payment received if the owner selected the ten-year CDSC
schedule and the initial Purchase Payment is under $100,000 or if the
owner selected the seven-year CDSC schedule and the initial Purchase
Payment is at least $100,000; and 2% of each Purchase Payment received
if the owner selected the ten-year CDSC schedule and the initial
Purchase Payment is at least $100,000.
Under RAVA Advantage Plus, the Purchase Payment Credits are: 1% of
each Purchase Payment received if the owner selected the ten-year CDSC
schedule and the initial Purchase Payment is under $100,000 or if the
owner selected the seven-year CDSC schedule and the initial Purchase
Payment is at least $100,000 but less than $1,000,000; and 2% of each
Purchase Payment received if the owner selected the ten-year CDSC
schedule and the initial Purchase Payment is at least $100,000 but less
than $1,000,000. For Band 3 Contracts, the Purchase Payment Credits
are: 2% of each Purchase Payment received if the owner selected the
seven-year CDSC schedule; and 3% of each Purchase Payment received if
the owner selected the ten-year CDSC schedule.
f. Recapture of Purchase Payment Credits
Under RAVA Advantage, IDS Life currently recaptures Purchase
Payment Credits if the owner returns the RAVA Advantage contract during
the free look period. IDS Life also may recapture Purchase Payment
Credits if they were applied within twelve months preceding: the date
of death that results in a lump sum death benefit; or a request for a
surrender due to the owner or annuitant's confinement to a nursing
home. See, IDS Life Insurance Company, et al., Investment Company Act
Release Nos. 24220 (December 23, 1999) (Notice) and 24257 (January 19,
2000) (Order).
Under RAVA Advantage Plus, IDS Life currently recaptures Purchase
Payment Credits if the owner returns the RAVA Advantage Plus contract
during the free look period. IDS Life also may recapture Purchase
Payment Credits if they were applied within twelve months
[[Page 1917]]
preceding: the date of death that results in a lump sum death benefit;
a request for a surrender due to the owner or owner's spouse's
confinement to a nursing home or hospital or the owner's terminal
illness; or settlement under an annuity payout plan. See, IDS Life
Insurance Company, et al., Investment Company Act Release Nos. 26338
(January 22, 2004) (Notice) and 26354 (February 20, 2004) (Order).
g. Surrender Options
Under RAVA Advantage, the owner can access contract values at any
time through partial or full surrender and the owner has a Free
Withdrawal Amount equal to earnings or up to 10% of the prior
anniversary contract value per contract year (if not already included
in earnings).
Under RAVA Advantage Plus, the owner can access contract values at
any time through partial or full surrender. If the owner has not
selected the Withdrawal Benefit, the owner has a Total Free Amount
equal to earnings or up to 10% of the prior anniversary contract value
per contract year (if not already included in earnings). If the owner
selected the Withdrawal Benefit, the owner may withdraw up to the
Guaranteed Benefit Payment each contract year. Amounts withdrawn in
excess of Guaranteed Benefit Payment may reduce future amounts
available under the Withdrawal Benefit.
h. All Standard and Optional Death Benefits
Under RAVA Advantage, payment to the beneficiary occurs upon the
earlier of the owner or annuitant's death, and benefits are based on
the age of both the owner and annuitant. Under RAVA Advantage Plus,
payment to the beneficiary occurs upon the owner's death, and benefits
are based on the age of the owner.
i. Standard Death Benefit
Under RAVA Advantage, if the owner and annuitant are age 80 or
younger on date of death, the death benefit is the greatest of: The
contract value; the contract value as of most recent sixth contract
anniversary plus subsequent Purchase Payments less adjusted partial
surrenders; or Purchase Payments less adjusted partial surrenders. If
either the owner or annuitant is age 81 or older on the date of death,
the death benefit is the greatest of: The contract value; or Purchase
Payments less adjusted partial surrenders. The benefit provided under
the optional Return of Purchase Payments Death Benefit (``ROPP Death
Benefit'') described below is included in the RAVA Advantage standard
death benefit at no extra cost.
Under RAVA Advantage Plus, if the owner is age 75 or younger at
contract issue, the death benefit is the greater of: the contract
value, less any Purchase Payment Credits subject to recapture and less
a pro rata portion of any rider fees; or Purchase Payments less
adjusted partial surrenders. If the owner is age 76 or older at
contract issue, the death benefit is: The contract value, less any
Purchase Payment Credits subject to recapture and less a pro rata
portion of any rider fees.
j. Optional Return of Purchase Payment (``ROPP'') Death Benefit
Under RAVA Advantage Plus, the ROPP Death Benefit is available (in
approved states) if the owner is age 76 or older at contract issue. The
benefit provided by the ROPP Death Benefit is included in the standard
death benefit if the owner is age 75 or younger at contract issue at no
additional cost. The ROPP Death Benefit states that, upon the owner's
death before annuity payouts begin and while the contract is in force,
IDS Life will pay the designated beneficiary the greater of: The
contract value, less Purchase Payment Credits subject to recapture and
less a pro rata portion of any rider fees; or Purchase Payments minus
adjusted partial surrenders. The current cost of the ROPP Death Benefit
is 0.20%. IDS Life reserves the right to increase the cost after the
tenth rider anniversary to a maximum of 0.30% and to discontinue
offering the ROPP Death Benefit for new RAVA Advantage Plus contracts.
k. Optional Maximum Anniversary Value (``MAV'') Death Benefit
The optional MAV Death Benefit is available under both RAVA
Advantage and RAVA Advantage Plus. Under RAVA Advantage, the MAV Death
Benefit is available (in approved States) if both the owner and
annuitant are age 75 or younger at contract issue. The MAV Death
Benefit states that, upon the earlier of the owner or annuitant's death
before annuity payouts begin and while the contract is in force, IDS
Life will pay the designated beneficiary the Maximum Anniversary Value
(``MAV'').
Under RAVA Advantage Plus, the MAV Death Benefit is available (in
approved States) if the owner is age 75 or younger at contract issue.
The MAV Death Benefit states that, upon the owner's death before
annuity payouts begin and while the contract is in force, IDS Life will
pay the designated beneficiary the greatest of: The contract value,
less Purchase Payment Credits subject to recapture and less a pro rata
portion of any rider fees; Purchase Payments minus adjusted partial
surrenders; or the MAV as calculated on the most recent contract
anniversary plus subsequent Purchase Payments made and minus
adjustments for partial surrenders since that contract anniversary. The
current cost of the MAV Death Benefit under RAVA Advantage Plus is
0.25%. IDS Life reserves the right to increase this cost after the
tenth rider anniversary to a maximum of 0.35% and to discontinue
offering the MAV Death Benefit for new RAVA Advantage Plus contracts. A
fee discount of 0.10% applies if the owner purchases the MAV Death
Benefit with either the EEB or EEP (described below).
l. Optional Maximum Five-Year Anniversary Value (``5-Year MAV'') Death
Benefit
RAVA Advantage Plus contains a new optional death benefit that
currently is not available under RAVA Advantage. The 5-Year MAV Death
Benefit is available (in approved states) if the owner is age 75 or
younger at contract issue. The 5-Year MAV Death Benefit states that,
upon the owner's death before annuity payouts begin and while the
contract is in force, IDS Life will pay the designated beneficiary the
greatest of: The contract value, less Purchase Payment Credits subject
to recapture and less a pro rata portion of any rider fees; Purchase
Payments minus adjusted partial surrenders; or the MAV as calculated on
the most recent fifth contract anniversary plus subsequent Purchase
Payments made and minus adjustments for partial surrenders since that
contract anniversary. The current cost of the 5-Year MAV Death Benefit
is 0.10%. IDS Life reserves the right to increase this cost after the
tenth rider anniversary to a maximum of 0.20% and to discontinue
offering the 5-Year MAV Death Benefit for new RAVA Advantage Plus
contracts. A fee discount of 0.05% applies if the owner purchases the
5-Year MAV Death Benefit with either the EEB or EEP (described below).
m. Optional Enhanced Earnings Death Benefit (``EEB'')
The optional EEB is available under both RAVA Advantage and RAVA
Advantage Plus. Under RAVA Advantage, the EEB is available (in approved
States) if both the owner and annuitant are age 75 or younger at the
rider effective date. The EEB states that, upon the earlier of the
owner or annuitant's death after the first contract anniversary but
before annuity payouts begin and while the contract is in force, IDS
Life will pay the designated
[[Page 1918]]
beneficiary the standard death benefit or the MAV Death Benefit, if
applicable, plus: 40% of earnings at death if the owner and the
annuitant were under age 70 on the rider effective date, up to a
maximum of 100% of Purchase Payments not previously surrendered that
are one or more years old; or 15% of earnings at death if the owner or
the annuitant were age 70 to 75 on the rider effective date, up to a
maximum of 37.5% of Purchase Payments not previously surrendered that
are one or more years old. The cost of the EEB under RAVA Advantage is
0.30%.
Under RAVA Advantage Plus, the EEB is available (in approved
States) if the owner is age 75 or younger at the rider effective date.
The EEB states that, upon the owner's death after the first contract
anniversary but before annuity payouts begin and while the contract is
in force, IDS Life will pay the designated beneficiary the standard
death benefit or the MAV Death Benefit or 5-Year MAV Death Benefit, if
applicable, plus: 40% of earnings at death if the owner was under age
70 on the rider effective date, up to a maximum of 100% of Purchase
Payments not previously surrendered that are one or more years old; or
15% of earnings at death if the owner was age 70 to 75 on the rider
effective date, up to a maximum of 37.5% of Purchase Payments not
previously surrendered that are one or more years old. The current cost
of the EEB under RAVA Advantage Plus is 0.30%. IDS Life reserves the
right to increase this cost after the tenth rider anniversary to a
maximum of 0.40% and to discontinue offering the EEB for new RAVA
Advantage Plus contracts. A fee discount of 0.10% applies if the owner
purchases the MAV Death Benefit with the EEB and a fee discount of
0.05% applies if the owner purchases the 5-Year MAV Death Benefit with
the EEB.
n. Optional Enhanced Earnings Plus Death Benefit (``EEP'')
The optional EEP is available under both RAVA Advantage and RAVA
Advantage Plus. Under RAVA Advantage, this benefit is available (in
approved states) if both the owner and annuitant are age 75 or younger
at contract issue, and the contract is purchased through an exchange.
The EEP states that, upon the earlier of the owner or annuitant's
death, after the first contract anniversary but before annuity payouts
begin and while the contract is in force, IDS Life will pay the
designated beneficiary: EEP Part I benefits, which equal the benefits
payable under the EEB described above; plus EEP Part II benefits, which
equal a percentage of exchanged Purchase Payments identified at issue
and not previously surrendered as follows:
------------------------------------------------------------------------
Percentage if Percentage if
owner and owner or
annuitant are annuitant are
Contract year date under age 70 on 70-75 on the
the rider rider
effective date effective date
------------------------------------------------------------------------
One and Two.......................... 0 0
Three and Four....................... 10 3.75
Five or more......................... 20 7.5
------------------------------------------------------------------------
The cost of the EEP under RAVA Advantage is 0.40%.
Under RAVA Advantage Plus, the EEP is available (in approved
States) if the owner is age 75 or younger at contract issue. The EEP
states that, upon the owner's death after the first contract
anniversary but before annuity payouts begin and while the contract is
in force, IDS Life will pay the designated beneficiary: EEP Part I
benefits, which equal the benefits payable under the EEB described
above; plus EEP Part II benefits, which equal a percentage of exchanged
Purchase Payments identified at issue and not previously surrendered as
follows:
------------------------------------------------------------------------
Percentage if Percentage if
owner is under owner is age
Contract year age 70 on the 70-75 on the
rider effective rider
date effective date
------------------------------------------------------------------------
One and Two.......................... 0 0
Three and Four....................... 10 3.75
Five or more......................... 20 7.5
------------------------------------------------------------------------
The current cost of the EEP under RAVA Advantage Plus is 0.40%. IDS
Life reserves the right to increase this cost after the tenth rider
anniversary to a maximum of 0.50% and to discontinue offering the EEP
for new RAVA Advantage Plus contracts. A fee discount of 0.10% applies
if the owner purchases the MAV Death Benefit with the EEP and a fee
discount of 0.05% applies if the owner purchases the 5-Year MAV Death
Benefit with the EEP.
o. Annuity Payout Options
There are five annuity payout options under both RAVA Advantage and
RAVA Advantage Plus: (A) Life annuity--no refund; (B) life annuity with
five, ten or 15 years certain; (C) life annuity--installment refund;
(D) joint and last survivor life annuity--no refund; and (E) payouts
for a specified period. These five annuity payouts are available on a
fixed or variable basis, or a combination of both. A sixth annuity
payout option, the Remaining Benefit Amount Payout Option, is available
only under the Withdrawal Benefit under RAVA Advantage Plus. This sixth
annuity payout is available on a fixed basis only. IDS may also agree
to other payout arrangements.
p. Asset Rebalancing
Under both RAVA Advantage and RAVA Advantage Plus, if the owner has
not selected the Withdrawal Benefit, the owner can elect to have the
variable subaccount portion of the contract value automatically
rebalanced on either a quarterly, semi-annual or annual basis, based on
the allocations chosen by the
[[Page 1919]]
contract owner. Under RAVA Advantage Plus, if the owner has selected
the Withdrawal Benefit and therefore is required to participate in an
asset allocation program, IDS rebalances contract values quarterly.
There is no additional cost for asset rebalancing.
q. Other Features
Both RAVA Advantage and RAVA Advantage Plus provide for dollar-cost
averaging. In addition, RAVA Advantage Plus provides for a special
dollar-cost averaging program (which may not be available at all
times). IDS Life reserves the right to add new contract features to
RAVA Advantage and/or RAVA Advantage Plus.
r. CDSC Schedules
Under both RAVA Advantage and RAVA Advantage Plus, IDS Life
assesses a CDSC against partial or full surrenders in excess of the
Free Withdrawal Amount/ Total Free Amount. IDS Life applies a CDSC on
each Purchase Payment. The length of time from receipt of a Purchase
Payment to the time of surrender determines the percentage of CDSC.
Under the seven-year CDSC period, the CDSC ranges from 7% in year 1 to
0% in year 8 and after. Under the ten-year CDSC period, the CDSC ranges
from 8% in year 1 to 0% in year 11 and after. IDS Life does not assess
a CDSC on contract earnings, Free Withdrawal Amounts/ Total Free
Amounts, required minimum distributions (provided the amount is no
greater than the required minimum distribution amount calculated under
the specific contract, currently in force), amounts refunded during the
free look period, death benefits, or if payments are made under any
annuity payout option (unless payouts made under annuity payout option
E are later surrendered). Additionally, the RAVA Advantage contract
provides for a waiver of the CDSC if the owner or annuitant is confined
to a nursing home, and has been for the prior 90 days, and confinement
began after the contract date. RAVA Advantage Plus provides for a
waiver of the CDSC if the owner or the owner's spouse is confined to a
nursing home or hospital, and has been for the prior 60 days, and
confinement began after the contract date. RAVA Advantage Plus also
provides for a waiver of the CDSC if the owner is diagnosed in the
second or later contract years as disabled with a medical condition
that with reasonable medical certainty will result in death within 12
months or less from the date of a licensed physician's statement.
s. M&E Charge
During the life of the RAVA Advantage contract, IDS life deducts an
M&E charge at an annual rate of 0.95% of the average daily subaccount
value for nonqualified annuity contracts and 0.75% of the average daily
subaccount value for qualified annuity contracts. During the life of
the RAVA Advantage Plus contract, IDS life deducts an M&E charge at an
annual rate of 0.95% of the average daily subaccount value for
nonqualified annuity contracts, 0.75% of the average daily subaccount
value for qualified annuity contracts and 0.55% of the average daily
subaccount value for Band 3 Contracts.
t. Contract Administrative Charge
Under both RAVA Advantage and RAVA Advantage Plus, IDS Life deducts
an annual charge of $30 for administrative expenses from the contract
value of each contract. For RAVA Advantage Plus, IDS Life reserves the
right to increase this annual contract administrative charge after the
first contract anniversary to a maximum of $50. Under RAVA Advantage
and RAVA Advantage Plus, IDS Life waives the contract administrative
charge when the contract value, or total Purchase Payments less any
Purchase Payments surrendered, is $50,000 or more on the current
contract anniversary.
u. Premium Tax
Under both RAVA Advantage and RAVA Advantage Plus, IDS life deducts
premium taxes of up to 3.5%, if applicable. These taxes depend upon the
contract owner's state of residence or the State in which the contract
was sold. Currently IDS Life deducts any applicable premium tax when
annuity payouts begin. However, IDS Life reserves the right to deduct
this tax at other times such as when a contract is surrendered.
v. Operating Expenses of the Investment Funds
Under both RAVA Advantage and RAVA Advantage Plus, assets invested
in the Investment Funds are charged with the annual operating expenses
of those Investment Funds.
The Old Contracts
12. VRA and CRA are registered together under the 1933 Act (File
No. 2-73114). IDS Life no longer offers VRA contracts. IDS Life offers
CRA contracts only for limited purposes. VRA and CRA both were issued
as nonqualified annuities for after-tax contributions only, or as
qualified annuities under the following retirement plans: (i) IRAs;
(ii) SEP plans; (iii) Section 401(k) Plans; (iv) Section 401(a) Plans;
(v) TSAs, or (vi) plans under Section 457 of the Code (``Section 457
Plans''). VRA was purchased with a single Purchase Payment between
$5,000 and $500,000. No additional Purchase Payments are allowed under
VRA. CRA may be purchased with a minimum initial Purchase Payment of
$600, or in minimum installments of $50 per month or $23.08 biweekly
under a scheduled payment plan. An owner may make additional Purchase
Payments to CRA, which require a $50 minimum (unless Purchase Payments
are made by installments under a scheduled payment plan), subsequent to
the initial Purchase Payment. Maximum limitations on Purchase Payments
are imposed for the first year and subsequent years, depending on
whether the annuity is nonqualified or qualified. Participants in the
CRA Select University of Wisconsin TSA Plan (``CRA Select'') bought CRA
with installment payments of $200 to $25,000 annually.
13. Owners of VRA and CRA contracts currently may allocate their
Purchase Payments among 14 Old Accounts that invest in 14 corresponding
Investment Funds (most of which currently are available under RAVA
Advantage Plus). CRA also offers a fixed account investment option with
a guaranteed minimum interest rate of 3.5% to 4% on an annual basis
depending on when the CRA contract was issued. VRA does not have a
fixed account investment option.
14. Owners of VRA and CRA contracts may transfer contract values
among the Old Accounts without charge. Transfers to and from CRA's
fixed account are permitted, subject to certain restrictions described
in the prospectus for the CRA contracts.
15. The owner of a VRA or CRA contract can access contract values
at any time before annuity payouts begin by means of partial surrenders
or a full surrender. In addition, VRA permits the owner a Free
Withdrawal Amount of up to 10% of the initial Purchase Payment amount
each year after the first without incurring a CDSC. CRA Select permits
an annual Free Withdrawal Amount of 10% of the contract value at the
beginning of each contract year. There are no other Free Withdrawal
Amounts under CRA.
16. The death benefit under VRA and CRA is available at no extra
cost. The death benefit provision under both VRA and CRA states that,
upon the earlier of the owner or annuitant's death before annuity
payouts begin and while the contract is in force, IDS Life will pay the
following death benefits to the designated beneficiary: (i) If death
[[Page 1920]]
occurs before the annuitant's 75th birthday, the beneficiary receives
the greater of the contract value; or Purchase Payments, minus any
surrenders, or (ii) if death occurs on or after the annuitant's 75th
birthday, the beneficiary receives the contract value.
17. The VRA and CRA contracts contain the same annuity payout
options A through E as RAVA Advantage Plus. Annuity payouts are
available on a fixed or variable basis, or a combination of both.
18. Under VRA, IDS Life assesses a CDSC against partial or full
surrenders in excess of the Free Withdrawal Amount. The CDSC applies to
surrenders in the first seven contract years as a percentage of the
amount surrendered. The CDSC ranges from 7% in the first contract year
to 0% after 7 contract years. Under CRA, IDS Life assesses a CDSC
against partial or full surrenders (in excess of the Free Withdrawal
Amount for CRA Select). The CDSC is a percentage of the amount
surrendered. Three separate CDSC periods apply to the three different
versions of CRA. For the original CRA, which is no longer sold, the
CDSC applies to surrenders in the first eleven contract years and
ranges from 7% in the first contract year to 0% after 11 contract
years. For CRA Select, which funded the University of Wisconsin TSA
Plan but is no longer sold, the CDSC applies to surrenders in the first
eight contract years and ranges from 7% in the first contract year to
0% after 8 contract years. For the CRA version that currently is sold
for conversions from American Express Retirement Services or other IDS
Life retirement annuities under which conversion is available, the CDSC
applies to surrenders in the first seven contract years and ranges from
6% in the first contract year to 0% after 7 contract years. IDS Life
does not assess a CDSC on Free Withdrawal Amounts under any VRA or CRA
Select contract, required minimum distributions (provided the amount is
no greater than the required minimum distribution amount calculated
under the specific contract, currently in force), amounts refunded
during the free look period, death benefits, or if payments are made
under any annuity payout option (unless payouts made under annuity
payout option E are later surrendered).
19. During the life of each VRA and CRA contract, IDS Life deducts
an M&E charge at an annual rate of 1% of the average daily variable
account value.
20. IDS Life deducts a charge for administrative expenses annually
from the contract value of each VRA and CRA contract. The annual
contract administrative charge is $20 per contract year for VRA and $30
per contract year for CRA.
21. IDS Life deducts premium taxes of up to 3.5%, if applicable,
and under the same terms as RAVA Advantage Plus.
22. Assets invested in the Investment Funds are charged with the
annual operating expenses of those Investment Funds.
23. Flex is registered under the 1933 Act (File No. 33-4173). IDS
Life no longer offers Flex contracts. Flex was issued as a nonqualified
annuity for after-tax contributions only, or as a qualified annuity
under the following retirement plans: (i) IRAs; (ii) SEP plans; (iii)
Section 401(k) Plans; (iv) Section 401(a) Plans; (v) TSAs; or (vi)
Section 457 Plans. Flex was purchased with a minimum initial Purchase
Payment of $1,000 for qualified annuities or $2,000 for nonqualified
annuities, or in minimum installments of $50 per month or $23.08
biweekly under a scheduled payment plan. An owner may make additional
Purchase Payments, which require a $50 minimum (unless Purchase
Payments are made by installments under a scheduled payment plan),
subsequent to the initial Purchase Payment. Maximum limitations on
Purchase Payments are imposed for the first year, depending on the age
of the owner or annuitant, and for each subsequent year.
24. Owners of Flex contracts currently may allocate their Purchase
Payments among the 14 Old Accounts that invest in 14 corresponding
Investment Funds (most of which currently are available under RAVA
Advantage Plus). Flex also offers a fixed account investment option
with guaranteed minimum interest rates ranging from 3% to 4% on an
annual basis, depending on when the Flex contract was issued.
25. Owners of Flex contracts may transfer contract values among the
Old Accounts without charge. Transfers to and from the fixed account
are permitted, subject to certain restrictions described in the
prospectus for the Flex contracts.
26. The owner of a Flex contract can access contract values at any
time before annuity payouts begin by means of partial surrenders or a
full surrender. In addition, Flex permits the owner a Free Withdrawal
Amount of contract earnings without incurring a CDSC.
27. The death benefit under Flex is available at no extra cost. The
death benefit provision states that, upon the earlier of the owner or
annuitant's death before annuity payouts begin and while the contract
is in force, IDS Life will pay the following death benefits to the
designated beneficiary: (i) If death occurs before the annuitant's 75th
birthday, the beneficiary receives the greatest of the contract value;
the contract value as of the most recent sixth contract anniversary,
minus any surrenders since that anniversary; or Purchase Payments,
minus any surrenders; or (ii) if death occurs on or after the
annuitant's 75th birthday, the beneficiary receives the greater of the
contract value; or the contract value as of the most recent sixth
contract anniversary, minus any surrenders since that anniversary.
28. Flex contains the same annuity payout options A through E as
RAVA Advantage Plus. Annuity payouts are available on a fixed or
variable basis, or a combination of both.
29. Under Flex, IDS Life assesses a CDSC against partial or full
surrenders in excess of the Free Withdrawal Amount. IDS Life applies a
CDSC of 7% on each Purchase Payment if the contract owner requests a
surrender within six years of making that Purchase Payment. The Flex
contract provides for a waiver of the CDSC for amounts surrendered
after the later of the annuitant's attaining age 65 or the tenth
contract anniversary. Additionally, IDS Life does not assess a CDSC on
contract earnings, required minimum distributions (provided the amount
is no greater than the required minimum distribution amount calculated
under the specific contract, currently in force), death benefits, or if
payments are made under any annuity payout option (unless payouts made
under annuity payout option E are later surrendered).
30. During the life of the Flex contract, IDS Life deducts an M&E
charge at an annual rate of 1% of the average daily variable account
value.
31. IDS Life deducts a charge of $6 for administrative expenses at
the end of each contract quarter from the contract value of the Flex
contract (which equals an annual charge of $24 per contract year).
32. IDS Life deducts premium taxes of up to 3.5%, if applicable,
and under the same terms as RAVA Advantage Plus.
33. Assets invested in the Investment Funds are charged with the
annual operating expenses of those Investment Funds.
34. EBA is registered under the 1933 Act (File No. 33-52518). IDS
Life no longer offers EBA contracts. EBA was issued only as a group
TSA. EBA was purchased with a minimum initial Purchase Payment of
$1,000 or in minimum installments of $25 per month or $300 annually
under a scheduled payment plan. An owner may make additional Purchase
Payments, which require a $50 minimum (unless
[[Page 1921]]
Purchase Payments are made by installments under a scheduled payment
plan), subsequent to the initial Purchase Payment. Maximum limitations
on Purchase Payments are imposed for the first year, depending on the
age of the contract owner, and for each subsequent year.
35. Owners of EBA contracts currently may allocate their Purchase
Payments among the 14 Old Accounts that invest in 14 corresponding
Investment Funds (most of which currently are available under RAVA
Advantage Plus). EBA also offers a fixed account investment option with
a guaranteed minimum interest rate of 4% on an annual basis.
36. Owners of EBA contracts may transfer contract values among the
Old Accounts without charge. Transfers to and from the fixed account
are permitted, subject to certain restrictions described in the
prospectus for the EBA contracts.
37. Subject to certain restrictions imposed by the Code, the owner
of an EBA contract can access certificate values at any time before
annuity payouts begin by means of partial surrenders or a full
surrender.
38. The death benefit under EBA is available at no extra cost. The
death benefit provision states that, upon the owner/annuitant's death
before annuity payouts begin and while the contract is in force, IDS
Life will pay the following death benefits to the designated
beneficiary: (i) If death occurs before the annuitant's 75th birthday,
the beneficiary receives the greater of the certificate value; or
Purchase Payments, minus any surrenders; or (ii) if death occurs on or
after the annuitant's 75th birthday, the beneficiary receives the
certificate value.
39. EBA contains the same annuity payout options A through E as
RAVA Advantage Plus. Annuity payouts are available on a fixed or
variable basis, or a combination of both.
40. Under EBA, IDS Life assesses a CDSC against partial or full
surrenders in the first eleven certificate years as a percentage of the
amount surrendered. The CDSC ranges from 8% in the first certificate
year to 0% after 11 certificate years. The EBA contract provides for a
waiver of the CDSC for amounts surrendered due to the owner's
retirement under the TSA plan on or after age 55. Additionally, IDS
Life does not assess a CDSC on required minimum distributions (provided
the amount is no greater than the required minimum distribution amount
calculated under the specific contract, currently in force), amounts
refunded during the free look period, death benefits, or if payments
are made under any annuity payout option (unless payouts made under
annuity payout option E are later surrendered).
41. During the life of the EBA contract, IDS Life deducts an M&E
charge at an annual rate of 1% of the average daily variable account
value.
42. IDS Life deducts a $30 charge for administrative expenses at
the end of each certificate year from the certificate value of the EBA
contract.
43. IDS Life deducts premium taxes of up to 3.5%, if applicable,
and under the same terms as RAVA Advantage Plus.
44. Assets invested in the Investment Funds are charged with the
annual operating expenses of those Investment Funds.
45. Applicants represent that the features and benefits of RAVA
Advantage Plus will be no less favorable than those under the Old
Contracts, with some exceptions for differences in the guaranteed
minimum interest rate under the fixed account investment option, lower
annuity settlement rates, some additional transfer restrictions and
lower initial death benefits. Applicants also represent that, with some
exceptions for the CDSC, the charge for administrative expenses and
optional charges for optional death benefits, the fees and charges of
the RAVA Advantage Plus contract will be no higher than those of the
Old Contracts.
Terms of the Extended Exchange Offer
46. Applicants propose to offer eligible owners of Old Contracts
the opportunity to exchange their Old Contracts for RAVA Advantage Plus
by means of the Extended Exchange Offer. Partial exchanges will not be
permitted.
47. To be eligible for the Extended Exchange Offer, an Old Contract
owner must meet all of the following criteria: (i) Have completed ten
or more contract or certificate years under the Old Contract; (ii) have
not made Purchase Payments greater than $4,000 in any tax year under
the Old Contract in the 36 months prior to accepting the Extended
Exchange Offer (except for installment payments made under a scheduled
payment plan); and (iii) have a remaining CDSC of 2% or less of the
contract or certificate value of the Old Contract. IDS Life reserves
the right to expand the Extended Exchange Offer to owners of contracts
who have completed less than ten contract or certificate years under
the Old Contract or who have made Purchase Payments greater than $4,000
in any tax year under the Old Contract in the 36 months prior to
accepting the Extended Exchange Offer. IDS Life also reserves the right
to require a minimum contract or certificate value (``Exchange Value'')
plus any additional transfers or rollovers for qualified annuities or
any additional Purchase Payments or exchanges for nonqualified
annuities (individually and collectively, the ``Additional Amounts'')
for eligibility for the Extended Exchange Offer and to change those
minimum amounts from time to time.
48. If an owner accepts the Extended Exchange Offer, IDS Life will
allocate to the owner's account either a Purchase Payment Credit or an
Exchange Credit. Under RAVA Advantage Plus, each time IDS Life receives
a Purchase Payment from an owner, it allocates to the owner's account a
Purchase Payment Credit equal to 1% of each Purchase Payment received:
(i) If the owner selected the ten-year CDSC schedule and the initial
Purchase Payment is under $100,000; or (ii) if the owner selected the
seven-year CDSC schedule and the initial Purchase Payment is at least
$100,000 but less than $1,000,000. Each time IDS Life receives a
Purchase Payment from the owner, it allocates to the owner's account a
Purchase Payment Credit equal to 2% of each Purchase Payment received
if the owner selected the ten-year CDSC schedule and the initial
Purchase Payment is at least $100,000 but less than $1,000,000. Under
the Band 3 Contracts, each time IDS Life receives a Purchase Payment
from the owner, it allocates to the owner's account a Purchase Payment
Credit equal to 2% of each Purchase Payment received if the owner
selected the seven-year CDSC schedule and 3% of each Purchase Payment
received if the owner selected the ten-year CDSC schedule. To increase
the likelihood of remaining eligible to receive the applicable Purchase
Payment Credit based on the initial Purchase Payment amount, the Old
Contract owner could transfer that contract or certificate value
allocated to the Old Accounts to the Old Account investing in the AXP
[supreg] VP Cash Management Fund while the exchange is pending to help
reduce the risk of market volatility.
49. Under the terms of the RAVA Advantage Plus contract, if the
initial Purchase Payment is less than $100,000, IDS Life will not
allocate a 1% Purchase Payment Credit based on the initial Purchase
Payment amount. However, in those cases where the initial Purchase
Payment is less than $100,000, IDS Life will provide, from its general
account assets, a 1% Exchange Credit based on the Exchange Value of the
Old Contract applied to RAVA Advantage Plus on the day the exchange is
effected (``Exchange Date''). This 1% Exchange Credit will not apply to
subsequent Purchase Payments to RAVA Advantage Plus.
[[Page 1922]]
However, even when the initial Purchase Payment is less than $100,000,
IDS Life will allocate a Purchase Payment Credit of 1% of the initial
Purchase Payment and 1% of each subsequent Purchase Payment received if
the owner selects the ten-year CDSC period.
50. Upon the owner's acceptance of the Extended Exchange Offer, IDS
Life will issue a RAVA Advantage Plus contract with all applicable
Credits. No CDSC will be deducted upon the surrender of an Old Contract
in connection with the exchange. The Exchange Value of each Old
Contract, together with any applicable Additional Amounts and Credits,
will be applied to the new RAVA Advantage Plus contract as of the
Exchange Date. The Exchange Date will be the contract date of the new
RAVA Advantage Plus contract for purposes of determining contract years
and anniversaries after the Exchange Date.
51. If the owner of the new RAVA Advantage Plus contract exercises
the free look option, IDS Life will recapture any Credits. IDS Life
will reverse either the RAVA Advantage Plus contract value (less any
Credits and reflecting any applicable market value adjustment) or the
Purchase Payment made to the RAVA Advantage Plus contract, depending on
applicable law. IDS Life will apply this amount to restore the Old
Contract to the extent possible. IDS Life will allocate this amount to
the selected Old Contract investments in the proportions that existed
just prior to the exchange. Any adjustments made due to investment
experience and/or market value adjustment will be allocated or deducted
according to the selected investment percentage allocations under the
Old Contract just prior to the exchange. Withdrawals made after the
free look period under RAVA Advantage Plus has expired will be governed
by the terms of the RAVA Advantage Plus contract, including the
application of the CDSC. To the extent a death benefit or surrender
payment includes any Credit amounts applied within twelve months
preceding: (i) The date of death that results in a lump sum death
benefit under RAVA Advantage Plus; (ii) a request for a CDSC waiver due
to the owner or owner's spouse's confinement to a nursing home or
hospital or the owner's terminal illness; or (iii) the owner's
settlement under an annuity payout plan, IDS Life will recapture the
Credits.
52. IDS Life will notify all owners of the Old Contracts of the
Extended Exchange Offer through normal client communications such as
updated prospectuses or prospectus supplements (``Program
Announcement''). This Program Announcement will: (i) Describe the terms
and conditions of the Extended Exchange Offer; (ii) suggest to owners
who may qualify that they contact their registered representatives to
learn more about the Extended Exchange Offer and to discuss their
individual situations (including tax, financial planning and contract
considerations); and (iii) notify owners that IDS Life reserves the
right to cancel the Extended Exchange Offer at any time. In addition,
IDS Life may send the information in the Program Announcement to some
or all Old Contract owners via additional communications that also may
include that owner's specific contract information (such as Exchange
Value and applicable CDSC).
53. IDS Life, either directly or through its registered
representatives, will provide eligible Old Contract owners who are
interested in learning more about the Extended Exchange Offer with an
Offering Communication that includes information outlined in the
Program Announcement and additional information describing the Extended
Exchange Offer. The Offering Communication will state, in clear and
plain English, that the Extended Exchange Offer is not designed for a
contract owner who: (i) Intends to hold the RAVA Advantage Plus
contract as a short-term investment vehicle; or (ii) anticipates
surrendering all or part (i.e. more than the Total Free Amount on an
annual basis) of his or her RAVA Advantage Plus contract before five to
seven years (if the Old Contract owner would select the seven-year CDSC
period under RAVA Advantage Plus) or eight to ten years (if the Old
Contract owner would select the ten-year CDSC period under RAVA
Advantage Plus). IDS Life will encourage Old Contract owners to
carefully evaluate their personal financial planning situation when
deciding whether to accept or reject the Extended Exchange Offer.
54. In addition, the Offering Communication will explain how the
owner of an Old Contract contemplating an exchange may avoid the
applicable CDSC on the RAVA Advantage Plus contract by not surrendering
more than the annual Total Free Amount and by holding any subsequent
Purchase Payments until expiration of the CDSC period. In this regard,
IDS Life will state, in clear and plain English, that if the owner
surrenders the RAVA Advantage Plus contract during the initial CDSC
period: (i) The lower M&E charges and any applicable Credits may be
more than offset by the CDSC; and (ii) an Old Contract owner may be
worse off than if he or she had rejected the Extended Exchange Offer.
55. Furthermore, IDS Life will state, in clear and plain English,
that guaranteed annuity settlement rates generally are lower under RAVA
Advantage Plus. Therefore, if the Old Contract owner contemplates
annuitizing the RAVA Advantage Plus contract during the first few
years, the lower settlement factors may more than offset the lower M&E
charges and any applicable Credits.
56. IDS Life will explain that if an owner accepts the Extended
Exchange Offer, IDS Life will allocate to the owner's account either a
Purchase Payment Credit or an Exchange Credit. If the initial Purchase
Payment is at least $100,000, IDS Life will allocate to the owner's
account a Purchase Payment Credit on the initial Purchase Payment and
on each subsequent Purchase Payment received. To increase the
likelihood of remaining eligible to receive the applicable Purchase
Payment Credit based on the initial Purchase Payment amount, the Old
Contract owner could transfer that contract or certificate value
allocated to the Old Accounts to the Old Account investing in the
AXP[supreg] VP Cash Management Fund while the exchange is pending to
help reduce the risk of market volatility. If the initial Purchase
Payment to RAVA Advantage Plus is less than $100,000, IDS Life will
provide a 1% Exchange Credit based on the Exchange Value of the Old
Contract applied to RAVA Advantage Plus on the Exchange Date. The 1%
Exchange Credit will not apply to subsequent Purchase Payments.
However, even when the initial Purchase Payment is less than $100,000,
IDS Life will allocate a Purchase Payment Credit of 1% of the initial
Purchase Payment and 1% of each subsequent Purchase Payment received if
the owner selects the ten-year CDSC period.
57. In addition, IDS Life will prominently disclose that the
guaranteed minimum interest rate on RAVA Advantage Plus' fixed account
investment option may be less than the guaranteed minimum interest rate
on the Old Contract's fixed account investment option. IDS Life also
will disclose that the current death benefit on the Old Contract may be
greater than the initial death benefit on RAVA Advantage Plus. When
applicable, IDS Life also will explain that an owner of an Old Contract
may lose some tax benefits. The Offering Communication will state that
certain Investment Funds available under the Old Contracts are not
available under RAVA Advantage Plus and that transfers to and from the
[[Page 1923]]
fixed account are more restricted under RAVA Advantage Plus than under
the Old Contract. Finally, the Offering Communication will state that
IDS Life may terminate the Extended Exchange Offer at any time. The
Offering Communication also will include a prospectus for the new RAVA
Advantage Plus contract.
58. To accept the Extended Exchange Offer, the owner of an Old
Contract must complete an internal exchange form and application for
the RAVA Advantage Plus contract. Applicants state that those Old
Contract owners who accept the Extended Exchange Offer will incur no
current taxes and that the exchanges will constitute tax-free
transfers, rollovers or exchanges pursuant to Section 1035 of the Code.
59. Applicants submit that the Extended Exchange Offer is meant to
encourage existing Old Contract owners to remain with IDS Life rather
than surrender their contracts in exchange for a competitor's product.
If the CDSC under RAVA Advantage Plus did not apply to the Exchange
Value, Applicants assert that IDS Life would have no assurance that an
Old Contract owner who accepted the Extended Exchange Offer would
persist long enough for any applicable Credits, payments to registered
representatives and other relevant expenses to be recouped through
standard fees from the ongoing operation of the RAVA Advantage Plus
contract.
60. Applicants state that the commissions that IDS Life will pay
its registered representatives for soliciting exchanges under the
Extended Exchange Offer are less than the normal commissions paid for
soliciting sales of RAVA Advantage Plus contracts. Applicants assert
that compensating IDS Life's registered representatives for these
exchanges is necessary in order to provide sufficient incentive for
them to compete with competitors' registered representatives.
61. IDS Life reserves the right to terminate the Extended Exchange
Offer at any time. If IDS Life terminates the Extended Exchange Offer,
it will send a notice to currently eligible Old Contract owners
(``Termination Notice''). The Termination Notice will state that Old
Contract owners who wish to participate in the Extended Exchange Offer
must do so within two months from the date of the Termination Notice.
The Termination Notice will contain all of the caveats described
herein.
