-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VojDiROLBJ4ipMSampCs1Q0g7SsFVopyl4mwyMniyywZiQL83w1Y0XlV4tsSleoS 7vuQEpJHuLLlsKTA6SHR9g== 0000950137-08-005920.txt : 20080424 0000950137-08-005920.hdr.sgml : 20080424 20080424134453 ACCESSION NUMBER: 0000950137-08-005920 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20080424 DATE AS OF CHANGE: 20080424 EFFECTIVENESS DATE: 20080501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVERSOURCE VARIABLE ANNUITY ACCOUNT CENTRAL INDEX KEY: 0000926266 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-139759 FILM NUMBER: 08773949 BUSINESS ADDRESS: STREET 1: 50605 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5229 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 6126780175 MAIL ADDRESS: STREET 1: 50605 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5229 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT/ DATE OF NAME CHANGE: 19990708 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT DATE OF NAME CHANGE: 19940701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVERSOURCE VARIABLE ANNUITY ACCOUNT CENTRAL INDEX KEY: 0000926266 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07195 FILM NUMBER: 08773950 BUSINESS ADDRESS: STREET 1: 50605 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5229 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 6126780175 MAIL ADDRESS: STREET 1: 50605 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5229 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT/ DATE OF NAME CHANGE: 19990708 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT DATE OF NAME CHANGE: 19940701 0000926266 S000003534 RIVERSOURCE VARIABLE ANNUITY ACCOUNT C000044116 Evergreen Pathways Variable Annuity C000044117 Evergreen Pathways Select Variable Annuity C000044118 Evergreen Privilege Variable Annuity C000044119 RiverSource AccessChoice Select Variable Annuity C000044120 RiverSource FlexChoice Variable Annuity C000044121 RiverSource FlexChoice Select Variable Annuity C000044122 Wells Fargo Advantage Choice Select Variable Annuity C000044123 Wells Fargo Advantage Choice Variable Annuity C000051238 Endeavor Plus(SM) Variable Annuity 485BPOS 1 c17683be485bpos.txt POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. [__] [ ] Post-Effective Amendment No. 7 (File No. 333-139759) [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 52 (File No. 811-7195) [X] (Check appropriate box or boxes) RIVERSOURCE VARIABLE ANNUITY ACCOUNT (Exact Name of Registrant) RiverSource Life Insurance Company (Name of Depositor) 829 Ameriprise Financial Center, Minneapolis, MN 55474 (Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-2237 Rodney J. Vessels, 50605 Ameriprise Financial Center, Minneapolis, MN 55474 (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b)(1)(vii) of Rule 485 [X] on May 1, 2008 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on (date) pursuant to paragraph (a)(1) of Rule 485 If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. PART A PROSPECTUS MAY 1, 2008 RIVERSOURCE(R) FLEXCHOICE SELECT VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/ VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/ VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT This prospectus contains information that you should know before investing in FlexChoice Select Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds, Series II Shares AllianceBernstein Variable Products Series Fund, Inc. (Class B) American Century(R) Variable Portfolios, Inc., Class II Columbia Funds Variable Insurance Trust Credit Suisse Trust Dreyfus Variable Investment Fund, Service Share Class Eaton Vance Variable Trust (VT) Fidelity(R) Variable Insurance Products Service Class 2 Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 Goldman Sachs Variable Insurance Trust (VIT) Janus Aspen Series: Service Shares Legg Mason Variable Portfolios I, Inc. MFS(R) Variable Insurance Trust(SM) - Service Class Oppenheimer Variable Account Funds, Service Shares PIMCO Variable Investment Trust (VIT) Putnam Variable Trust - Class IB Shares RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds The Universal Institutional Funds, Inc., Class II Shares Van Kampen Life Investment Trust Class II Shares Wanger Advisors Trust Some funds may not be available in your contract. Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 1 RiverSource Life offers other variable annuity contracts in addition to the contract described in this prospectus which your investment professional may or may not be authorized to offer to you. Each annuity has different features and optional benefits that may be appropriate for you based on your individual financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges you will pay when buying, owning and withdrawing money from the contract we describe in this prospectus may be more or less than the fees and charges of other variable annuities we issue. A securities broker dealer authorized to sell the contract described in this prospectus (selling firm) may not offer all the variable annuities we issue. In addition, some selling firms may not permit their investment professionals to sell the contract and/or optional benefits described in this prospectus to persons over a certain age (which may be lower than age limits we set), or may otherwise restrict the sale of the optional benefits described in this prospectus by their investment professionals. You should ask your investment professional about his or her selling firm's ability to offer you other variable annuities we issue (which might have lower fees and charges than the contract described in this prospectus), and any limits the selling firm has placed on your investment professional's ability to offer you the contract and/or optional riders described in this prospectus. TABLE OF CONTENTS KEY TERMS........................................ 3 THE CONTRACT IN BRIEF............................ 5 EXPENSE SUMMARY.................................. 7 CONDENSED FINANCIAL INFORMATION.................. 13 FINANCIAL STATEMENTS............................. .13 THE VARIABLE ACCOUNT AND THE FUNDS............... 13 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............. 33 THE FIXED ACCOUNT................................ 34 BUYING YOUR CONTRACT............................. 36 CHARGES.......................................... 38 VALUING YOUR INVESTMENT.......................... 44 MAKING THE MOST OF YOUR CONTRACT................. 46 WITHDRAWALS...................................... 54 TSA -- SPECIAL PROVISIONS........................ 55 CHANGING OWNERSHIP............................... 56 BENEFITS IN CASE OF DEATH........................ 56 OPTIONAL BENEFITS................................ 59 THE ANNUITY PAYOUT PERIOD........................ 75 TAXES............................................ 77 VOTING RIGHTS.................................... 80 SUBSTITUTION OF INVESTMENTS...................... 80 ABOUT THE SERVICE PROVIDERS...................... 81 ADDITIONAL INFORMATION........................... 82 APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE.......................... 84 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA).................. 85 APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L....... 87 APPENDIX C: EXAMPLE -- DEATH BENEFITS............ 92 APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER........... 95 APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS....... 97 APPENDIX F: SECURESOURCE RIDERS -- ADDITIONAL RMD DISCLOSURE...................... 101 APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER.......... 103 APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER..... 105 APPENDIX I: ASSET ALLOCATION PROGRAM FOR CONTRACTS PURCHASED BEFORE MAY 1, 2006......... 107 APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER DISCLOSURE............................... 108 APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT RIDER DISCLOSURE..................................... 120 APPENDIX L: INCOME ASSURER BENEFIT RIDERS DISCLOSURE..................................... 128 APPENDIX M: CONDENSED FINANCIAL INFORMATION (UNAUDITED).................................... 137 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.................................... 148
- -------------------------------------------------------------------------------- 2 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FIXED ACCOUNT: Our general account which includes the one-year fixed account and the DCA fixed account. Amounts you allocate to the fixed account earn interest rates we declare periodically. For Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of the funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): These accounts have guaranteed interest rates for guarantee periods we declare when you allocate purchase payments or transfer contract value to a GPA. These guaranteed rates and periods of time may vary by state. Unless an exception applies, transfers or withdrawals from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a guarantee period account is withdrawn or transferred more than 30 days before the end of its guarantee period. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - SIMPLE IRAs under Section 408(p) of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code - - Custodial and investment only plans under Section 401(a) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life" refer to RiverSource Life Insurance Company. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 3 VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our corporate office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our corporate office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Each contract has different expenses. Contract Option L has lower expenses than Contract Option C. Contract Option L has a four-year withdrawal charge schedule that applies to each purchase payment you make. Contract Option C eliminates the purchase payment withdrawal charge schedule, but has a higher mortality and expense risk fee than Contract Option L. Contract Option L includes the option to purchase a living benefit rider; living benefit riders are not currently available on Contract Option C(1). Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to keep your contract. PURPOSE: These contracts allow you to accumulate money for retirement or similar long term goal. You do this by making one or more purchase payments. You may allocate your purchase payments to the one-year fixed account, the DCA fixed account, GPAs and/or subaccounts of the variable account under the contract; however you risk losing amounts you invest in the subaccounts of the variable account. These accounts, in turn, may earn returns that increase the value of a contract. You may be able to purchase an optional benefit to reduce the investment risk you assume. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). BUYING A CONTRACT: There are many factors to consider carefully before you buy a variable annuity and any optional benefit rider. Variable annuities -- with or without optional benefit riders -- are not right for everyone. MAKE SURE YOU HAVE ALL THE FACTS YOU NEED BEFORE YOU PURCHASE A VARIABLE ANNUITY OR CHOOSE AN OPTIONAL BENEFIT RIDER. Some of the factors you may wish to consider include: - - "Tax-free" exchanges: It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. - - Tax-deferred retirement plans: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. - - Taxes: Generally, income earned on your contract value grows tax-deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. (see "Taxes") - - Your age: if you are an older person, you may not necessarily have a need for tax deferral, retirement income or a death benefit. Older persons who are considering buying a variable annuity may find it helpful to consult with or include a family member, friend or other trusted advisor in the decision making process before buying a contract. - - How long you intend to keep the contract: The contract has withdrawal charges. Does the contract meet your current and anticipated future need for liquidity? (see "Withdrawals") - - If you can afford the contract: are your annual income and assets adequate to buy the annuity and any optional benefit riders you may choose? - - The fees and expenses you will pay when buying, owning and withdrawing money from this contract. (see "Charges") - - How and when you plan to take money from the contract: under current tax law, withdrawals, including withdrawals made under optional benefit riders, are taxed differently than annuity payouts. In addition, certain withdrawals may be subject to a federal income tax penalty. (see "Withdrawals") - - Your investment objectives, how much experience you have in managing investments and how much risk you are you willing to accept. (1) Living benefit riders were available on Contract Option C prior to May 1, 2007. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 5 - - Short-term trading: if you plan to manage your investment in the contract by frequent or short-term trading, this contract is not suitable for you and you should not buy it. (see "Making the Most of Your Contract -- Transferring Among Accounts") FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract. We will not deduct any contract charges or fees. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: Generally, you may allocate purchase payments among the: - - subaccounts of the variable account, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - GPAs which earn interest at rates that we declare when you allocate purchase payments or transfer contract value to these accounts. The required minimum investment in a GPA is $1,000. These accounts may not be available in all states. (see "The Guarantee Period Accounts (GPAs)") - - the one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "Buying Your Contract" and "Transfer policies"). (see "The Fixed Account") - - DCA fixed account, which earns interest at rates that we adjust periodically. There are restrictions on how long contract value can remain in this account (see "DCA Fixed Account"). TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to an MVA, unless an exception applies. You may establish automated transfers among the accounts. Transfers into the DCA fixed account are not permitted. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract. (See "Making the Most of Your Contract -- Transferring Among Accounts") WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") OPTIONAL BENEFITS: You can buy additional benefits with your contract. We offer optional death benefits. Under Contract Option L, we also offer optional living benefits, including: a guaranteed contract value on a future date ("Accumulation Protector Benefit Rider") and a guaranteed minimum withdrawal benefit that permits you to withdraw a guaranteed amount from the contract over a period of time, which may include, under limited circumstances, the lifetime of a single person (SecureSource - Single Life) or the lifetime of you and your spouse (SecureSource - Joint Life) ("SecureSource Riders". Optional living benefits require the use of a model portfolio which may limit transfers and allocations; may limit the timing, amount and allocation of purchase payments; and may limit the amount of withdrawals that can be taken under the optional benefit during a contract year. We previously offered other optional living benefits under both Contract Option L and Contract Option C. Optional benefits vary by state and may have eligibility requirements. (see "Optional Benefits") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount based on the death benefit selected. (see "Benefits in Case of Death") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you buy a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs and the DCA fixed account are not available during the payout period. (see "The Annuity Payout Period") - -------------------------------------------------------------------------------- 6 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (Contingent deferred sales charge as a percentage of purchase payments withdrawn) You select either contract Option L or Option C at the time of application. Option C has no withdrawal charge schedule but carries a higher mortality and expense risk fee than Option L.
CONTRACT OPTION L YEARS FROM PURCHASE PAYMENT RECEIPT WITHDRAWAL CHARGE PERCENTAGE 1-2 8% 3 7 4 6 Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal we impose a withdrawal charge. This charge will vary based on the contract option shown below and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in the table below. (See "Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout Plans.")
IF YOUR AIR IS 3.5%, THEN YOUR IF YOUR AIR IS 5%, THEN YOUR DISCOUNT RATE PERCENT (%) IS: DISCOUNT RATE PERCENT (%) IS: CONTRACT OPTION L 6.55% 8.05% CONTRACT OPTION C 6.65% 8.15%
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE FOUR DEATH BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE ROP Death Benefit 1.55% 0.15% 1.70% MAV Death Benefit 1.75 0.15 1.90 5% Accumulation Death Benefit 1.90 0.15 2.05 Enhanced Death Benefit 1.95 0.15 2.10 IF YOU SELECT CONTRACT OPTION C AND: ROP Death Benefit 1.65% 0.15% 1.80% MAV Death Benefit 1.85 0.15 2.00 5% Accumulation Death Benefit 2.00 0.15 2.15 Enhanced Death Benefit 2.05 0.15 2.20
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 7 OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the current contract anniversary.) OPTIONAL DEATH BENEFITS If eligible, you may select an optional death benefit in addition to the ROP and MAV Death Benefits. The fees apply only if you select one of these benefits. BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25% BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract anniversary.) OPTIONAL LIVING BENEFITS -- CURRENTLY OFFERED UNDER CONTRACT OPTION L(1) If eligible, you may select one of the following optional living benefits if available in your state. Each optional living benefit requires the use of an asset allocation model. The fees apply only if you elect one of these benefits. ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract value or the Minimum Contract Accumulation Value, whichever is greater.) SECURESOURCE(SM) - SINGLE LIFE RIDER FEE(2) MAXIMUM: 1.50% CURRENT: 0.65% SECURESOURCE(SM) - JOINT LIFE RIDER FEE(2) MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract value or the total Remaining Benefit Amount, whichever is greater.) OPTIONAL LIVING BENEFITS -- PREVIOUSLY OFFERED UNDER CONTRACT OPTION L AND CONTRACT OPTION C The following optional living benefits, except as noted, are no longer available for purchase. The fees apply only if you elected one of these benefits when you purchased your contract. Each optional living benefit requires the use of an asset allocation model portfolio. GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE(2) MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract value or the total Remaining Benefit Amount, whichever is greater.) GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE(2) MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract anniversary.) INCOME ASSURER BENEFIT(R) - MAV RIDER FEE(3) MAXIMUM: 1.50% CURRENT: 0.30%(4) INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE MAXIMUM: 1.75% CURRENT: 0.60%(4) RIDER FEE(3) INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% MAXIMUM: 2.00% CURRENT: 0.65%(4) ACCUMULATION BENEFIT BASE RIDER FEE(3)
(As a percentage of the guaranteed income benefit base charged annually on the contract anniversary.) (1) Effective May 1, 2007, optional living benefits are not available on Contract Option C. (2) See disclosure in Appendix L. (3) See disclosure in Appendix K. (4) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. - -------------------------------------------------------------------------------- 8 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(1)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense reimbursements 0.52% 2.09%
(1) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor and/or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Basic Value Fund, Series II Shares 0.67% 0.25% 0.29% --% 1.21% AIM V.I. Capital Appreciation Fund, Series II 0.61 0.25 0.27 -- 1.13 Shares AIM V.I. Capital Development Fund, Series II 0.75 0.25 0.31 -- 1.31(1) Shares AIM V.I. Global Health Care Fund, Series II Shares 0.75 0.25 0.32 0.01 1.33(1) AIM V.I. International Growth Fund, Series II 0.71 0.25 0.36 0.01 1.33(1) Shares AIM V.I. Mid Cap Core Equity Fund, Series II 0.72 0.25 0.29 0.03 1.29(1) Shares AllianceBernstein VPS Balanced Shares Portfolio 0.55 0.25 0.18 -- 0.98 (Class B) AllianceBernstein VPS Global Technology Portfolio 0.75 0.25 0.17 -- 1.17 (Class B) AllianceBernstein VPS Growth and Income Portfolio 0.55 0.25 0.04 -- 0.84 (Class B) AllianceBernstein VPS International Value 0.75 0.25 0.06 -- 1.06 Portfolio (Class B) American Century VP Inflation Protection, Class II 0.49 0.25 0.01 -- 0.75 American Century VP International, Class II 1.10 0.25 0.01 -- 1.36 American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16 American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16 American Century VP Value, Class II 0.83 0.25 0.01 -- 1.09 Columbia High Yield Fund, Variable Series, Class B 0.78 0.25 0.12 -- 1.15(2) Columbia Marsico Growth Fund, Variable Series, 0.97 -- 0.02 -- 0.99 Class A Columbia Marsico International Opportunities Fund, 1.02 0.25 0.12 -- 1.39 Variable Series, Class B Columbia Small Cap Value Fund, Variable Series, 0.80 0.25 0.09 -- 1.14(3) Class B Credit Suisse Trust - Commodity Return Strategy 0.50 0.25 0.28 -- 1.03(4) Portfolio Dreyfus Investment Portfolios MidCap Stock 0.75 0.25 0.05 -- 1.05(5) Portfolio, Service Shares Dreyfus Investment Portfolios Technology Growth 0.75 0.25 0.09 0.01 1.10 Portfolio, Service Shares Dreyfus Variable Investment Fund Appreciation 0.75 0.25 0.05 -- 1.05 Portfolio, Service Shares Dreyfus Variable Investment Fund International 0.75 0.25 0.28 -- 1.28 Equity Portfolio, Service Shares Dreyfus Variable Investment Fund International 1.00 0.25 0.19 -- 1.44 Value Portfolio, Service Shares Eaton Vance VT Floating-Rate Income Fund 0.57 0.25 0.32 -- 1.14 Fidelity(R) VIP Contrafund(R) Portfolio Service 0.56 0.25 0.09 -- 0.90 Class 2 Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90 Fidelity(R) VIP Investment Grade Bond Portfolio 0.32 0.25 0.11 -- 0.68 Service Class 2 Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71% 0.25% 0.14% --% 1.10% FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72 FTVIPT Franklin Rising Dividends Securities 0.58 0.25 0.02 0.01 0.86(6) Fund - Class 2 FTVIPT Franklin Small-Mid Cap Growth Securities 0.47 0.25 0.28 0.01 1.01(6) Fund - Class 2 FTVIPT Mutual Shares Securities Fund - Class 2 0.59 0.25 0.13 -- 0.97 FTVIPT Templeton Global Income Securities 0.50 0.25 0.14 -- 0.89 Fund - Class 2 FTVIPT Templeton Growth Securities Fund - Class 2 0.73 0.25 0.03 -- 1.01 Goldman Sachs VIT Mid Cap Value 0.80 -- 0.07 -- 0.87 Fund - Institutional Shares Goldman Sachs VIT Structured U.S. Equity 0.65 -- 0.07 -- 0.72(7) Fund - Institutional Shares Janus Aspen Series Large Cap Growth Portfolio: 0.64 0.25 0.02 0.01 0.92 Service Shares Legg Mason Partners Variable Small Cap Growth 0.75 -- 0.35 -- 1.10(8) Portfolio, Class I MFS(R) Investors Growth Stock Series - Service 0.75 0.25 0.11 -- 1.11 Class MFS(R) New Discovery Series - Service Class 0.90 0.25 0.11 -- 1.26 MFS(R) Total Return Series - Service Class 0.75 0.25 0.08 -- 1.08(9) MFS(R) Utilities Series - Service Class 0.75 0.25 0.10 -- 1.10(9) Oppenheimer Capital Appreciation Fund/VA, Service 0.64 0.25 0.02 -- 0.91 Shares Oppenheimer Global Securities Fund/VA, Service 0.62 0.25 0.02 -- 0.89 Shares Oppenheimer Main Street Small Cap Fund/VA, Service 0.70 0.25 0.02 -- 0.97 Shares Oppenheimer Strategic Bond Fund/VA, Service Shares 0.57 0.25 0.02 0.02 0.86(10) PIMCO VIT All Asset Portfolio, Advisor Share Class 0.18 0.25 0.25 0.69 1.37(11) Putnam VT Health Sciences Fund - Class IB Shares 0.70 0.25 0.13 -- 1.08 Putnam VT International Equity Fund - Class IB 0.73 0.25 0.11 0.01 1.10 Shares Putnam VT Small Cap Value Fund - Class IB Shares 0.77 0.25 0.10 0.07 1.19 Putnam VT Vista Fund - Class IB Shares 0.65 0.25 0.11 -- 1.01 RVST RiverSource(R) Partners Variable 0.70 0.13 0.16 -- 0.99(12) Portfolio - Fundamental Value Fund (previously RiverSource(R) Variable Portfolio - Fundamental Value Fund) RVST RiverSource(R) Partners Variable 0.83 0.13 1.13 -- 2.09(12) Portfolio - Select Value Fund (previously RiverSource(R) Variable Portfolio - Select Value Fund) RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(12) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable Portfolio - Cash 0.33 0.13 0.14 -- 0.60 Management Fund RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable Portfolio - Global 0.44 0.13 0.17 -- 0.74(12) Inflation Protected Securities Fund RVST RiverSource(R) Variable Portfolio - Growth 0.60 0.13 0.16 -- 0.89 Fund RVST RiverSource(R) Variable Portfolio - High 0.59 0.13 0.15 -- 0.87 Yield Bond Fund RVST RiverSource(R) Variable Portfolio - Income 0.61 0.13 0.17 -- 0.91 Opportunities Fund RVST RiverSource(R) Variable Portfolio - Large Cap 0.58 0.13 0.15 -- 0.86 Equity Fund RVST RiverSource(R) Variable Portfolio - Large Cap 0.59 0.13 0.36 -- 1.08(12) Value Fund RVST RiverSource(R) Variable Portfolio - Mid Cap 0.58 0.13 0.15 -- 0.86 Growth Fund RVST RiverSource(R) Variable Portfolio - Mid Cap 0.73 0.13 0.17 -- 1.03(12) Value Fund RVST RiverSource(R) Variable Portfolio - S&P 500 0.22 0.13 0.17 -- 0.52(12) Index Fund RVST RiverSource(R) Variable Portfolio - Short 0.48 0.13 0.18 -- 0.79 Duration U.S. Government Fund RVST Threadneedle(R) Variable Portfolio - Emerging 1.11 0.13 0.26 -- 1.50 Markets Fund (previously RiverSource(R) Variable Portfolio - Emerging Markets Fund) RVST Threadneedle(R) Variable 0.69 0.13 0.19 -- 1.01 Portfolio - International Opportunity Fund (previously RiverSource(R) Variable Portfolio - International Opportunity Fund)
- -------------------------------------------------------------------------------- 10 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES Van Kampen Life Investment Trust Comstock 0.56% 0.25% 0.03% --% 0.84% Portfolio, Class II Shares Van Kampen UIF Global Real Estate Portfolio, Class 0.85 0.35 0.38 -- 1.58(13) II Shares Van Kampen UIF Mid Cap Growth Portfolio, Class II 0.75 0.35 0.35 -- 1.45(13) Shares Van Kampen UIF U.S. Real Estate Portfolio, Class 0.74 0.35 0.29 -- 1.38(13) II Shares Wanger International Small Cap 0.88 -- 0.11 -- 0.99 (effective June 1, 2008, the Fund will change its name to Wanger International) Wanger U.S. Smaller Companies 0.90 -- 0.05 -- 0.95 (effective June 1, 2008, the Fund will change its name to Wanger USA)
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series II shares to 1.45% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 1.30% for AIM V.I. Capital Development Fund, Series II Shares, 1.32% for AIM V.I. Global Health Care Fund, Series II Shares, 1.32% for AIM V.I. International Growth Fund, Series II Shares and 1.27% for AIM V.I. Mid Cap Core Equity Fund, Series II Shares. (2) The Fund's investment adviser has contractually agreed to waive 0.19% of the distribution (12b-1) fees until April 30, 2009. In addition, the Fund's investment adviser has contractually agreed to waive advisory fees and reimburse the Fund for certain expenses so that the total annual Fund operating expenses (exclusive of distribution fees, brokerage commissions, interest, taxes and extraordinary expenses, (if any)) do not exceed 0.60% annually through April 30, 2009. If these waivers were reflected in the above table, net expenses would be 0.66%. There is no guarantee that these waivers and/or limitations will continue after April 30, 2009. (3) The Distributor and/or the Advisor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, but including custodian charges relating to overdrafts, if any), after giving effect to any balance credits from the Fund's custodian, do not exceed 1.10% of the Fund's average daily net assets. If the waiver were reflected in the above table, net expenses would be 1.10%. The Advisor or the Distributor may modify or terminate these arrangements at any time. (4) Credit Suisse fee waivers are voluntary and may be discontinued at any time. After fee waivers and expense reimbursements net expenses would be 0.95% for Credit Suisse Trust - Commodity Return Strategy Portfolio. (5) The Dreyfus Corporation has agreed, until May 1, 2009, to waive receipt of its fees and/or assume the expenses of the portfolio so that the net expenses (subject to certain exclusions) do not exceed 0.90% for Dreyfus Investment Portfolios MidCap Stock Portfolio, Service Shares. (6) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the acquired fund) to the extent that the Fund's fees and expenses are due to those of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. After fee reductions net expenses would be 0.85% for FTVIPT Franklin Rising Dividends Securities Fund - Class 2 and 1.00% for FTVIPT Franklin Small-Mid Cap Growth Securities Fund - Class 2. (7) The Investment Adviser has voluntarily agreed to reduce or limit "Other expenses" (subject to certain exclusions) equal on an annualized basis to 0.044% of the Fund's average daily net assets. The expense reduction may be terminated at any time at the option of the Investment Adviser. After expense reductions net expenses would be 0.71% for Goldman Sachs VIT Structured U.S. Equity Fund - Institutional Shares. (8) Because of voluntary waivers and/or reimbursements, actual total operating expenses are not expected to exceed 1.00%. These voluntary fee waivers and reimbursements do not cover brokerage, taxes, interest and extraordinary expenses and may be reduced or terminated at any time. After fee waivers and expense reimbursements net expenses would be 1.00%. (9) MFS has agreed in writing to reduce its management fee to 0.65% for MFS Total Return Series annually on average daily net assets in excess of $3 billion and 0.70% for MFS Utilities Series annually on average daily net assets in excess of $1 billion. After fee reductions net expenses would be 1.05% for MFS Total Return Series - Service Class and 1.07% for MFS Utilities Series - Service Class. This written agreement will remain in effect until modified by the Fund's Board of Trustees. (10) The "Other expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year. That undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended Dec. 31, 2007, the transfer agent fees did not exceed this expense limitation. The Manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the acquired fund fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund and OFI Master Loan Fund LLC. After fee waivers and expense reimbursements, the net expenses would be 0.82% for Oppenheimer Strategic Bond Fund/VA, Service Shares. (11) PIMCO has contractually agreed through Dec. 31, 2008, to reduce its advisory fee to the extent that the "Acquired fund fees and expenses" attributable to advisory and administrative fees exceed 0.64% of the total assets invested in the acquired funds. PIMCO may recoup these waivers in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. After fee waivers and expense reimbursements, the net expenses would be 1.35%. (12) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed: 0.98% for RVST RiverSource(R) Partners Variable Portfolio - Fundamental Value Fund, 1.03% for RVST RiverSource(R) Partners Variable Portfolio - Select Value Fund, 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund, 0.72% for RVST RiverSource(R) Variable Portfolio - Global Inflation Protected Securities Fund, 1.05% for RVST RiverSource(R) Variable Portfolio - Large Cap Value Fund, 1.05% for RVST RiverSource(R) Variable Portfolio - Mid Cap Value Fund and 0.51% for RVST RiverSource(R) Variable Portfolio - S&P 500 Index Fund. (13) After giving effect to the Adviser's voluntary fee waivers and/or expense reimbursement, the net expenses incurred by investors including certain investment related expenses, was 1.40% for Van Kampen UIF Global Real Estate Portfolio, Class II Shares, 1.16% for Van Kampen UIF Mid Cap Growth Portfolio, Class II Shares and 1.28% for Van Kampen UIF U.S. Real Estate Portfolio, Class II Shares. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 11 EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. CURRENTLY OFFERED UNDER CONTRACT OPTION L MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds, offered on or after May 1, 2007. They assume that you select the MAV Death Benefit, the SecureSource - Joint Life Rider and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,432 $2,570 $3,076 $5,955 $632 $1,870 $3,076 $5,955
CURRENTLY OFFERED UNDER CONTRACT OPTION C MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds, offered on or after May 1, 2007. They assume that you select the MAV Death Benefit and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option C $453 $1,366 $2,287 $4,627 $453 $1,366 $2,287 $4,627
PREVIOUSLY OFFERED UNDER CONTRACT OPTION L & CONTRACT OPTION C MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expense of any of the funds for contracts we offered before May 1, 2007. They assume that you select the MAV Death Benefit, the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,462 $2,696 $3,343 $6,766 $662 $1,996 $3,343 $6,766 Contract Option C 673 2,027 3,391 6,845 673 2,027 3,391 6,845
ALL CONTRACTS MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP Death Benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,030 $1,408 $1,213 $2,599 $230 $708 $1,213 $2,599 Contract Option C 241 742 1,268 2,710 241 742 1,268 2,710
(1) In these examples, the $40 contract administrative charge is estimated as a .022% charge for Option L and a .030% for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. (2) Because these examples are intended to illustrate the most expensive combination of contract features, the maximum annual fee for each optional rider is reflected rather than the fee that is currently being charged. - -------------------------------------------------------------------------------- 12 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and highest total annual variable account expense combinations in Appendix M. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statements date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. This contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 13 various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under the asset allocation program we offer (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program") or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and when there is substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - -------------------------------------------------------------------------------- 14 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 15 UNLESS AN ASSET ALLOCATION PROGRAM WE OFFER IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Basic Value Fund, N Y Long-term growth of capital. Invests at Invesco Aim Advisors, Series II Shares least 65% of its total assets in equity Inc. adviser, advisory securities of U.S. issuers that have entities affiliated market capitalizations of greater than with Invesco Aim $500 million and are believed to be Advisors, Inc., undervalued in relation to long-term subadvisers. earning power or other factors. The Fund may invest up to 25% of its total assets in foreign securities. AIM V.I. Capital Y Y Growth of capital. Invests principally in Invesco Aim Advisors, Appreciation Fund, Series II common stocks of companies likely to Inc. adviser, advisory Shares benefit from new or innovative products, entities affiliated services or processes as well as those with Invesco Aim with above-average long-term growth and Advisors, Inc., excellent prospects for future growth. subadvisers. The Fund can invest up to 25% of its total assets in foreign securities that involve risks not associated with investing solely in the United States. AIM V.I. Capital Development Y Y Long-term growth of capital. Invests Invesco Aim Advisors, Fund, Series II Shares primarily in securities (including common Inc. adviser, advisory stocks, convertible securities and bonds) entities affiliated of small- and medium-sized companies. The with Invesco Aim Fund may invest up to 25% of its total Advisors, Inc., assets in foreign securities. subadvisers. AIM V.I. Global Health Care Y Y Capital Growth The fund seeks to meet its Invesco Aim Advisors, Fund, Series II Shares objective by investing, normally, at Inc. adviser, advisory least 80% of its assets in securities of entities affiliated health care industry companies. The Fund with Invesco Aim may invest up to 20% of its total assets Advisors, Inc., in companies located in developing subadvisers. countries, i.e., those countries that are in the initial stages of their industrial cycles. The Fund may also invest up to 5% of its total assets in lower-quality debt securities, i.e., junk bonds. AIM V.I. International Y Y Long-term growth of capital. Invests Invesco Aim Advisors, Growth Fund, Series II primarily in a diversified portfolio of Inc. adviser, advisory Shares international equity securities, whose entities affiliated issuers are considered to have strong with Invesco Aim earnings momentum. The Fund may invest up Advisors, Inc., to 20% of its total assets in security subadvisers. issuers located in developing countries and in securities exchangeable for or convertible into equity securities of foreign companies.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Mid Cap Core Equity N Y Long-term growth of capital. Invests Invesco Aim Advisors, Fund, Series II Shares normally at least 80% of its net assets, Inc. adviser, advisory plus the amount of any borrowings for entities affiliated investment purposes, in equity with Invesco Aim securities, including convertible Advisors, Inc., securities, of medium sized companies. subadvisers. The Fund may invest up to 20% of its net assets in equity securities of companies in other market capitalization ranges or in investment grade debt securities. The Fund may also invest up to 25% of its total assets in foreign securities. AllianceBernstein VPS N Y Total return consistent with reasonable AllianceBernstein L.P. Balanced Shares Portfolio risk, through a combination of income and (Class B) longer-term growth of capital. Invests primarily in U.S. government and agency obligations, bonds, fixed-income and equity securities of non-U.S. issuers (including short-and long-term debt securities and preferred stocks to the extent the Advisor deems best adapted to the current economic and market out look), and common stocks. AllianceBernstein VPS Global Y Y Long-term growth of capital. The Fund AllianceBernstein L.P. Technology Portfolio (Class invests at least 80% of its net assets in B) securities of companies that use technology extensively in the development of new or improved products or processes. Invests in a global portfolio of securities of U.S. and foreign companies selected for their growth potential. AllianceBernstein VPS Growth Y Y Long-term growth of capital. Invests AllianceBernstein L.P. and Income Portfolio (Class primarily in the equity securities of B) domestic companies that the Advisor deems to be undervalued. AllianceBernstein VPS Y Y Long-term growth of capital. Invests AllianceBernstein L.P. International Value primarily in a diversified portfolio of Portfolio (Class B) equity securities of established companies selected from more than 40 industries and from more than 40 developed and emerging market countries. American Century VP N Y Long-term total return To protect against American Century Inflation Protection, Class U.S. inflation. Investment Management, II Inc. American Century VP N Y Capital growth. Invests primarily in American Century International, Class II stocks of growing foreign companies in Global Investment developed countries. Management, Inc.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER American Century VP Mid Cap Y Y Long-term capital growth with income as a American Century Value, Class II secondary objective. Long-term capital Investment Management, growth with income as secondary Inc. objective. Invests primarily in stocks of companies that management believes are undervalued at the time of purchase. The fund will invest at least 80% of its assets in securities of companies whose market capitalization at the time of purchase is within the capitalization range of the Russell 3000 Index, excluding the largest 100 such companies. American Century VP Y Y Long-term capital growth. Analytical American Century Ultra(R), Class II research tools and techniques are used to Investment Management, identify the stocks of larger-sized Inc. companies that appear to have the best opportunity of sustaining long-term above average growth. American Century VP Value, Y Y Long-term capital growth, with income as American Century Class II a secondary objective. Invests primarily Investment Management, in stocks of companies that management Inc. believes to be undervalued at the time of purchase. Columbia High Yield Fund, Y Y Total return, consisting of a high level Columbia Management Variable Series, Class B of income and capital appreciation. Under Advisors, LLC, normal circumstances, the Fund invests at advisor; MacKay least 80% of net assets in domestic and Shields LLC, foreign corporate below investment grade subadviser. debt securities. These securities generally will be, at the time of purchase, rated BB or below by Standard & Poor's Corporation (S&P) or Fitch, rated "Ba" or below by Moody's, or unrated but determined by the Advisor to be of comparable quality. The Fund invests primarily in domestic corporate below investment grade securities (including private placements), U.S. dollar-denominated foreign corporate below investment grade securities (including private placements), zero- coupon bonds and U.S. Government obligations. The Fund may invest up to 20% of net assets in equity securities that may include convertible securities. The Fund is not managed to a specific duration. Columbia Marsico Growth Y Y Long-term growth of capital. Under normal Columbia Management Fund, Variable Series, Class circumstances, the Fund invests primarily Advisors, LLC, A in equity securities of adviser; Marsico large-capitalization companies that have Capital Management, market capitalizations of $5 billion or LLC, sub-adviser. more at the time of purchase. The Fund generally holds a core position of between 35 and 50 common stocks. It may hold up to 25% of total assets in foreign securities, including in emerging market securities.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Columbia Marsico Y Y Long-term growth of capital. Under normal Columbia Management International Opportunities circumstances, the Fund invests at least Advisors, LLC, Fund, Variable Series, Class 65% of total assets in common stocks of adviser; Marsico B foreign companies. The Fund may invest in Capital Management, companies of any size throughout the LLC, sub-adviser. world that are selected for their long-term growth potential. The Fund normally invests in issuers from at least three different countries not including the United States. The Fund may invest in common stocks of companies operating in or economically tied to emerging markets countries. Some issuers or securities in the Fund's portfolio may be based in or economically tied to the United States. Columbia Small Cap Value Y Y Long-term capital appreciation. Under Columbia Management Fund, Variable Series, Class normal circumstances, the Fund invests at Advisors, LLC B least 80% of net assets in equity securities of companies that have market capitalizations in the range of companies in the Russell 2000 Index at the time of purchase that the Advisor believes are undervalued and have the potential for long-term growth. The Fund may invest up to 20% of total assets in foreign securities. The Fund may also invest in real estate investment trusts. Credit Suisse Trust - Y Y Total Return. Invests in commodity-linked Credit Suisse Asset Commodity Return Strategy derivative instruments backed and Management, LLC Portfolio fixed-income securities. The portfolio invests in commodity-linked derivative instruments, such as commodity-linked notes, swap agreements, commodity options, futures and options on futures that provide exposure to the investment returns of the commodities markets without investing directly in physical commodities. The portfolio invests all of its assets in commodity-linked derivative instruments, such as structured notes and swaps, and fixed-income securities, subject to applicable IRS limits. The portfolio may also gain exposure to commodity markets by investing in the Credit Suisse Cayman Commodity Fund II, a wholly owned subsidiary of the Portfolio formed in the Cayman Island.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Dreyfus Investment N Y Investment results greater than the total The Dreyfus Portfolios MidCap Stock return performance of publicly traded Corporation Portfolio, Service Shares common stocks of medium-sized domestic companies in the aggregate, as represented by the Standard & Poor's Midcap 400 Index. The portfolio normally invests at least 80% of its assets in stocks of mid-size companies. The portfolio invests in growth and value stocks, which are chosen through a disciplined investment process that combines computer modeling techniques, fundamental analysis and risk management. Consistency of returns compared to the S&P 400 is a primary goal of the investment process. The portfolio's stock investments may include common stocks, preferred stocks, convertible securities and depository receipts, including those issued in initial public offerings or shortly thereafter. Dreyfus Investment N Y Capital appreciation. The portfolio The Dreyfus Portfolios Technology Growth invests, under normal circumstances, at Corporation Portfolio, Service Shares least 80% of its assets in the stocks of growth companies of any size that Dreyfus believes to be leading producers or beneficiaries of technological innovation. Up to 25% of the portfolio's assets may be in foreign securities. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities. Dreyfus Variable Investment N Y Long-term capital growth consistent with The Dreyfus Fund Appreciation Portfolio, the preservation of capital. Its Corporation; Fayez Service Shares secondary goal is current income. To Sarofim & Co., sub- pursue these goals, the portfolio adviser. normally invests at least 80% of its assets in common stocks. The portfolio focuses on "blue chip" companies with total market capitalizations of more than $5 billion at the time of purchase, including multinational companies. These established companies have demonstrated sustained patterns of profitability, strong balance sheets, an expanding global presence and the potential to achieve predictable, above-average earnings growth. Dreyfus Variable Investment Y Y Capital growth. To pursue this goal, the The Dreyfus Fund International Equity portfolio primarily invests in growth Corporation Portfolio, Service Shares stocks of foreign companies. Normally, the portfolio invests at least 80% of its assets in stocks, including common stocks, preferred stocks and convertible securities, including those purchased in initial public offering.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Dreyfus Variable Investment Y Y Long-term capital growth. To pursue this The Dreyfus Fund International Value goal, the portfolio normally invests at Corporation Portfolio, Service Shares least 80% of its assets in stocks. The portfolio ordinarily invests most of its assets in securities of foreign companies which Dreyfus considers to be value companies. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities, including those purchased in initial public offerings or shortly thereafter. The portfolio may invest in companies of any size. The portfolio may also invest in companies located in emerging markets. Eaton Vance VT Floating- Y Y High level of current income. The Fund Eaton Vance Management Rate Income Fund invests primarily in senior floating rate loans ("Senior Loans"). Senior Loans typically are of below investment grade quality and have below investment grade credit ratings, which ratings are associated with securities having high risk, speculative characteristics. The Fund invests at least 80% of its net assets in income producing floating rate loans and other floating rate debt securities. The Fund may also purchase investment grade fixed income debt securities and money market instruments. The Fund may invest up to 25% of its total assets in foreign securities and may engage in certain hedging transactions. The Fund may purchase derivative instruments, such as futures contracts and options thereon, interest rate and credit default swaps, credit linked notes and currency hedging derivatives. Fidelity(R) VIP Y Y Long-term capital appreciation. Normally Fidelity Management & Contrafund(R) Portfolio invests primarily in common stocks. Research Company Service Class 2 Invests in securities of companies whose (FMR), investment value it believes is not fully recognized manager; FMR U.K. and by the public. Invests in either "growth" FMR Far East, stocks or "value" stocks or both. The sub-advisers. fund invests in domestic and foreign issuers. Fidelity(R) VIP Growth N Y Achieve capital appreciation. Normally Fidelity Management & Portfolio Service Class 2 invests primarily in common stocks. Research Company Invests in companies that it believes (FMR), investment have above-average growth potential manager; FMR U.K., FMR (stocks of these companies are often Far East, sub- called "growth" stocks). The Fund invests advisers. in domestic and foreign issuers.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Fidelity(R) VIP Investment Y Y High level of current income consistent Fidelity Management & Grade Bond Portfolio Service with the preservation of capital. Research Company Class 2 Normally invests at least 80% of assets (FMR), investment in investment-grade debt securities manager; FMR U.K., FMR (those of medium and high quality) of all Far East, sub- types and repurchase agreements for those advisers. securities. Fidelity(R) VIP Mid Cap Y Y Long-term growth of capital. Normally Fidelity Management & Portfolio Service Class 2 invests primarily in common stocks. Research Company Normally invests at least 80% of assets (FMR), investment in securities of companies with medium manager; FMR U.K., FMR market capitalizations. May invest in Far East, sub- companies with smaller or larger market advisers. capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both. Fidelity(R) VIP Overseas Y Y Long-term growth of capital. Normally Fidelity Management & Portfolio Service Class 2 invests primarily in common stocks of Research Company foreign securities. Normally invests at (FMR), investment least 80% of assets in non-U.S. manager; FMR U.K., FMR securities. Far East, Fidelity International Investment Advisors (FIIA) and FIIA U.K., sub-advisers. FTVIPT Franklin Income Y Y Maximize income while maintaining Franklin Advisers, Securities Fund - Class 2 prospects for capital appreciation. The Inc. Fund normally invests in both equity and debt securities. The Fund seeks income by investing in corporate, foreign, and U.S. Treasury bonds as well as stocks with dividend yields the manager believes are attractive. FTVIPT Franklin Rising N Y Long-term capital appreciation, with Franklin Advisory Dividends Securities preservation of capital as an important Services, LLC Fund - Class 2 consideration. The Fund normally invests at least 80% of its net assets in investments of companies that have paid rising dividends, and normally invests predominantly in equity securities. FTVIPT Franklin Small-Mid N Y Long-term capital growth. The Fund Franklin Advisers, Cap Growth Securities normally invests at least 80% of its net Inc. Fund - Class 2 assets in investments of small capitalization and mid capitalization companies and normally invests predominantly in equity securities.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER FTVIPT Mutual Shares N Y Capital appreciation, with income as a Franklin Mutual Securities Fund - Class 2 secondary goal. The Fund normally invests Advisers, LLC primarily in equity securities of companies that the manager believes are undervalued. The Fund also invests, to a lesser extent in risk arbitrage securities and distressed companies. FTVIPT Templeton Global Y Y High current income consistent with Franklin Advisers, Income Securities Fund - preservation of capital, with capital Inc. Class 2 appreciation as a secondary consideration. The Fund normally invests mainly in debt securities of governments and their political subdivisions and agencies, supranational organizations and companies located anywhere in the world, including emerging markets. FTVIPT Templeton Growth Y Y Long-term capital growth. The Fund Templeton Global Securities Fund - Class 2 normally invests primarily in equity Advisors Limited, securities of companies located anywhere adviser; Templeton in the world, including those in the U.S. Asset Management Ltd., and in emerging markets. subadviser. Goldman Sachs VIT Mid Cap Y Y Long-term capital appreciation. The Fund Goldman Sachs Asset Value Fund - Institutional invests, under normal circumstances, at Management, L.P. Shares least 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase) ("Net Assets") in a diversified portfolio of equity investments in mid-cap issuers with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constituting the Russell Midcap(R) Value Index at the time of investment. If the market capitalization of a company held by the Fund moves outside this range, the Fund may, but is not required to, sell the securities. The capitalization range of the Russell Midcap(R) Value Index is currently between $1.1 billion and $21 billion. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its Net Assets in foreign securities, including securities of issuers in countries with emerging markets or economies ("emerging countries") and securities quoted in foreign currencies. The Fund may invest in the aggregate up to 20% of its Net Assets in companies with public stock market capitalizations outside the range of companies constituting the Russell Midcap(R) Value Index at the time of investment and in fixed-income securities, such as government, corporate and bank debt obligations.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Goldman Sachs VIT Structured Y Y Long-term growth of capital and dividend Goldman Sachs Asset U.S. Equity income. The Fund invests, under normal Management, L.P. Fund - Institutional Shares circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at the time of purchase) ("Net Assets") in a diversified portfolio of equity investments in U.S. issuers, including foreign companies that are traded in the United States. However, it is currently anticipated that, under normal circumstances, the Fund will invest at least 95% of its Net Assets in such equity investments. The Fund's investments are selected using a variety of quantitative techniques, derived from fundamental research including but not limited to valuation, momentum, profitability and earnings quality, in seeking to maximize the Fund's expected returns. The Fund maintains risk, style, capitalization and industry characteristics similar to the S&P 500 Index. The S&P 500 Index is an index of large-cap stocks designed to reflect a broad representation of the U.S. economy. The Fund seeks to maximize expected return while maintaining these and other characteristics similar to the benchmark. The Fund is not required to limit its investments to securities in the S&P 500 Index. Janus Aspen Series Large Cap Y Y Long-term growth of capital in a manner Janus Capital Growth Portfolio: Service consistent with the preservation of Management LLC Shares capital. Invests under normal circumstances at least 80% of its net assets in common stocks of large-sized companies. Large-sized companies are those whose market capitalization falls within the range of companies in the Russell 1000(R) Index at the time of purchase. Legg Mason Partners Variable Y Y Long-term growth of capital. Under normal Legg Mason Partners Small Cap Growth Portfolio, circumstances, the fund invests at least Fund Advisor, LLC, Class I 80% of its net assets in equity adviser; ClearBridge securities of companies with small market Advisors, LLC, sub- capitalizations and related investments. adviser. MFS(R) Investors Growth N Y Capital appreciation. Normally invests at MFS Investment Stock Series - Service Class least 80% of the fund's net assets in Management(R) equity securities of companies MFS believes to have above average earnings growth potential compared to other companies (growth companies). Growth companies tend to have stock prices that are high relative to their earnings, dividends, book value, or other financial measures. The Fund generally focuses on companies with large capitalizations.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER MFS(R) New Discovery N Y Capital appreciation. Invests in stocks MFS Investment Series - Service Class of companies MFS believes to have above Management(R) average earnings growth potential compared to other companies (growth companies). Growth companies tend to have stock prices that are high relative to their earnings, dividends, book value, or other financial measures. The Fund generally focuses on companies with small capitalizations. MFS(R) Total Return Y Y Total return. Invests primarily in equity MFS Investment Series - Service Class and fixed income securities. MFS invests Management(R) between 40% and 75% of the fund's net assets in equity securities and at least 25% of the fund's total assets in fixed-income senior securities. MFS(R) Utilities Series - Y Y Total return. Normally invests at least MFS Investment Service Class 80% of the fund's net assets in Management(R) securities of issuers in the utilities industry. The Fund's assets may be invested in companies of any size. Oppenheimer Capital Y Y Capital appreciation by investing in OppenheimerFunds, Inc. Appreciation Fund/VA, securities of well-known, established Service Shares companies. Oppenheimer Global Y Y Long-term capital appreciation. Invests OppenheimerFunds, Inc. Securities Fund/VA, Service mainly in common stocks of U.S. and Shares foreign issuers that are "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. Oppenheimer Main Street Y Y Capital appreciation. Invests mainly in OppenheimerFunds, Inc. Small Cap Fund/VA, Service common stocks of small-capitalization Shares U.S. companies that the fund's investment manager believes have favorable business trends or prospects. Oppenheimer Strategic Bond Y Y High level of current income principally OppenheimerFunds, Inc. Fund/VA, Service Shares derived from interest on debt securities. Invests mainly in three market sectors: debt securities of foreign governments and companies, U.S. government securities and lower-rated high yield securities of U.S. and foreign companies.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER PIMCO VIT All Asset Y Y Maximum real return consistent with Pacific Investment Portfolio, Advisor Share preservation of real capital and prudent Management Company LLC Class investment management period. The Portfolio seeks to achieve its investment objective by investing under normal circumstances substantially all of its assets in Institutional Class shares of the PIMCO Funds, an affiliated open-end investment company, except the All Asset and All Asset All Authority Funds ("Underlying Funds"). Though it is anticipated that the Portfolio will not currently invest in the European StockPLUS(R) TR Strategy, Far East (ex-Japan) StocksPLUS(R) TR Strategy, Japanese StocksPLUS(R) TR Strategy, StocksPLUS(R) Municipal-Backed and StocksPLUS(R) TR Short Strategy Funds, the Portfolio may invest in these Funds in the future, without shareholder approval, at the discretion of the Portfolio's asset allocation sub-adviser. Putnam VT Health Sciences N Y Capital appreciation. The fund pursues Putnam Investment Fund - Class IB Shares its goal by investing mainly in common Management, LLC stocks of companies in the health sciences industries, with a focus on growth stocks. Under normal circumstances, the fund invests at least 80% of its net assets in securities of (a) companies that derive at least 50% of their assets, revenues or profits from the pharmaceutical, health care services, applied research and development and medical equipment and supplies industries, or (b) companies Putnam Management thinks have the potential for growth as a result of their particular products, technology, patents or other market advantages in the health sciences industries. Putnam VT International N Y Capital appreciation. The fund pursues Putnam Investment Equity Fund - Class IB its goal by investing mainly in common Management, LLC Shares stocks of companies outside the United States that Putnam Management believes have favorable investment potential. Under normal circumstances, the fund invests at least 80% of its net assets in equity investments. Putnam VT Small Cap Value N Y Capital appreciation. The fund pursues Putnam Investment Fund - Class IB Shares its goal by investing mainly in common Management, LLC stocks of U.S. companies, with a focus on value stocks. Under normal circumstances, the fund invests at least 80% of its net assets in small companies of a size similar to those in the Russell 2000 Value Index. Putnam VT Vista Fund - Class N Y Capital appreciation. The fund pursues Putnam Investment IB Shares its goal by investing mainly in common Management, LLC stocks of U.S. companies, with a focus on growth stocks.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Partners Y Y Long-term capital growth. The Fund's RiverSource Variable assets are primarily invested in equity Investments, LLC, Portfolio - Fundamental securities of U.S. companies. Under adviser; Davis Value Fund normal market conditions, the Fund's Selected Advisers, assets will be invested primarily in L.P., subadviser. (previously RiverSource companies with market capitalizations of Variable Portfolio - at least $5 billion at the time of the Fundamental Value Fund) Fund's investment. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Partners Y Y Long-term growth of capital. Invests RiverSource Variable Portfolio - Select primarily in equity securities of mid cap Investments, LLC, Value Fund companies as well as companies with adviser; Systematic larger and smaller market Financial Management, (previously RiverSource capitalizations. The Fund considers L.P. and WEDGE Capital Variable Portfolio - Select mid-cap companies to be either those with Management L.L.P., Value Fund) a market capitalization of up to $15 sub-advisers. billion or those whose market capitalization falls within range of the Russell Midcap(R) Value Index. RVST RiverSource Partners Y Y Long-term capital appreciation. Under RiverSource Variable Portfolio - Small normal market conditions, at least 80% of Investments, LLC, Cap Value Fund the Fund's net assets will be invested in adviser; River Road small cap companies with market Asset Management, LLC, (previously RiverSource capitalization, at the time of Donald Smith & Co., Variable Portfolio - Small investment, of up to $2.5 billion or that Inc., Franklin Cap Value Fund) fall within the range of the Russell Portfolio Associates 2000(R) Value Index. The Fund may invest LLC, Barrow, Hanley, up to 25% of its net assets in foreign Mewhinney & Strauss, investments. Inc. and Denver Investment Advisors LLC, subadvisers. RVST RiverSource Variable Y Y Maximum current income consistent with RiverSource Portfolio - Cash Management liquidity and stability of principal. Investments, LLC Fund Invests primarily in money market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Y Y High level of current income while RiverSource Portfolio - Diversified Bond attempting to conserve the value of the Investments, LLC Fund investment for the longest period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage- and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets. RVST RiverSource Variable Y Y High level of current income and, as a RiverSource Portfolio - Diversified secondary goal, steady growth of capital. Investments, LLC Equity Income Fund Under normal market conditions, the Fund invests at least 80% of its net assets in dividend-paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Y Y Total return that exceeds the rate of RiverSource Portfolio - Global Inflation inflation over the long-term. Investments, LLC Protected Securities Fund Non-diversified mutual fund that, under normal market conditions, invests at least 80% of its net assets in inflation-protected debt securities. These securities include inflation- indexed bonds of varying maturities issued by U.S. and foreign governments, their agencies or instrumentalities, and corporations. RVST RiverSource Variable Y Y Long-term capital growth. Invests RiverSource Portfolio - Growth Fund primarily in common stocks and securities Investments, LLC convertible into common stocks that appear to offer growth opportunities. These growth opportunities could result from new management, market developments, or technological superiority. The Fund may invest up to 25% of its net assets in foreign investments.
- -------------------------------------------------------------------------------- 28 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Y Y High current income, with capital growth RiverSource Portfolio - High Yield Bond as a secondary objective. Under normal Investments, LLC Fund market conditions, the Fund invests at least 80% of its net assets in high-yield debt instruments (commonly referred to as "junk") including corporate debt securities as well as bank loans rated below investment grade by a nationally recognized statistical rating organization, or if unrated, determined to be of comparable quality. Up to 25% of the Fund may be invested in high yield debt instruments of foreign issuers. RVST RiverSource Variable Y Y High total return through current income RiverSource Portfolio - Income and capital appreciation. Under normal Investments, LLC Opportunities Fund market conditions, the Fund invests primarily in income- producing debt securities with an emphasis on the higher rated segment of the high-yield (junk bond) market. These income-producing debt securities include corporate debt securities as well as bank loans. The Fund will purchase only securities rated B or above, or unrated securities believed to be of the same quality. If a security falls below a B rating, the Fund may continue to hold the security. Up to 25% of the Fund may be in foreign investments. RVST RiverSource Variable Y Y Capital appreciation. Under normal market RiverSource Portfolio - Large Cap Equity conditions, the Fund invests at least 80% Investments, LLC Fund of its net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable N Y Long-term growth of capital. Under normal RiverSource Portfolio - Large Cap Value market conditions, the Fund invests at Investments, LLC Fund least 80% of its net assets in equity securities of companies with a market capitalization greater than $5 billion. The Fund may also invest in income- producing equity securities and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable N Y Growth of capital. Under normal market RiverSource Portfolio - Mid Cap Growth conditions, the Fund invests at least 80% Investments, LLC Fund of its net assets at the time of purchase in equity securities of mid capitalization companies. The investment manager defines mid-cap companies as those whose market capitalization (number of shares outstanding multiplied by the share price) falls within the range of the Russell Midcap(R) Growth Index.
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 29
AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Y Y Long-term growth of capital. Under normal RiverSource Portfolio - Mid Cap Value circumstances, the Fund invests at least Investments, LLC Fund 80% of its net assets (including the amount of any borrowings for investment purposes) in equity securities of medium-sized companies. Medium-sized companies are those whose market capitalizations at the time of purchase fall within the range of the Russell Midcap(R) Value Index. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Y Y Long-term capital appreciation. The Fund RiverSource Portfolio - S&P 500 Index seeks to provide investment results that Investments, LLC Fund correspond to the total return (the combination of appreciation and income) of large-capitalization stocks of U.S. companies. The Fund invests in common stocks included in the Standard & Poor's 500 Composite Stock Price Index (S&P 500). The S&P 500 is made up primarily of large-capitalization companies that represent a broad spectrum of the U.S. economy. RVST RiverSource Variable Y Y High level of current income and safety RiverSource Portfolio - Short Duration of principal consistent with investment Investments, LLC U.S. Government Fund in U.S. government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. RVST Threadneedle Variable Y Y Long-term capital growth. The Fund's RiverSource Portfolio - Emerging Markets assets are primarily invested in equity Investments, LLC, Fund securities of emerging market companies. adviser; Threadneedle Under normal market conditions, at least International Limited, (previously RiverSource 80% of the Fund's net assets will be an indirect wholly- Variable Portfolio - invested in securities of companies that owned subsidiary of Emerging Markets Fund) are located in emerging market countries, Ameriprise Financial, or that earn 50% or more of their total sub-adviser. revenues from goods and services produced in emerging market countries or from sales made in emerging market countries. RVST Threadneedle Variable Y Y Capital appreciation. Invests primarily RiverSource Portfolio - International in equity securities of foreign issuers Investments, LLC, Opportunity Fund that are believed to offer strong growth adviser; Threadneedle potential. The Fund may invest in International Limited, (previously RiverSource developed and in emerging markets. an indirect wholly- Variable Portfolio - owned subsidiary of International Opportunity Ameriprise Financial, Fund) sub-adviser.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Van Kampen Life Investment Y Y Capital growth and income through Van Kampen Asset Trust Comstock Portfolio, investments in equity securities, Management Class II Shares including common stocks, preferred stocks and securities convertible into common and preferred stocks. The Portfolio emphasizes value style of investing seeking well-established, undervalued companies believed by the Portfolio's investment adviser to posses the potential for capital growth and income. Van Kampen UIF Global Real Y Y Current income and capital appreciation. Morgan Stanley Estate Portfolio, Class II Invests primarily in equity securities of Investment Management Shares companies in the real estate industry Inc., doing business located throughout the world, including as Van Kampen, real estate operating companies, real adviser; Morgan estate investment trusts and similar Stanley Investment entities established outside the U.S. Management Limited and (foreign real estate companies). Morgan Stanley Investment Management Company, sub- advisers. Van Kampen UIF Mid Cap Y Y Long-term capital growth. Invests Morgan Stanley Growth Portfolio, Class II primarily in growth-oriented equity Investment Management Shares securities of U.S. mid cap companies and Inc., doing business foreign companies, including emerging as Van Kampen. market securities. Van Kampen UIF U.S. Real N Y Above-average current income and Morgan Stanley Estate Portfolio, Class II long-term capital appreciation by Investment Management Shares investing primarily in equity securities Inc., doing business of companies in the U.S. real estate as Van Kampen. industry, including real estate investment trusts. Non-diversified Portfolio that invests primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Wanger International Long-term growth of capital. Invests Columbia Wanger Asset Small Cap primarily in stocks of companies based Management, L.P. outside the U.S. with market capitalizations of less than $5 billion at time of initial purchase. Effective June 1, 2008, the Fund will change its name to Effective June 1, 2008: Wanger International. Long-term growth of capital. Under normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion. Wanger U.S. Smaller Long-term growth of capital. Invests Columbia Wanger Asset Companies primarily in stocks of small- and Management, L.P. medium-size U.S. companies with market capitalizations of less than $5 billion at time of initial purchase. Effective June 1, 2008, the Fund will change its name to Effective June 1, 2008: Wanger USA. Long-term growth of capital. Under normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion.
- -------------------------------------------------------------------------------- 32 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THE GUARANTEE PERIOD ACCOUNTS (GPAS) The GPAs may not be available in some states. Currently, unless an asset allocation program is in effect, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The required minimum investment in each GPA is $1,000. These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the guarantee period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion (future rates). We will determine future rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable guarantee periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We will not apply an MVA to contract value you transfer or withdraw out of the GPAs within 30 days before the end of the guarantee period. During this 30 day window you may choose to start a new guarantee period of the same length, transfer the contract value to a GPA of another length, transfer the contract value to any of the subaccounts or withdraw the contract value (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your guarantee period, our current practice is to automatically transfer the contract value into the shortest GPA term offered in your state. We guarantee the contract value allocated to the GPAs, including interest credited, if you do not make any transfers or withdrawals from the GPAs prior to 30 days before the end of the Guarantee Period (30 day rule). At all other times, and unless one of the exceptions to the 30 day rule described below applies, we will apply an MVA if you withdraw or transfer contract value from a GPA including withdrawals under the SecureSource riders, the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider, or you elect an annuity payout plan while you have contract value invested in a GPA. We will refer to these transactions as "early withdrawals." The application of an MVA may result in either a gain or loss of principal. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 33 The 30-day rule does not apply and no MVA will apply to: - - transfers from a one-year GPA occurring under an automated dollar-cost averaging program or Interest Sweep Strategy; - - automatic rebalancing under any Portfolio Navigator model portfolio we offer which contains one or more GPAs. However, an MVA will apply if you transfer to a new Portfolio Navigator model portfolio; - - amounts applied to an annuity payout plan while a Portfolio Navigator model portfolio containing one or more GPAs is in effect; - - reallocation of your contract value according to an updated Portfolio Navigator model portfolio; - - amounts withdrawn for fees and charges; or - - amounts we pay as death claims. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your guarantee period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the guarantee period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A. THE FIXED ACCOUNT (APPLIES TO CONTRACTS ISSUED ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR STATE) The fixed account is our general account. Amounts allocated to the fixed account become part of our general account. The fixed account includes the one-year fixed account and the DCA fixed account. We credit interest on amounts you allocate to the fixed account at rates we determine from time to time in our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns we earn on our general account investments, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed minimum interest rate on amounts invested in the fixed account may vary by state but will not be lower than state law allows. We back the principal and interest guarantees relating to the fixed account. These guarantees are based on the continued claims-paying ability of RiverSource Life. The fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the fixed account, however, disclosures regarding the fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ONE-YEAR FIXED ACCOUNT Unless an asset allocation program we offer is in effect, you may allocate purchase payments or transfer contract value to the one-year fixed account.(1) The value of the one-year fixed account increases as we credit interest to the one-year fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. We credit the one-year fixed account with the current guaranteed annual rate that is in effect on the date we receive your purchase payment or you transfer contract value to the one-year fixed account. The interest rate we apply to each purchase payment or transfer to the one-year fixed account is guaranteed for one year. There are restrictions on the amount you can allocate to the one-year fixed account as well as on transfers from this account (see "Buying Your Contract" and "Making the Most of Your Contract -- Transfer policies"). (1) For Contract Option C, the one-year fixed account may not be available, or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. DCA FIXED ACCOUNT You may allocate purchase payments to the DCA fixed account. You may not transfer contract value to the DCA fixed account. You may allocate your entire initial purchase payment to the DCA fixed account for a term of six or twelve months. We reserve the right to offer shorter or longer terms for the DCA fixed account. - -------------------------------------------------------------------------------- 34 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS In accordance with your investment instructions, we transfer a pro rata amount from the DCA fixed account to your investment allocations monthly so that, at the end of the DCA fixed account term, the balance of the DCA fixed account is zero. The value of the DCA fixed account increases when we credit interest to the DCA fixed account, and decreases when we make monthly transfers from the DCA fixed account to your investment allocations. We credit interest only on the declining balance of the DCA fixed account; we do not credit interest on amounts that have been transferred from the DCA fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. Generally, we will credit the DCA fixed account with interest at the same annual effective rate we apply to the one-year fixed account on the date we receive your purchase payment, regardless of the length of the term you select. We reserve the right to declare different annual effective rates: - - for the DCA fixed account and the one-year fixed account; - - for the DCA fixed accounts with terms of differing length; - - for amounts in the DCA fixed account you instruct us to transfer to the one-year fixed account if available under your contract; - - for amounts in the DCA fixed account you instruct us to transfer to the GPAs; - - for amounts in the DCA fixed account you instruct us to transfer to the subaccounts. The interest rates in effect for the DCA fixed account when we receive your purchase payment are guaranteed for the length of the term. When you allocate an additional purchase payment to an existing DCA fixed account term, the interest rates applicable to that purchase payment will be the rates in effect for the DCA fixed account of the same term on the date we receive your purchase payment. For DCA fixed accounts with an initial term (or, in the case of an additional purchase payment, a remaining term) of less than twelve months, the net effective interest rates we credit to the DCA fixed account balance will be less than the declared annual effective rates. Alternatively, you may allocate your initial purchase payment to any combination of the following which equals one hundred percent of the amount you invest: - - the DCA fixed account for a six month term; - - the DCA fixed account for a twelve month term; - - the Portfolio Navigator model portfolio in effect; - - if no Portfolio Navigator model portfolio is in effect, to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If you make a purchase payment while a DCA fixed account term is in progress, you may allocate your purchase payment among the following: - - to the DCA fixed account term(s) then in effect. Amounts you allocate to an existing DCA fixed account term will be transferred out of the DCA fixed account over the remainder of the term. For example, if you allocate a new purchase payment to an existing DCA fixed account term of six months when only two months remains in the six month term, the amount you allocate will be transferred out of the DCA fixed account over the remaining two months of the term; - - to the Portfolio Navigator model portfolio then in effect; - - if no Portfolio Navigator model portfolio is in effect, then to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If no DCA fixed account term is in progress when you make an additional purchase payment, you may allocate it according to the rules above for the allocation of your initial purchase payment. If you participate in a model portfolio, and you change to a different model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account to your newly-elected model portfolio. If your contract permits, and you discontinue your participation in a model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account for the remainder of the term in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). You may discontinue any DCA fixed account before the end of its term by giving us notice. If you do so, we will transfer the remaining balance of the DCA fixed account whose term you are ending to the model portfolio in effect, or if no model portfolio is in effect, in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 35 one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). Dollar-cost averaging from the DCA fixed account does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. For a discussion of how dollar-cost averaging works, see "Making the Most of Your Contract -- Automated Dollar-Cost Averaging." BUYING YOUR CONTRACT Your investment professional will help you complete and submit an application and send it along with your initial purchase payment to our corporate office. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. You may buy Contract Option L or Contract Option C. Contract Option L has a four-year withdrawal charge schedule and optional living benefit riders. Contract Option C eliminates the per purchase payment withdrawal charge schedule in exchange for a higher mortality and expense risk fee; additionally, optional living benefit riders are not available under Contract Option C. Both contracts have the same underlying funds. As the owner, you have all rights and may receive all benefits under the contract. You may select a qualified or nonqualified annuity. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 85 or younger. (The age limit may be younger for qualified annuities in some states.) When you apply, you may select (if available in your state): - - contract Option L or Option C; - - GPAs, the one-year fixed account (if included), the DCA fixed account and/or subaccounts in which you want to invest; - - how you want to make purchase payments; - - a beneficiary; - - the optional Portfolio Navigator asset allocation program(1); and - - one of the following Death Benefits: - ROP Death Benefit - MAV Death Benefit(2) - 5% Accumulation Death Benefit(2) - Enhanced Death Benefit(2) (1) There is no additional charge for this feature. (2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not available with Benefit Protector and Benefit Protector Plus Death Benefit riders. In addition, under Contract Option L(3), you may also select (if available in your state): EITHER OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM): - - Accumulation Protector Benefit rider - - SecureSource rider Under both Contract Option L and Contract Option C, you may also select (if available in your state): EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS: - - Benefit Protector Death Benefit rider(4) - - Benefit Protector Plus Death Benefit rider(4) (3) Living benefit riders were available on Contract Option C prior to May 1, 2007. (4) Not available with the 5% Accumulation Death Benefit or Enhanced Death Benefit riders. This contract provides for allocations of purchase payments to the GPAs, the one-year fixed account, the DCA fixed account and/or to the subaccounts in even 1% increments subject to the required $1,000 required minimum investment for the GPAs. For Contract Option L, the amount of any purchase payment allocated to the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish an automated dollar-cost averaging arrangement with respect to the purchase payment according to procedures currently in effect. We reserve the right to further limit purchase payment allocations to the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. For Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. - -------------------------------------------------------------------------------- 36 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS If your application is complete, we will process it and apply your purchase payment to the GPAs, the one-year fixed account, DCA fixed account and subaccounts you selected within two business days after we receive it at our corporate office. If we accept your application, we will send you a contract. If your application is not complete, you must give us the information to complete it within five business days. If we cannot accept your application within five business days, we will decline it and return your payment unless you specifically ask us to keep the payment and apply it once your application is complete. We will credit additional purchase payments you make to your accounts on the valuation date we receive them. If we receive an additional purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our corporate office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a Systematic Investment Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts begin on the retirement date. When we process your application, we will establish the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. Your selected date can align with your actual retirement from a job, or it can be a different date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 90th(1) birthday or the tenth contract anniversary, if purchased after age 80(1), or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the retirement date generally must be: - - for IRAs by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 90th(1) birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. (1) Applies to contracts purchased on or after May 1, 2006, in most states. For all other contracts, the retirement date must be no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75. Ask your investment professional which retirement date applies to you. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) If you select the SecureSource - Joint Life rider, please consider carefully whether or not you wish to change the beneficiary of your annuity contract. The rider will terminate if the surviving covered spouse can not utilize the spousal continuation provision of the contract when the death benefit is payable. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 37 PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM INITIAL PURCHASE PAYMENT $10,000 MINIMUM ADDITIONAL PURCHASE PAYMENTS $50 for SIPs $100 for all other payment types MAXIMUM TOTAL PURCHASE PAYMENTS*: $1,000,000 * This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the Code's limits on annual contributions also apply. We also reserve the right to restrict cumulative additional purchase payments for contracts with the SecureSource riders, the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider. Additional purchase payments are restricted during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including, but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values or to satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers, withdrawals or death benefits until instructions are received from the appropriate governmental authority or a court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary. We prorate this charge among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. Some states also limit any contract charge allocated to the fixed account. We will waive this charge when your contract value is $50,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct the charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the fixed account. We cannot increase these fees. - -------------------------------------------------------------------------------- 38 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The contract (either Option L or Option C) and the death benefit guarantee you select determines the mortality and expense risk fee you pay:
CONTRACT OPTION L CONTRACT OPTION C ROP Death Benefit 1.55% 1.65% MAV Death Benefit 1.75 1.85 5% Accumulation Death Benefit 1.90 2.00 Enhanced Death Benefit 1.95 2.05
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the annuity payout period even if the annuity payout plan does not involve a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Contract Option C has no purchase payment withdrawal charge schedule but carries a higher mortality and expense risk fee than contract Option L. If you select contract Option L and you withdraw all or part of your contract value before annuity payouts begin, we may deduct a withdrawal charge. As described below, a withdrawal charge schedule applies to each purchase payment you make. The withdrawal charge lasts for four years (see "Expense Summary"). You may withdraw an amount during any contract year without a withdrawal charge. We call this amount the Total Free Amount (TFA). The TFA varies depending on whether your Contract Option L includes the SecureSource rider, the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider: CONTRACT OPTION L WITHOUT SECURESOURCE RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER OR THE GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greater of: - - 10% of the contract value on the prior contract anniversary(1); or - - current contract earnings. CONTRACT OPTION L WITH SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime Payment. CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the Remaining Benefit Payment. (1) We consider your initial purchase payment to be the prior contract anniversary's contract value during the first contract year. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 39 Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as described below. A withdrawal charge will apply if the amount you withdraw includes any of your prior purchase payments that are still within their withdrawal charge schedule. To determine whether your withdrawal includes any of your prior purchase payments that are still within their withdrawal charge schedule, we withdraw amounts from your contract in the following order: 1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA. 2. We withdraw purchase payments not previously withdrawn, in the order you made them: the oldest purchase payment first, the next purchase payment second, etc. until all purchase payments have been withdrawn. By applying this "first-in, first-out" rule, we do not assess a withdrawal charge on purchase payments that we received prior to the number of years stated in the withdrawal charge schedule you select when you purchase the contract. We only assess a withdrawal charge on purchase payments that are still within the withdrawal charge schedule you selected. EXAMPLE: Each time you make a purchase payment under the contract Option L, a withdrawal charge schedule attaches to that purchase payment. The withdrawal charge percentage for each purchase payment declines according to the withdrawal charge schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 4-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY" ABOVE.) For example, if you select contract Option L, during the first two years after a purchase payment is made, the withdrawal charge percentage attached to that payment is 8%. The withdrawal charge percentage for that payment during the fourth year after it is made is 6%. At the beginning of the fifth year after that purchase payment is made, and thereafter, there is no longer a withdrawal charge as to that payment. We determine your withdrawal charge by multiplying each of your payments withdrawn by the applicable withdrawal charge percentage (see "Expense Summary"), and then adding the total withdrawal charges. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. A partial withdrawal that includes contract value taken from the Guarantee Period Accounts may also be subject to a Market Value Adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay you the amount you request. Note that the withdrawal charge is assessed against the original amount of your purchase payments that are subject to a withdrawal charge, even if your contract has lost value. This means that purchase payments withdrawn may be greater than the amount of contract value you withdraw. For an example, see Appendix B. WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION L We do not assess withdrawal charges for: - - withdrawals of any contract earnings; - - withdrawals of amounts totaling up to 10% of the contract value on the prior contract anniversary to the extent it exceeds contract earnings; - - if you elected the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider, the greater of your contract's Remaining Benefit Payment or Remaining Annual Lifetime Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - if you elected the Guarantor Withdrawal Benefit rider, your contract's Remaining Benefit Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required amount calculated under your specific contract currently in force; and - - contracts settled using an annuity payout plan (EXCEPTION: As described below, if you select annuity payout Plan E, and choose later to withdraw the value of your remaining annuity payments, we will assess a withdrawal charge. This exception also applies to Contract Option C.) - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - -------------------------------------------------------------------------------- 40 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal under this annuity payout plan we impose a withdrawal charge whether you have Contract Option L or Contract Option C. This charge will vary based on your contract option and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in a table in the "Expense Summary." (See "The Annuity Payout Period -- Annuity Payout Plans.") POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. OPTIONAL LIVING BENEFIT CHARGES -- CURRENTLY OFFERED UNDER CONTRACT OPTION L(1) ACCUMULATION PROTECTOR BENEFIT RIDER FEE We charge an annual fee of 0.55% of the greater of your contract value or the minimum contract accumulation value on your contract anniversary for this optional benefit only if you select it. We deduct the fee from the contract value on the contract anniversary. We prorate this fee among the GPAs, the one-year fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Accumulation Protector Benefit rider, you may not cancel it and the fee will continue to be deducted until the end of the waiting period. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable, adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently, the Accumulation Protector Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Accumulation Protector Benefit rider charge will not exceed a maximum of 1.75%. We will not change the Accumulation Protector Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge; (b) you choose the spousal continuation step up after we have exercised our right to increase the rider charge; (c) you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. We reserve the right to restart the waiting period whenever you elect to change your model portfolio to one that causes the rider charge to increase. The fee does not apply after annuity payouts begin. (1) Effective May 1, 2007, optional living benefits are not available on Contract Option C. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 41 SECURESOURCE RIDER FEE We charge an annual fee based on the greater of the contract anniversary value or the total Remaining Benefit Amount (RBA) for this optional feature only if you select it as follows: - - SecureSource - Single Life rider, 0.65%; - - SecureSource - Joint Life rider, 0.85%. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the SecureSource rider, you may not cancel it and the fee will continue to be deducted until the contract or rider is terminated, or the contract value reduces to zero. If the contract or rider is terminated for any reason, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the RBA reduces to zero but the contract value has not been depleted, you will continue to be charged. Currently the SecureSource rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The SecureSource - Single Life rider charge will not exceed a maximum charge of 1.50%. The SecureSource - Joint Life rider charge will not exceed a maximum charge of 1.75%. We will not change the SecureSource rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to exercise the annual elective step up before the end of the waiting period, the SecureSource rider charge will not change until the end of the waiting period. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective annual step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the elective spousal continuation step up after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. OPTIONAL LIVING BENEFIT CHARGES -- PREVIOUSLY OFFERED UNDER CONTRACT OPTION L AND CONTRACT OPTION C GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE(1) We charge an annual fee of 0.65% of the greater of the contract anniversary value or the total Remaining Benefit Amount (RBA) for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the RBA goes to zero but the contract value has not been depleted, you will continue to be charged. Currently the Guarantor Withdrawal Benefit for Life rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Guarantor Withdrawal Benefit for Life rider charge will not exceed a maximum charge of 1.50%. (1) See disclosure in Appendix J. We will not change the Guarantor Withdrawal Benefit for Life rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to exercise the annual elective step up before the end of the waiting period, the Guarantor Withdrawal Benefit for - -------------------------------------------------------------------------------- 42 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Life rider charge will not change until the end of the waiting period. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective annual step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the elective spousal continuation step up after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1) THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B (SEE APPENDIX K) UNLESS OTHERWISE NOTED. We charge an annual fee of 0.55% of contract value for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the Remaining Benefit Amount (RBA) goes to zero but the contract value has not been depleted, you will continue to be charged. Currently the Guarantor Withdrawal Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Guarantor Withdrawal Benefit rider charge will not exceed a maximum charge of 1.50%. We will not change the Guarantor Withdrawal Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to step up before the third contract anniversary, the Guarantor Withdrawal Benefit rider charge will not change until the third contract anniversary. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the elective spousal continuation step up under Rider A after we have exercised our right to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. (1) See disclosure in Appendix K. INCOME ASSURER BENEFIT RIDER FEE We charge an annual fee for this optional feature only if you selected it. We determine the fee by multiplying the guaranteed income benefit base by the charge of the Income Assurer Benefit rider you select. There are three Income Assurer Benefit rider - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 43 options available under your contract (see "Optional Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed income benefit base calculation. The charge for each Income Assurer Benefit rider is as follows:
MAXIMUM CURRENT Income Assurer Benefit - MAV 1.50% 0.30%(1) Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1) Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. We deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate this fee among the GPAs, the one-year fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently the Income Assurer Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate charge for each model portfolio but not to exceed the maximum charges shown above. We cannot change the Income Assurer Benefit rider charge after the rider effective date, unless you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge and/or charge a separate charge for each model portfolio. If you choose to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge, you will pay the charge that is in effect on the valuation date we receive your written request to change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. OPTIONAL DEATH BENEFIT CHARGES -- CURRENTLY OFFERED BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. VALUING YOUR INVESTMENT We value your accounts as follows: GPAS We value the amounts you allocated to the GPAs directly in dollars. The value of a GPA equals: - - the sum of your purchase payments and transfer amounts allocated to the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after any applicable MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - -------------------------------------------------------------------------------- 44 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. THE FIXED ACCOUNT THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT IF AVAILABLE UNDER YOUR CONTRACT, AND THE DCA FIXED ACCOUNT. We value the amounts you allocate to the fixed account directly in dollars. The value of the fixed account equals: - - the sum of your purchase payments allocated to the one-year fixed account (if included) and the DCA fixed account, and transfer amounts to the one-year fixed account (if included); - - plus interest credited; - - minus the sum of amounts withdrawn (including any applicable withdrawal charges for Contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: To calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change in two ways -- in number and in value. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 45 The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and the deduction of a prorated portion of: - - the contract administrative charge; and - - the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or one-year GPA to one or more subaccounts. Automated transfers are not available for GPA terms of two or more years. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from the one-year fixed account or one-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn on the one-year fixed account or one-year GPA will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low... (ARROW) Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. (ARROW) Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
- -------------------------------------------------------------------------------- 46 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. Dollar-cost averaging as described in this section is not available when a Portfolio Navigator model portfolio is in effect. However, subject to certain restrictions, dollar-cost averaging is available through the DCA fixed account. See the "DCA Fixed Account" and "Portfolio Navigator Asset Allocation Program" sections in this prospectus for details. ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. Different rules apply to asset rebalancing under a Portfolio Navigator model portfolio (see "Portfolio Navigator Asset Allocation Program" and "Appendix I: Asset Allocation Program for Contracts Purchased Before May 1, 2006" below). As long as you are not participating in a Portfolio Navigator model portfolio, asset rebalancing is available for use with the DCA fixed account (see "DCA Fixed Account") only if your subaccount allocation for asset rebalancing is exactly the same as your subaccount allocation for transfers from the DCA fixed account. If you change your subaccount allocations under the asset rebalancing program or the DCA fixed account, we will automatically change the subaccount allocations so they match. If you do not wish to have the subaccount allocation be the same for the asset rebalancing program and the DCA fixed account, you must terminate the asset rebalancing program or the DCA fixed account, as you may choose. PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM The Portfolio Navigator Asset Allocation Program (PN program) described in this section replaces the previously offered asset allocation program described in Appendix I for owners of all contracts purchased on or after May 1, 2006 and for contract owners who choose to move from the previously offered asset allocation program to the PN program or who add the PN program on or after May 1, 2006. The PN program is available for nonqualified annuities and for qualified annuities. The PN program allows you to allocate your contract value to a PN program model portfolio that consists of subaccounts, each of which invests in an underlying fund with a particular investment objective, and may include certain GPAs and/or the one-year fixed account (if available under the PN program) that represent various asset classes (allocation options). The PN program also allows you to periodically update your model portfolio or transfer to a new model portfolio. You are required to participate in the PN program if your contract purchased on or after May 1, 2006 includes an optional Accumulation Protector Benefit rider, SecureSource rider, Guarantor Withdrawal Benefit for Life rider (if available in your state, otherwise the Guarantor Withdrawal Benefit rider) or Income Assurer Benefit rider. If your contract does not include one of these riders, you also may elect to participate in the PN program at no additional charge. You should review any PN program information, including the terms of the PN program, carefully. Your investment professional can provide you with additional information and can answer questions you may have on the PN program. SERVICE PROVIDERS TO THE PN PROGRAM. RiverSource Investments, an affiliate of ours, serves as non-discretionary investment adviser for the PN program solely in connection with the development of the model portfolios and periodic updates of the model portfolios. In this regard, RiverSource Investments enters into an investment advisory agreement with each contract owner participating in the PN program. In its role as investment adviser to the PN program, RiverSource Investments relies upon the recommendations of a third party service provider. In developing and updating the model portfolios, RiverSource Investments reviews the recommendations, and the third party's rationale for the recommendations, with the third party service provider. RiverSource Investments also conducts periodic due diligence and provides ongoing oversight with respect to the process utilized by the third party service provider. For more information on RiverSource Investment's role as investment adviser for the PN program, please see the Portfolio Navigator Asset Allocation Program Investment Adviser Disclosure Document, which is based on Part II of RiverSource Investment's Form ADV, the SEC investment adviser registration form. The Disclosure Document is delivered to contract owners at the time they enroll in the PN program. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 47 Currently, the PN program model portfolios are designed and periodically updated for RiverSource Investments by Morningstar Associates, LLC, a registered investment adviser and wholly owned subsidiary of Morningstar, Inc. RiverSource Investments may replace Morningstar Associates and may hire additional firms to assist with the development and periodic updates of the model portfolios in the future. Also, RiverSource Investments may elect to develop and periodically update the model portfolios without the assistance of a third party service provider. The criteria used in developing and updating the model portfolios do not guarantee or predict future performance. Neither Morningstar Associates nor RiverSource Investments, in connection with their respective roles, provides any individualized investment advice to contract owners regarding the application of a particular model portfolio to his or her circumstances. Contract owners are solely responsible for determining whether any model portfolio is appropriate. We identify to Morningstar Associates the universe of allocation options that can be included in the model portfolios and, in limited circumstances, underlying funds of such allocation options (the universe of allocation options). The universe of allocation options may not include all allocation options available under your contract. We may modify from time to time such universe of allocation options. These modifications may reflect instructions from, or respond to actions taken by, any party making an allocation option available to us. For example, we may modify the universe of allocation options in response to the liquidation, merger or other closure of a fund. Once we identify this universe of allocation options to Morningstar Associates, neither RiverSource Investments, nor any of its affiliates, including us, dictates to Morningstar Associates the number of allocation options that should be included in a model portfolio, the percentage that any allocation option represents in a model portfolio, or whether a particular allocation option may be included in a model portfolio. However, as described below under "Potential conflict of interest", there are certain conflicts of interest associated with RiverSource Investments and its affiliates' influence over the development and updating of the model portfolios. POTENTIAL CONFLICTS OF INTEREST. In identifying the universe of allocation options, we and our affiliates, including RiverSource Investments, are subject to competing interests that may influence the allocation options we propose. These competing interests involve compensation that RiverSource Investments or its affiliates may receive as the investment adviser to the RiverSource Variable Portfolio Funds and certain allocation options as well as compensation we or an affiliate of ours may receive for providing services in connection with the RiverSource Variable Series Trust funds and such allocation options or their underlying funds. These competing interests also involve compensation we or an affiliate of ours may receive if certain funds that RiverSource Investments does not advise are included in model portfolios. The inclusion of funds that pay compensation to RiverSource Investments or an affiliate may have a positive or negative impact on performance. As an affiliate of RiverSource Investments, the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options, we may have an incentive to identify the RiverSource Variable Series Trust funds and such allocation options for consideration as part of a model portfolio over unaffiliated funds. In addition, RiverSource Investments, in its capacity as investment adviser to the RiverSource Variable Series Trust funds, monitors the performance of the RiverSource Variable Series Trust funds. In this role, RiverSource Investments may, from time to time, recommend certain changes to the board of directors of the RiverSource Variable Series Trust funds. These changes may include but not be limited to a change in portfolio management or fund strategy or the closure or merger of a RiverSource Variable Series Trust fund. RiverSource Investments also may believe that certain RiverSource Variable Series Trust funds may benefit from additional assets or could be harmed by redemptions. All of these factors may impact RiverSource Investment's view regarding the composition and allocation of a model portfolio. RiverSource Investments' role as investment adviser to the PN program in connection with the development and updating of the model portfolios, and our identification of the universe of allocation options to Morningstar Associates for consideration, may influence the allocation of assets to or away from allocation options that are affiliated with, or managed or advised by RiverSource Investments or its affiliates. RiverSource Investments, we or another affiliate of ours may receive higher compensation from certain unaffiliated funds that RiverSource Investments does not advise or manage. (See "Expense Summary -- Annual Operating Expenses of the Funds" and "The Variable Account and the Funds -- The Funds.") Therefore, we may have an incentive to identify these unaffiliated funds to Morningstar Associates for inclusion in the model portfolios. In addition, we or an affiliate of ours may receive higher compensation from certain GPAs or the one-year fixed account than from other allocation options. We therefore may have an incentive to identify these allocation options to Morningstar Associates for inclusion in the model portfolios. Some officers and employees of RiverSource Investments are also officers or employees of us or our affiliates which may be involved in, and/or benefit from, your participation in the PN program. These officers and employees may have an incentive to make recommendations, or take actions, that benefit one or more of the entities they represent, rather than participants in the PN program. PARTICIPATING IN THE PN PROGRAM. If you choose or are required to participate in the PN program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In - -------------------------------------------------------------------------------- 48 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS addition, your investment professional may provide you with an investor questionnaire, a tool to help define your investing style which is based on factors such as your investment goals, your tolerance for risk and how long you intend to invest. Your responses to the investor questionnaire can help you determine which model portfolio most closely matches your investing style. While the scoring of the investor questionnaire is objective, there is no guarantee that your responses to the investor questionnaire accurately reflect your tolerance for risk. Similarly, there is no guarantee that the asset mix reflected in the model portfolio you select after completing the investor questionnaire is appropriate to your ability to withstand investment risk. Neither RiverSource Life nor RiverSource Investments is responsible for your decision to participate in the PN program, your selection of a specific model portfolio or your decision to change to an updated or different model portfolio. Currently, there are five PN model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. Each model portfolio specifies allocation percentages to each of the subaccounts, any GPAs and/or the one-year fixed account that make up that model portfolio. By participating in the PN program, you instruct us to invest your contract value in the subaccounts, any GPAs and/or the one-year fixed account (if included) according to the allocation percentages stated for the specific model portfolio you have selected. By participating in the PN program, you also instruct us to automatically rebalance your contract value quarterly in order to maintain alignment with these allocation percentages. Special rules apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); - - no MVA will apply if you reallocate your contract value according to an updated model portfolio; and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio. (See "Guarantee Period Accounts -- Market Value Adjustment.") If you initially allocate qualifying purchase payments to the DCA fixed account, when available (see "DCA Fixed Account"), and you are participating in the PN program, we will make monthly transfers in accordance with your instructions from the DCA fixed account into the model portfolio you have chosen. Each model portfolio is evaluated periodically by Morningstar Associates, which may then provide updated recommendations to RiverSource Investments. As a result, the model portfolios may be updated from time to time (typically annually) with new allocation options and allocation percentages. When these reassessments are completed and changes to the model portfolios occur, you will receive a reassessment letter. This reassessment letter will notify you that the model portfolio has been reassessed and that, unless you instruct us not to do so, your contract value, less amounts allocated to the DCA fixed account, is scheduled to be reallocated according to the updated model portfolio. The reassessment letter will specify the scheduled reallocation date and will be sent to you at least 30 days prior to this date. Based on the written authorization you provided when you enrolled in the PN program, if you do not notify us otherwise, you will be deemed to have instructed us to reallocate your contract value, less amounts allocated to the DCA fixed account, according to the updated model portfolio. If you do not want your contract value, less amounts allocated to the DCA fixed account, to be reallocated according to the updated model portfolio, you must provide written or other authorized notification as specified in the reassessment letter. In addition to this periodic reassessment and reallocation of the model portfolios, you may also request a change to your model portfolio up to twice per contract year by written request on an authorized form or by another method agreed to by us. Such changes include changing to a different model portfolio at any time or requesting to reallocate according to the updated version of your existing model portfolio other than according to the reassessment process described above. If your contract includes an optional Accumulation Protector Benefit rider, SecureSource rider, Guarantor Withdrawal Benefit for Life rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider and you make such a change (other than a scheduled periodic reallocation), we may charge you a higher fee for your rider. If your contract includes the SecureSource rider, we reserve the right to limit the number of model portfolio changes if required to comply with the written instructions of a Fund (see "Market Timing"). If your contract includes the SecureSource or the Guarantor Withdrawal Benefit for Life rider, we reserve the right to limit the number of model portfolios from which you can select based on the dollar amount of purchase payments you make, subject to state restrictions. We reserve the right to change the terms and conditions of the PN program upon written notice to you. This includes but is not limited to the right to: - - limit your choice of models based on the amount of your initial purchase payment we accept or when you take a withdrawal; - - cancel required participation in the program after 30 days written notice; - - substitute a fund of funds for your current model portfolio if permitted under applicable securities law; and - - discontinue the PN program. We will give you 30 days' written notice of any such change. In addition, RiverSource Investments has the right to terminate its investment advisory agreement with you upon 30 days' written notice. If RiverSource Investments terminates its investment advisory agreement with you and other participants in the - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 49 PN program, we would either have to find a replacement investment adviser or terminate the PN program unless otherwise permitted by applicable law, regulations or positions of the SEC staff. The investment advisory agreement will terminate automatically in the event that we are notified of a death which results in a death benefit becoming payable under the contract. In this case, your investment advisory relationship with RiverSource Investments and the notification of future reassessments will cease, but prior instructions provided by you in connection with your participation in the PN program will continue (e.g., rebalancing instructions provided to insurer). RISKS. Asset allocation through the PN program does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. By spreading your contract value among various allocation options under the PN program, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will happen. Although each model portfolio is intended to optimize returns given various levels of risk tolerance, a model portfolio may not perform as intended. A model portfolio, the allocation options and market performance may differ in the future from historical performance and from the assumptions upon which the model portfolio is based, which could cause the model portfolio to be ineffective or less effective in reducing volatility. Investment performance of your contract value could be better or worse by participating in the PN program than if you had not participated. A model portfolio may perform better or worse than any single fund or allocation option or any other combination of funds or allocation options. The performance of a model portfolio depends on the performance of the component funds. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of the model portfolios can cause their component funds to incur transactional expenses to raise cash for money flowing out of the funds or to buy securities with money flowing into the funds. Moreover, a large outflow of money from the funds may increase the expenses attributable to the assets remaining in the funds. These expenses can adversely affect the performance of the relevant funds and of the model portfolios. In addition, when a particular fund needs to buy or sell securities due to quarterly rebalancing or periodic updating of a model portfolio, it may hold a large cash position. A large cash position could detract from the achievement of the fund's investment objective in a period of rising market prices; conversely, a large cash position would reduce the fund's magnitude of loss in the event of falling market prices and provide the fund with liquidity to make additional investments or to meet redemptions. (See also the description of competing interests in the section titled "Service Providers to the PN Program" above.) For additional information regarding the risks of investing in a particular fund, see that fund's prospectus. PN PROGRAM UNDER THE ACCUMULATION PROTECTOR BENEFIT RIDER, SECURESOURCE RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER If you purchase the optional Accumulation Protector Benefit rider, the optional SecureSource rider, the optional Guarantor Withdrawal Benefit for Life rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider, you are required to participate in the PN program under the terms of each rider. - - ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation Protector Benefit rider. As long as the Accumulation Protector Benefit rider is in effect, your contract value must be invested in one of the model portfolios. The Accumulation Protector Benefit rider automatically ends at the end of the waiting period as does the requirement that you participate in the PN program. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD. - - SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: In those states where the SecureSource rider is not available, you may purchase the Guarantor Withdrawal Benefit for Life rider if available in your state; see disclosure in Appendix K. The SecureSource rider and the Guarantor Withdrawal Benefit for Life rider require that your contract value be invested in one of the model portfolios for the life of the contract. Subject to state restrictions, we reserve the right to limit the number of model portfolios from which you can select based on the dollar amount of purchase payments you make. Because you cannot terminate the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE SECURESOURCE RIDER OR THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. - - GUARANTOR WITHDRAWAL BENEFIT RIDER: In those states where the SecureSource rider and the Guarantor Withdrawal Benefit for Life rider are not available, you may purchase the Guarantor Withdrawal Benefit rider; see disclosure in Appendix K. Because the Guarantor Withdrawal Benefit rider requires that your contract value be invested in one of the model portfolios for the life of the contract, and you cannot terminate the Guarantor Withdrawal Benefit rider once you have selected it, you - -------------------------------------------------------------------------------- 50 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. - - INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit rider during a 30-day period after the first rider anniversary and at any time after the expiration of the waiting period. At all other times, if you do not want to participate in any of the model portfolios, you must terminate you contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. As long as the Income Assurer Benefit rider is in effect, your contract value must be invested in one of the model portfolios. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) DURING THE PERIOD OF TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT. OPTIONAL PN PROGRAM If you do not select the optional Accumulation Protector Benefit rider, the optional SecureSource rider, the optional Guarantor Withdrawal Benefit for Life rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider with your contract, you may elect to participate in the PN program. You may elect the PN program at any time. You may cancel your participation in the PN program at any time by giving us written notice or by any other method authorized by us. Upon cancellation, automated rebalancing associated with the PN program will end. You may ask us in writing to allocate the variable subaccount portion of your contract value according to the percentage that you choose (see "Asset Rebalancing"). You can elect to participate in the PN program again at any time. You will also cancel the PN program if you initiate transfers other than transfers to one of the current model portfolios or transfers from the DCA fixed account (see "DCA Fixed Account"). Partial withdrawals do not cancel the PN program. Your participation in the PN program will terminate on the date you make a full withdrawal from your contract, on your retirement date or when your contract terminates for any reason. TRANSFERRING AMONG ACCOUNTS The transfer rights discussed in this section do not apply while a Portfolio Navigator model portfolio is in effect. You may transfer contract value from any one subaccount or GPAs, the one-year fixed account or the DCA fixed account to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. You may not transfer contract value to a DCA fixed account. The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account (if included) at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from the one-year fixed account (if included) to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to an MVA. For Contract Option L, the amount of contract value transferred to the one-year fixed account cannot result in the value of the one-year fixed account being greater than 30% of the contract value; transfers out of the one-year fixed account are limited to 30% of one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. For Contract Option C, transfers to the one-year fixed account and transfers out of the one-year fixed account may not be available or may - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 51 be significantly limited. See your contract for the actual terms of the one-year fixed account you purchased. For both Contract Option L and Contract Option C, we reserve the right to further limit transfers to or from the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the guarantee period will receive an MVA, which may result in a gain or loss of contract value, unless an exception applies (see "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)"). - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - You may not transfer contract values from the subaccounts, the GPAs, or the one-year fixed account into the DCA fixed account. However, you may transfer contract values from the DCA fixed account to any of the investment options available under your contract, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPA, as described above. (See "DCA Fixed Account.") - - Once annuity payouts begin, you may not make transfers to or from the GPAs or the fixed account, but you may make transfers once per contract year among the subaccounts. During the annuity payout period, we reserve the right to limit the number of subaccounts in which you may invest. When annuity payments begin, you must transfer all contract value out of your GPAs and the DCA fixed account. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. - -------------------------------------------------------------------------------- 52 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under an automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund may require us to reject your transfer request. For example, while we disregard transfers permitted under any asset allocation, dollar-cost averaging and asset rebalancing programs that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 53 HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our corporate office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers among your subaccounts, the one-year fixed account or GPAs or automated partial withdrawals from the GPAs, one-year fixed account, DCA fixed account or the subaccounts. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - If a Portfolio Navigator model portfolio is in effect, you are not allowed to set up automated transfers except in connection with a DCA fixed account (see "The Fixed Account -- DCA Fixed Account" and "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly $250 quarterly, semiannually or annually 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our corporate office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we - -------------------------------------------------------------------------------- 54 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS receive your withdrawal request at our corporate office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay administrative charges, withdrawal charges, or any applicable optional rider charges (see "Charges") and IRS taxes and penalties (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.") Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced. If you have elected the SecureSource rider, Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider and your partial withdrawals in any contract year exceed the permitted withdrawal amount under the terms of the SecureSource rider, Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider, your benefits under the rider may be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will automatically withdraw from all your subaccounts, GPAs, the DCA fixed account, and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless requested otherwise(1). After executing a partial withdrawal, the value in each subaccount, one-year fixed account or GPA must be either zero or at least $50. (1) If you elected a SecureSource rider, you do not have the option to request from which account to withdraw. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 55 - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our corporate office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have an Income Assurer Benefit and/or Benefit Protector Plus, the riders will terminate upon transfer of ownership of the annuity contract. The SecureSource - Joint Life rider, if selected, only allows transfer of the ownership of the annuity contract between covered spouses or their revocable trust(s); no other ownership changes are allowed while this rider is in force. The Accumulation Protector Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders will continue upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are four death benefit options under your contract. You must select one of the following death benefits: - - ROP Death Benefit; - - MAV Death Benefit - - 5% Accumulation Death Benefit - - Enhanced Death Benefit. If it is available in your state and if both you and the annuitant are 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP Death Benefit will apply. Once you elect a death benefit, you cannot change it. We show the death benefit that applies in your contract. The death benefit you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under each option, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you chose when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. - -------------------------------------------------------------------------------- 56 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS: ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV = PW X DB DEATH BENEFITS) ------------ CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA. DB = the death benefit on the date of (but prior to) the partial withdrawal CV = contract value on the date of (but prior to) the partial withdrawal MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus adjusted partial withdrawals. Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by adjusted partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. 5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs, the one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts and the DCA fixed account at issue increased by 5%; - - plus any subsequent amounts allocated to the subaccounts and the DCA fixed account; - - minus adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. Thereafter, we continue to add subsequent amounts allocated to the subaccounts or the DCA fixed account and subtract adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. 5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED = PWT X VAF PARTIAL WITHDRAWALS --------------- SV
PWT = the amount transferred from the subaccounts or the DCA fixed account or the amount of the partial withdrawal (including any applicable withdrawal charge or MVA) from the subaccounts or the DCA fixed account. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts or the DCA fixed account on the date of (but prior to) the transfer of partial withdrawal.
The amount of purchase payment and purchase payment credits (if applicable) withdrawn from or transferred from any subaccount or fixed account (if applicable) or GPA account is calculated as (a) times (b) where: (a) is the amount of purchase payment and purchase payment credits (if applicable) in the account or subaccount on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount transferred or withdrawn from the account or subaccount to the value in the account or subaccount on the date of (but prior to) the current withdrawal or transfer. For contracts issued in New Jersey, the cap on the Variable Account Floor is 200% of the sum of the purchase payments allocated to the subaccounts and the DCA fixed account that have not been withdrawn or transferred out of the subaccounts or DCA fixed account. NOTE: The 5% variable account floor is calculated differently and is not the same value as the Income Assurer Benefit(SM) 5% variable account floor. RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT The ROP Death Benefit is the basic death benefit to the contract that will pay your beneficiaries no less than your purchase payments, adjusted for withdrawals. If you or the annuitant die before annuity payouts begin and while this contract is in force, the death benefit will be the greater of these two values: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. The ROP Death Benefit will apply unless you select one of the alternative death benefits described immediately below. IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 57 BENEFIT VALUES MAY BE LIMITED AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION. MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT The MAV Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the MAV on the date of death. 5% ACCUMULATION DEATH BENEFIT The 5% Accumulation Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the 5% variable account floor. ENHANCED DEATH BENEFIT The Enhanced Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the MAV on the date of death; or 4. the 5% variable account floor. For an example of how each death benefit is calculated, see Appendix C. IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. We will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The SecureSource - Joint Life rider, if selected, will continue only if the spouse electing the spousal continuation provision of the contract is a covered spouse and continues the contract as the new owner. The Accumulation Protector Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits"). If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the IRS; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. Additionally, the optional SecureSource rider, if one selected, will terminate. - -------------------------------------------------------------------------------- 58 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The SecureSource - Joint Life rider, if selected, will continue only if the spouse electing the spousal continuation provision of the contract is a covered spouse and continues the contract as the new owner. The Accumulation Protector Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. Additionally, the optional SecureSource rider, if selected, will terminate. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS OPTIONAL LIVING BENEFITS -- CURRENTLY OFFERED UNDER CONTRACT OPTION L(1) ACCUMULATION PROTECTOR BENEFIT RIDER The Accumulation Protector Benefit rider is an optional benefit that you may select for an additional charge. The Accumulation Protector Benefit rider may provide a guaranteed contract value at the end of the specified waiting period on the benefit date, but not until then, under the following circumstances:
ON THE BENEFIT DATE, IF: THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER BENEFIT IS: The Minimum Contract Accumulation Value The contract value is increased on the benefit date to (defined below) as determined under the equal the Minimum Contract Accumulation Value as Accumulation Protector Benefit rider is determined under the Accumulation Protector Benefit rider greater than your contract value, on the benefit date. The contract value is equal to or greater than Zero; in this case, the Accumulation Protector Benefit the Minimum Contract Accumulation Value as rider ends without value and no benefit is payable. determined under the Accumulation Protector Benefit rider,
(1) Effective May 1, 2007, optional living benefits are not available under Contract Option C. If the contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time during the waiting period and before the benefit date, the contract and all riders, including the Accumulation Protector Benefit rider will terminate without value and no benefits will be paid. EXCEPTION: If you are still living on the benefit date, we will pay you an amount equal to the Minimum Contract Accumulation Value as determined under the Accumulation Protector Benefit rider on the valuation date your contract value reached zero. If this rider is available in your state, you may elect the Accumulation Protector Benefit at the time you purchase your contract and the rider effective date will be the contract issue date. The Accumulation Protector Benefit rider may not be terminated once you have elected it, except as described in the "Terminating the Rider" section below. An additional charge for the Accumulation Protector Benefit rider will be assessed annually during the waiting period. The rider ends when the waiting period expires and no further benefit will be payable and no further fees for the rider will be deducted. The Accumulation Protector Benefit rider may not be purchased with the optional SecureSource, the Guarantor Withdrawal Benefit for Life rider or - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 59 the Guarantor Withdrawal Benefit riders. When the rider ends, you may be able to purchase another optional rider we then offer by written request received within 30 days of that contract anniversary date. The Accumulation Protector Benefit rider may not be available in all states. You should consider whether a Accumulation Protector Benefit rider is appropriate for you because: - - you must participate in the Portfolio Navigator program if you purchase a contract on or after May 1, 2006 with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). If you selected this rider before May 1, 2006, you must participate in the asset allocation program (see "Appendix I: Asset Allocation Program for Contracts Purchased Prior to May 1, 2006"), however, you may elect to participate in the Portfolio Navigator program. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts and GPAs (if included) and one-year fixed account (if included) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, one-year fixed account (if included) and GPAs that are available under the contract to contract owners who do not elect this rider; - - you may not make additional purchase payments to your contract during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider; - - if you purchase this annuity as a qualified annuity, for example, an IRA, you may need to take partial withdrawals from your contract to satisfy the minimum distribution requirements of the Code (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Partial withdrawals, including those you take to satisfy RMDs, will reduce any potential benefit that the Accumulation Protector Benefit rider provides. You should consult your tax advisor if you have any questions about the use of this rider in your tax situation; - - if you think you may withdraw all of your contract value before you have held your contract with this benefit rider attached for 10 years, or you are considering selecting an annuity payout option within 10 years of the effective date of your contract, you should consider whether this optional benefit is right for you. You must hold the contract a minimum of 10 years from the effective date of the Accumulation Protector Benefit rider, which is the length of the waiting period under the Accumulation Protector Benefit rider, in order to receive the benefit, if any, provided by the Accumulation Protector Benefit rider. In some cases, as described below, you may need to hold the contract longer than 10 years in order to qualify for any benefit the Accumulation Protector Benefit rider may provide; - - the 10 year waiting period under the Accumulation Protector Benefit rider will restart if you exercise the elective step up option (described below) or your surviving spouse exercises the spousal continuation elective step up (described below); and - - the 10 year waiting period under the Accumulation Protector Benefit rider may be restarted if you elect to change model portfolios to one that causes the Accumulation Protector Benefit rider charge to increase (see "Charges"). Be sure to discuss with your investment professional whether a Accumulation Protector Benefit rider is appropriate for your situation. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE ACCUMULATION PROTECTOR BENEFIT: BENEFIT DATE: This is the first valuation date immediately following the expiration of the waiting period. MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the Accumulation Protector Benefit rider. The contract value will be increased to equal the MCAV on the benefit date if the contract value on the benefit date is less than the MCAV on the benefit date. ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial withdrawal from the contract is equal to the amount derived from multiplying (a) and (b) where: (a) is 1 minus the ratio of the contract value on the date of (but immediately after) the partial withdrawal to the contract value on the date of (but immediately prior to) the partial withdrawal; and (b) is the MCAV on the date of (but immediately prior to) the partial withdrawal. WAITING PERIOD: The waiting period for the rider is 10 years. We reserve the right to restart the waiting period on the latest contract anniversary if you change your asset allocation model after we have exercised our rights to increase the rider charge for new contract owners, or if you change your asset allocation model after we have exercised our rights to charge a separate charge for each model. Your initial MCAV is equal to your initial purchase payment. It is increased by the amount of any subsequent purchase payments received within the first 180 days that the rider is effective. It is reduced by adjustments for any partial withdrawals made during the waiting period. - -------------------------------------------------------------------------------- 60 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS AUTOMATIC STEP UP On each contract anniversary after the effective date of the rider, the MCAV will be set to the greater of: 1. 80% of the contract value on the contract anniversary; or 2. the MCAV immediately prior to the automatic step up. The automatic step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The automatic step up of the MCAV does not restart the waiting period or increase the charge (although the total fee for the rider may increase). ELECTIVE STEP UP OPTION Within thirty days following each contract anniversary after the rider effective date, but prior to the benefit date, you may notify us in writing that you wish to exercise the annual elective step up option. You may exercise this elective step up option only once per contract year during this 30 day period. If your contract value on the valuation date we receive your written request to step up is greater than the MCAV on that date, your MCAV will increase to 100% of that contract value. When you exercise the annual elective step up, we may be charging more for the Accumulation Protector Benefit rider at that time. If your MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, you will pay the charge that is in effect on the valuation date we receive your written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. Failure to exercise this elective step up in subsequent years will not reinstate any prior waiting period. Rather, the waiting period under the rider will always commence from the most recent anniversary for which the elective step up option was exercised. The elective step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The elective step up option is not available to non-spouse beneficiaries that continue the contract during the waiting period. SPOUSAL CONTINUATION If a spouse chooses to continue the contract under the spousal continuation provision, the rider will continue as part of the contract. Once, within the thirty days following the date of spousal continuation, the spouse may choose to exercise an elective step up. The spousal continuation elective step up is in addition to the annual elective step up. If the contract value on the valuation date we receive the written request to exercise this option is greater than the MCAV on that date, we will increase the MCAV to that contract value. If the MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, the spouse will pay the charge that is in effect on the valuation date we receive their written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. TERMINATING THE RIDER The rider will terminate under the following conditions: The rider will terminate before the benefit date without paying a benefit on the date: - you take a full withdrawal; or - annuitization begins; or - the contract terminates as a result of the death benefit being paid. The rider will terminate on the benefit date. For an example, see Appendix D. SECURESOURCE RIDERS There are two optional SecureSource riders available under your contract: - - SecureSource - Single Life; or - - SecureSource - Joint Life. The information in this section applies to both SecureSource riders, unless otherwise noted. The SecureSource - Single Life rider covers one person. The SecureSource - Joint Life Rider covers two spouses jointly who are named at contract issue. You may elect only the SecureSource - Single Life rider or the SecureSource - Joint Life rider, not both, and you may not switch riders later. You must elect the rider when you purchase your contract. The rider effective date will be the contract issue date. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 61 The SecureSource rider is an optional benefit that you may select for an additional annual charge if(1): - - you purchase your contract on or after May 1, 2007; and - - SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract is issued; or - - JOINT LIFE: you and your spouse are 80 or younger on the date the contract is issued. (1) The SecureSource rider is not available under an inherited qualified annuity. The SecureSource rider guarantees (unless the rider is terminated. See "Rider Termination" heading below.) that regardless of the investment performance of your contract you will be able to withdraw up to a certain amount each year from the contract before the annuity payouts begin until: - - SINGLE LIFE: you have recovered at minimum all of your purchase payments or, if later, until death (see "At Death" heading below) -- even if the contract value is zero. - - JOINT LIFE: you have recovered at minimum all of your purchase payments or, if later, until the death of the last surviving covered spouse (see "Joint Life only: Covered Spouses" and "At Death" headings below), even if the contract value is zero. Your contract provides for annuity payouts to begin on the retirement date (see "Buying Your Contract -- The Retirement Date"). Before the retirement date, you have the right to withdraw some or all of your contract value, less applicable administrative, withdrawal and rider charges imposed under the contract at the time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals"). Because your contract value will fluctuate depending on the performance of the underlying funds in which the subaccounts invest, the contract itself does not guarantee that you will be able to take a certain withdrawal amount each year before the annuity payouts begin, nor does it guarantee the length of time over which such withdrawals can be made before the annuity payouts begin. The SecureSource rider may be appropriate for you if you intend to make periodic withdrawals from your annuity contract and wish to ensure that market performance will not adversely affect your ability to withdraw your principal over time. Under the terms of the SecureSource rider, the calculation of the amount which can be withdrawn in each contract year varies depending on several factors, including but not limited to the waiting period (see "Waiting period" heading below) and whether or not the lifetime withdrawal benefit has become effective: (1) The basic withdrawal benefit gives you the right to take limited withdrawals in each contract year and guarantees that over time the withdrawals will total an amount equal to, at minimum, your purchase payments (unless the rider is terminated. See "Rider Termination" heading below). Key terms associated with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)" and "Remaining Benefit Amount (RBA)." See these headings below for more information. (2) The lifetime withdrawal benefit gives you the right, under certain limited circumstances defined in the rider, to take limited withdrawals until the later of: - - SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero (unless the rider is terminated. See "Rider Termination" heading below); - - JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero (unless the rider is terminated. See "Rider Termination" heading below). Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only: Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for more information. Only the basic withdrawal benefit will be in effect prior to the date that the lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit becomes effective automatically on the rider anniversary date after the: - - SINGLE LIFE: covered person reaches age 65, or the rider effective date if the covered person is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" heading below); - - JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date if the younger covered spouse is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below). Provided annuity payouts have not begun, the SecureSource rider guarantees that you may take the following withdrawal amounts each contract year: - - Before the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RBP at the beginning of the contract year; - - After the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RALP or the RBP at the beginning of the contract year, but the rider does not guarantee withdrawal of the sum of both the RALP and the RBP in a contract year. - -------------------------------------------------------------------------------- 62 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS If you withdraw less than the allowed withdrawal amount in a contract year, the unused portion cannot be carried over to the next contract year. As long as your withdrawals in each contract year do not exceed the annual withdrawal amount allowed under the rider: - - SINGLE LIFE: and there has not been a contract ownership change or spousal continuation of the contract, the guaranteed amounts available for withdrawal will not decrease; - - JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease. If you withdraw more than the allowed withdrawal amount in a contract year, we call this an "excess withdrawal" under the rider. Excess withdrawals trigger an adjustment of a benefit's guaranteed amount, which may cause it to be reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and "ALP Excess Withdrawal Processing" headings below). Please note that basic withdrawal benefit and lifetime withdrawal benefit each has its own definition of the allowed annual withdrawal amount. Therefore a withdrawal may be considered an excess withdrawal for purposes of the lifetime withdrawal benefit only, the basic withdrawal benefit only, or both. If your withdrawals exceed the greater of the RBP or the RALP, withdrawal charges under the terms of the contract may apply (see "Charges -- Withdrawal Charges"). The amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Making the Most of Your Contract -- Withdrawals"). The rider's guaranteed amounts can be increased at the specified intervals if your contract value has increased. An annual step up feature is available at each contract anniversary, subject to certain conditions, and may be applied automatically to your contract or may require you to elect the step up (see "Annual Step Up" heading below). If you exercise the annual step up election, the spousal continuation step up election (see "Spousal Continuation Step Up" heading below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). If you take withdrawals during the waiting period, any prior steps ups applied will be reversed and step ups will not be available until the end of the waiting period. You may take withdrawals after the waiting period without reversal of prior step ups. You should consider whether a SecureSource rider is appropriate for you because: - - LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is subject to certain limitations, including but not limited to: (a) SINGLE LIFE: Once the contract value equals zero, payments are made for as long as the oldest owner or annuitant is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the first death of any owner or annuitant except as otherwise provided below (see "At Death" heading below). Therefore, if there are multiple contract owners or the annuitant is not an owner, the rider may terminate or the lifetime withdrawal benefit may be reduced. This possibility may present itself when: (i) There are multiple contract owners -- when one of the contract owners dies the benefit terminates even though other contract owners are still living (except if the contract is continued under the spousal continuation provision of the contact); or (ii) The owner and the annuitant are not the same persons -- if the annuitant dies before the owner, the benefit terminates even though the owner is still living. This could happen, for example, when the owner is younger than the annuitant. This risk increases as the age difference between owner and annuitant increases. JOINT LIFE: Once the contract value equals zero, payments are made for as long as either covered spouse is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the death of the last surviving covered spouse (see "At Death" heading below). (b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA, GBP and/or RBP values are greater than zero. If the both the ALP and the contract value are zero, the lifetime withdrawal benefit will terminate. (c) When the lifetime withdrawal benefit is first established, the initial ALP is based on (i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below), unless there has been a spousal continuation or ownership change; or (ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below). Any withdrawal you take before the ALP is established reduces the RBA and therefore may result in a lower amount of lifetime withdrawals you are allowed to take. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 63 (d) Withdrawals can reduce both the contract value and the RBA to zero prior to the establishment of the ALP. If this happens, the contract and the rider will terminate. - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect the rider. (See "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program.") You may make two elective model portfolio changes per contract year; we reserve the right to limit elective model portfolio changes if required to comply with the written instructions of a fund (see "Market Timing"). You can allocate your contract value to any available model portfolio during the following times: (1) prior to your first withdrawal and (2) following a benefit reset as described below but prior to any subsequent withdrawal. During these accumulation phases, you may request to change your model portfolio to any available model portfolio. Immediately following a withdrawal your contract value will be reallocated to the target model portfolio as shown in your contract if your current model portfolio is more aggressive than the target model portfolio. This automatic reallocation is not included in the total number of allowed model changes per contract year and will not cause your rider fee to increase. The target model portfolio is currently the Moderate model. We reserve the right to change the target model portfolio to a model portfolio that is more aggressive than the current target model portfolio after 30 days written notice. After you have taken a withdrawal and prior to any benefit reset as described below, you are in a withdrawal phase. During withdrawal phases you may request to change your model portfolio to the target model portfolio or any model portfolio that is more conservative than the target model portfolio without a benefit reset as described below. If you are in a withdrawal phase and you choose to allocate your contract value to a model portfolio that is more aggressive than the target model portfolio, your rider benefit will be reset as follows: (a) the total GBA will be reset to the lesser of its current value or the contract value; and (b) the total RBA will be reset to the lesser of its current value or the contract value; and (c) the ALP, if established, will be reset to the lesser of its current value or 6% of the contract value; and (d) the GBP will be recalculated as described below, based on the reset GBA and RBA; and (e) the RBP will be recalculated as the reset GBP less all prior withdrawals made during the current contract year, but not be less than zero; and (f) the RALP will be recalculated as the reset ALP less all prior withdrawals made during the current contract year, but not be less than zero. You may request to change your model portfolio by written request on an authorized form or by another method agreed to by us. - - LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect only the SecureSource - Single Life rider or the SecureSource - Joint Life rider. If you elect the SecureSource rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled (except as provided under "Rider Termination" heading below) and the fee will continue to be deducted until the contract or rider is terminated or the contract value reduces to zero (described below). Dissolution of marriage does not terminate the SecureSource - Joint Life rider and will not reduce the fee we charge for this rider. The benefit under the SecureSource - Joint Life rider continues for the covered spouse who is the owner of the contract (or annuitant in the case of nonnatural ownership). The rider will terminate at the death of the contract owner (or annuitant in the case of nonnatural ownership) because the original spouse will be unable to elect the spousal continuation provision of the contract (see "Joint Life only: Covered Spouses" below). - - JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES: Since the joint life benefit will terminate unless the surviving covered spouse continues the contract under the spousal continuation provision of the contract upon the owner's death, only ownership arrangements that permit such continuation are allowed at rider issue. In general, the covered spouses should be joint owners, or one covered spouse should be the owner and the other covered spouse should be named as the sole primary beneficiary. For non-natural ownership arrangements that allow for spousal continuation one covered spouse should be the annuitant and the other covered spouse should be the sole primary beneficiary. For revocable trust ownerships, the grantor of the trust must be the annuitant and the beneficiary must either be the annuitant's spouse or a trust that names the annuitant's spouse as the sole primary beneficiary. You are responsible for establishing ownership arrangements that will allow for spousal continuation. If you select the SecureSource - Joint Life rider, please consider carefully whether or not you wish to change the beneficiary of your annuity contract. The rider will terminate if the surviving covered spouse can not utilize the spousal continuation provision of the contract when the death benefit is payable. - -------------------------------------------------------------------------------- 64 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw from the contract in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than the RBP or RALP under this rider. Any amount you withdraw under the contract's TFA provision that exceeds the RBP or RALP is subject to the excess withdrawal processing described below for the GBA, RBA and ALP. You should consult your tax advisor before you select this optional rider if you have any questions about the use of the rider in your tax situation because: - - TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income tax law, withdrawals under nonqualified annuities, including withdrawals taken from the contract under the terms of the rider, are treated less favorably than amounts received as annuity payments under the contract (see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income. You should consult your tax advisor before you select this optional rider if you have any questions about the use of the rider in your tax situation. - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD that exceeds the guaranteed amount of withdrawal available under the rider and such withdrawals may reduce future benefits guaranteed under the rider. While the rider permits certain excess withdrawals to be made for the purpose of satisfying RMD requirements for your contract alone without reducing future benefits guaranteed under the rider, there can be no guarantee that changes in the federal income tax law after the effective date of the rider will not require a larger RMD to be taken, in which case, future guaranteed withdrawals under the rider could be reduced. See Appendix F for additional information. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, a SecureSource rider may be of limited value to you. KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW: WITHDRAWAL: The amount by which your contract value is reduced as a result of any withdrawal request. It may differ from the amount of your request due to any withdrawal charge and any market value adjustment. WAITING PERIOD: The period of time starting on the rider effective date during which the annual step up is not available if you take withdrawals. The current waiting period is three years. GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not payable as a death benefit. It is an interim value used to calculate the amount available for withdrawals each year under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of the individual GBAs associated with each purchase payment. THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBA that is associated with that RBA will also be set to zero. - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBA remains unchanged. If there have been multiple purchase payments, both the total GBA and each payment's GBA remain unchanged. (b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 65 GBA EXCESS WITHDRAWAL PROCESSING The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that is guaranteed by the rider as future withdrawals. At any point in time, the RBA equals the amount of GBA that remains available for withdrawals for the remainder of the contract's life, and total RBA is the sum of the individual RBAs associated with each purchase payment. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the RBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own RBA initially set equal to that payment's GBA (the amount of the purchase payment). - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the RBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the total RBA is reduced by the amount of the withdrawal. If there have been multiple purchase payments, each payment's RBA is reduced in proportion to its RBP. (b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. RBA EXCESS WITHDRAWAL PROCESSING The total RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the total RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, both the total RBA and each payment's RBA will be reset. The total RBA will be reset according to the excess withdrawal processing described above. Each payment's RBA will be reset in the following manner: 1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in proportion to its individual RBP at the time of the withdrawal; and 2. The withdrawal amount above the total RBP and any amount determined by the excess withdrawal processing are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for withdrawal in each contract year after the waiting period, until the RBA is reduced to zero, under the basic withdrawal benefit. At any point in time, each purchase payment has its own GBP, which is equal to the lesser of that payment's RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual GBPs. During the waiting period, the guaranteed annual withdrawal amount may be less than the GBP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual withdrawal amount during the waiting period is equal to the value of the RBP at the beginning of the contract year. THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBP is established as 7% of the GBA value. - - At each contract anniversary -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value. - - When you make additional purchase payments -- each additional purchase payment has its own GBP equal to 7% of the purchase payment amount. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBP associated with that RBA will also be reset to zero. - -------------------------------------------------------------------------------- 66 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA and the RBA associated with each purchase payment will be reset to the amount of that purchase payment. Each payment's GBP will be reset to 7% of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBP remains unchanged. (b) is greater than the total RBP -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value, based on the RBA and GBA after the withdrawal. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the remainder of the contract year under the basic withdrawal benefit. At any point in time, the total RBP is the sum of the RBPs for each purchase payment. During the waiting period, when the guaranteed amount may be less than the GBP, the value of the RBP at the beginning of the contract year will be that amount that is actually guaranteed each contract year. THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At the beginning of each contract year during the waiting period and prior to any withdrawal -- the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. - - At the beginning of any other contract year -- the RBP for each purchase payment is set equal to that purchase payment's GBP. - - When you make additional purchase payments -- each additional purchase payment has its own RBP equal to that payment's GBP. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At spousal continuation -- (see "Spousal Option to Continue the Contract" heading below). - - When an individual RBA is reduced to zero -- the RBP associated with that RBA will also be reset to zero. - - When you make any withdrawal -- the total RBP is reset to equal the total RBP immediately prior to the withdrawal less the amount of the withdrawal, but not less than zero. If there have been multiple purchase payments, each payment's RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for future withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in the excess withdrawal processing, the applicable RBP will not yet reflect the amount of the current withdrawal. SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine when the ALP is established, and the duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person is the oldest contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust or corporation, the covered person is the oldest annuitant. A spousal continuation or a change of contract ownership may reduce the amount of the lifetime withdrawal benefit and may change the covered person. JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally married spouse as defined under federal law, as named on the application and as shown in the contract for as long as the marriage is valid and in effect. If the contract owner is a nonnatural person (e.g., a trust), the covered spouses are the annuitant and the legally married spouse of the annuitant. The covered spouses lives are used to determine when the ALP is established, and the duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading below). The covered spouses are established on the rider effective date and cannot be changed. ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): - - SINGLE LIFE: The covered person's age after which time the lifetime benefit can be established. Currently, the lifetime benefit can be established on the later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65. - - JOINT LIFE: The age of the younger covered spouse at which time the lifetime benefit is established. ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime withdrawal benefit is at any time the amount available for withdrawals in each contract year after the waiting period until the later of: - - SINGLE LIFE: death; or - - JOINT LIFE: death of the last surviving covered spouse; or - - the RBA is reduced to zero. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 67 The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the ALP is zero. During the waiting period, the guaranteed annual lifetime withdrawal amount may be less than the ALP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual lifetime withdrawal amount during the waiting period is equal to the value of the RALP at the beginning of the contract year. THE ALP IS DETERMINED AT THE FOLLOWING TIMES: - - SINGLE LIFE: The later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65 -- the ALP is established as 6% of the total RBA. - - JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of the following dates: (a) the rider effective date if the younger covered spouse has already reached age 65. (b) the rider anniversary on/following the date the younger covered spouse reaches age 65. (c) upon the first death of a covered spouse, then (1) the date we receive written request when the death benefit is not payable and the surviving covered spouse has already reached age 65; or (2) the date spousal continuation is effective when the death benefit is payable and the surviving covered spouse has already reached age 65; or (3) the rider anniversary on/following the date the surviving covered spouse reaches age 65. (d) Following dissolution of marriage of the covered spouses, (1) the date we receive written request if the remaining covered spouse who is the owner (or annuitant in the case of nonnatural ownership) has already reached age 65; or (2) the rider anniversary on/following the date the remaining covered spouse who is the owner (or annuitant in the case of nonnatural ownership) reaches age 65. - - When you make additional purchase payments -- each additional purchase payment increases the ALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - SINGLE LIFE: At spousal continuation or contract ownership change-- (see "Spousal Option to Continue the Contract" and "Contract Ownership Change" headings below). - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the ALP will be reset to equal total purchase payments multiplied by 6%. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the RALP -- the ALP remains unchanged. (b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE ALP. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. ALP EXCESS WITHDRAWAL PROCESSING The ALP is reset to the lesser of the ALP immediately prior to the withdrawal, or 6% of the contract value immediately following the withdrawal. REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal for the remainder of the contract year under the lifetime withdrawal benefit. During the waiting period, when the guaranteed annual withdrawal amount may be less than the ALP, the value of the RALP at the beginning of the contract year will be the amount that is actually guaranteed each contract year. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the RALP is zero. THE RALP IS DETERMINED AT THE FOLLOWING TIMES: - - The RALP is established at the same time as the ALP, and: (a) During the waiting period and prior to any withdrawals -- the RALP is established equal to 6% of purchase payments. (b) At any other time -- the RALP is established equal to the ALP less all prior withdrawals made in the contract year but not less than zero. - - At the beginning of each contract year during the waiting period and prior to any withdrawals -- the RALP is set equal to the total purchase payments, multiplied by 6%. - -------------------------------------------------------------------------------- 68 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - At the beginning of any other contract year -- the RALP is set equal to ALP. - - When you make additional purchase payments -- each additional purchase payment increases the RALP by 6% of the purchase payment amount. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make any withdrawal -- the RALP equals the RALP immediately prior to the withdrawal less the amount of the withdrawal but not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available for future withdrawals. When determining if a withdrawal will result in excess withdrawal processing, the applicable RALP will not yet reflect the amount of the current withdrawal. REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract and the RMD calculated separately for your contract is greater than the RBP or the RALP on the most recent contract anniversary, the portion of the RMD that exceeds the RBP or RALP on the most recent rider anniversary will not be subject to excess withdrawal processing provided that the following conditions are met: - - The RMD is for your contract alone; - - The RMD is based on your recalculated life expectancy taken from the Uniform Lifetime Table under the Code; and - - The RMD amount is otherwise based on the requirements of section 401(a)(9), related Code provisions and regulations thereunder that were in effect on the effective date of the rider. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. Withdrawal amounts greater than the RBP or RALP on the contract anniversary date that do not meet these conditions will result in excess withdrawal processing as described above. See Appendix F for additional information. STEP UP DATE: The date any step up becomes effective, and depends on the type of step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment period or increase the allowable payment. The annual step up may be available as described below, subject to the following rules: - - The annual step up is effective on the step up date. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the waiting period, any previously applied step ups will be reversed and the Annual step up will not be available until the end of the waiting period. - - On any rider anniversary where the RBA or, if established, the ALP would increase and the application of the step up would not increase the rider charge, the annual step up will be automatically applied to your contract, and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary as long as either the contract value is greater than the total RBA or 6% of the contract value is greater than the ALP, if established, on the step-up date. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - The ALP and RALP are not eligible for step ups until they are established. Prior to being established, the ALP and RALP values are both zero. - - Please note it is possible for the ALP to step up even if the RBA or GBA do not step up, and it is also possible for the RBA and GBA to step up even if the ALP does not step up. The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as follows: - - The total RBA will be reset to the greater of the total RBA immediately prior to the step up date or the contract value on the step up date. - - The total GBA will be reset to the greater of the total GBA immediately prior to the step up date or the contract value on the step up date. - - The total GBP will be reset using the calculation as described above based on the increased GBA and RBA. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 69 - - The total RBP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset to the increased GBP less all prior withdrawals made in the current contract year, but not less than zero. - - The ALP will be reset to the greater of the ALP immediately prior to the step up date or 6% of the contract value on the step up date. - - The RALP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RALP will not be affected by the step up. (b) At any other time, the RALP will be reset to the increased ALP less all prior withdrawals made in the current contract year, but not less than zero. SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH: SINGLE LIFE: If a surviving spouse elects to continue the contract and continues the contract as the new owner under the spousal continuation provision of the contract, the SecureSource - Single Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled and any waiting period limitations on withdrawals and step-ups terminate; if the covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP and RALP values are affected as follows: - - The GBA, RBA and GBP values remain unchanged. - - The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the date of continuation -- the ALP will be established on the contract anniversary following the date the covered person reaches age 65 as the lesser of the RBA or the contract anniversary value, multiplied by 6%. The RALP will be established on the same date equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the date of continuation -- the ALP will be established on the date of continuation as the lesser of the RBA or the contract value, multiplied by 6%. The RALP will be established on the same date in an amount equal to the ALP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the date of continuation -- the ALP and RALP will be automatically reset to zero for the period of time beginning with the date of continuation and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%, and the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the date of continuation -- the ALP will be automatically reset to the lesser of the current ALP or 6% of the contract value on the date of continuation. The RALP will be reset to the ALP less all prior withdrawals made in the current contract year, but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the spousal continuation. JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal continuation provision of the contract as the new owner, the SecureSource - Joint Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled and any waiting period limitations on withdrawals and step-ups terminate. The surviving covered spouse can name a new beneficiary, however, a new covered spouse cannot be added to the rider. SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values following a withdrawal no longer apply to your contract. For withdrawals, the withdrawal will be made from the variable subaccounts, Guarantee Period Accounts (where available), the One-Year Fixed Account (if applicable) and the DCA Fixed Account in the same proportion as your interest in each bears to the contract value. You cannot specify from which accounts the withdrawal is to be made. - -------------------------------------------------------------------------------- 70 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the total RBA remains greater than zero, you will be paid in the following scenarios: 1) The ALP has not yet been established and the contract value is reduced to zero as a result of fees or charges or a withdrawal that is less than or equal to the RBP. In this scenario, you can choose to: (a) receive the remaining schedule of GBPs until the RBA equals zero; or (b) SINGLE LIFE: wait until the rider anniversary on/following the date the covered person reaches age 65, and then receive the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero; or (c) JOINT LIFE: wait until the rider anniversary on/following the date the younger covered spouse reaches age 65, and then receive the ALP annually until the latter of (i) the death of the last surviving covered spouse, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 2) The ALP has been established and the contract value reduces to zero as a result of fees or charges, or a withdrawal that is less than or equal to both the RBP and the RALP. In this scenario, you can choose to receive: (a) the remaining schedule of GBPs until the RBA equals zero; or (b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero; or. (c) JOINT LIFE: the ALP annually until the latter of (i) the death of the last surviving covered spouse, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 3) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP. In this scenario, the remaining schedule of GBPs will be paid until the RBA equals zero. 4) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RBP but less than or equal to the RALP. In this scenario, the ALP will be paid annually until the death of the: - - SINGLE LIFE: covered person; - - JOINT LIFE: last surviving covered spouse. Under any of these scenarios: - - The annualized amounts will be paid to you in the frequency you elect. You may elect a frequency offered by us at the time payments begin. Available payment frequencies will be no less frequent than annually; - - We will no longer accept additional purchase payments; - - You will no longer be charged for the rider; - - Any attached death benefit riders will terminate; and - - SINGLE LIFE: The death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. - - JOINT LIFE: If the owner had been receiving the ALP, upon the first death the ALP will continue to be paid annually until the later of: 1) the death of the last surviving covered spouse or 2) the RBA is reduced to zero. In all other situations the death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. The SecureSource rider and the contract will terminate under either of the following two scenarios: - - If the contract value falls to zero as a result of a withdrawal that is greater than both the RALP and the RBP. This is full withdrawal of the contract value. - - If the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP, and the total RBA is reduced to zero. AT DEATH: SINGLE LIFE: If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may: 1) elect to take the death benefit under the terms of the contract, 2) take the fixed payout option available under this rider, or 3) continue the contract under the spousal continuation provision of the contract above. If the contract value equals zero and the death benefit becomes payable, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person dies and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 71 - - If the covered person is still alive and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the later of the death of the covered person or the RBA equals zero. - - If the covered person is still alive and the RBA equals zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the death of the covered person. - - If the covered person dies and the RBA equals zero, the benefit terminates. No further payments will be made. JOINT LIFE: If the death benefit becomes payable at the death of a covered spouse, the surviving covered spouse must utilize the spousal continuation provision of the contract and continue the contract as the new owner to continue the joint benefit. If spousal continuation is not available under the terms of the contract, the rider terminates. The lifetime benefit of this rider ends at the death of the last surviving covered spouse. If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may: 1) elect to take the death benefit under the terms of the contract, 2) take the fixed payout option available under this rider, or 3) continue the contract under the spousal continuation provision of the contract above. If the contract value equals zero at the first death of a covered spouse, the ALP will continue to be paid annually until the later of: 1) the death of the last surviving covered spouse or 2) the RBA is reduced to zero. If the contract value equals zero at the death of the last surviving covered spouse, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the RBA equals zero, the benefit terminates. No further payments will be made. CONTRACT OWNERSHIP CHANGE: SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the GBA, RBA, GBP, RBP values will remain unchanged. If the covered person changes due to the ownership change, the ALP and RALP will be reset as follows: - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be established on the contract anniversary following the date the covered person reaches age 65. The ALP will be set equal to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the anniversary date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the anniversary date occurs at any other time, the RALP will be set to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be established on the ownership change date. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be set to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be set to the ALP less all prior withdrawals made in the current contract year but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be reset to zero for the period of time beginning with the ownership change date and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the time period ends during the waiting period and prior to any withdrawals, the RALP will be reset to equal the lesser of the ALP or total purchase payments multiplied by 6%. If the time period ends at any other time, the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be reset on the ownership change date. The ALP will be reset to the lesser of the current ALP or 6% of the contract value. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be reset to the ALP less all prior withdrawals made in the current contract year but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the ownership change. JOINT LIFE: Ownership changes are only allowed between the covered spouses or their revocable trust(s). No other ownership changes are allowed as long as the rider is in force. GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the SecureSource rider. - -------------------------------------------------------------------------------- 72 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity payout option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This option may not be available if the contract is issued to qualify under section 403 or 408 of the Code, as amended. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. RIDER TERMINATION The SecureSource rider cannot be terminated either by you or us except as follows: 1. SINGLE LIFE: After the death benefit is payable the rider will terminate if: (a) any one other than your spouse continues the contract, or (b) your spouse does not use the spousal continuation provision of the contract to the continue the contract. 2. JOINT LIFE: After the death benefit is payable the rider will terminate if: (a) any one other than a covered spouse continues the contract, or (b) a covered spouse does not use the spousal continuation provision of the contract to the continue the contract. 3. Annuity payouts under an annuity payout plan will terminate the rider. 4. Termination of the contract for any reason will terminate the rider. OPTIONAL LIVING BENEFITS -- PREVIOUSLY OFFERED UNDER CONTRACT OPTION L AND CONTRACT OPTION C If you bought a contract before May 1, 2007 with an optional living benefit, please use the following table to review the disclosure that applies to the optional living benefit rider you purchased. If you are uncertain as to which optional living benefit rider you purchased, ask your investment professional, or contact us at the telephone number or address shown on the first page of this prospectus.
IF YOU PURCHASED AND YOU SELECTED ONE OF THE DISCLOSURE FOR THIS BENEFIT MAY BE A CONTRACT(1)... FOLLOWING OPTIONAL LIVING BENEFITS... FOUND IN THE FOLLOWING APPENDIX: Before April 29, 2005 Guarantor Withdrawal Benefit ("Rider Appendix L B") April 29, 2005 - April 30, Guarantor Withdrawal Benefit ("Rider Appendix L 2006 A") May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit for Life Appendix K Before May 1, 2007 Income Assurer Benefit Appendix M
(1) These dates are approximate and will vary by state; your actual contract and any riders are the controlling documents. If you are uncertain which rider you have, please contact your investment professional or us. OPTIONAL DEATH BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are age 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are age 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 73 the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit, plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were age 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. For an example, see Appendix G. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are age 70 or older at the rider effective date. It does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are age 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is only available for transfers, exchanges or rollovers from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector Rider, 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
- -------------------------------------------------------------------------------- 74 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) IF YOU OR THE ANNUITANT ARE AGE 70 CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% + (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). For an example, see Appendix H. THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below, except under annuity payout Plan E. You also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). You may reallocate this contract value to the subaccounts to provide variable annuity payouts. If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs and the DCA fixed account are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin (see "Making the Most of Your Contract -- Transfer policies"). ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payout, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 75 Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. Some of the annuity payout plans may not be available if you have selected the Income Assurer Benefit rider. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we made only one monthly payout, we will not make any more payouts. - - PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN (under the Income Assurer Benefit rider: you may select life annuity with ten or 20 years certain): We make monthly payouts for a guaranteed payout period of five, ten, 15 or 20 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND (not available under the Income Assurer Benefit rider): We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly annuity payouts during the lifetime of the annuitant and joint annuitant. When either the annuitant or joint annuitant dies, we will continue to make monthly payouts during the lifetime of the survivor. If the survivor dies before we have made payouts for 20 years, we continue to make payouts to the named beneficiary for the remainder of the 20-year period which begins when the first annuity payout is made. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect (under the Income Assurer Benefit rider, you may elect a payout period of 20 years only). We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the payout period, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. (Exception: If you have an Income Assurer Benefit rider and elect this annuity payout plan based on the Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. The discount rate we use in the calculation will vary between 6.55% and 8.15% depending on the applicable contract option and the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes.") - - GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR GUARANTOR WITHDRAWAL BENEFIT RIDER): This fixed annuity payout option is an alternative to the above annuity payout plans. This option may not be available if the contract is a qualified annuity. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. Under this option, the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the total RBA at the time you begin this fixed payout option (see "Optional Benefits -- SecureSource Riders", "Appendix K: Guarantor Withdrawal Benefit for Life Rider" or "Appendix L: Guarantor Withdrawal Benefit Rider"). These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at the time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary. ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS - -------------------------------------------------------------------------------- 76 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 77 DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. - -------------------------------------------------------------------------------- 78 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 79 statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or are not the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource Variable Portfolio -- Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. - -------------------------------------------------------------------------------- 80 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves as the principal underwriter and general distributor of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. SALES OF THE CONTRACT - - Only securities broker-dealers ("selling firms") registered with the SEC and members of the FINRA may sell the contract. - - The contracts are continuously offered to the public through authorized selling firms. We and RiverSource Distributors have a sales agreement with the selling firm to offer the contracts to the public. We agree to pay the selling firm (or an affiliated insurance agency) for contracts its investment professionals sell. The selling firm may be required to return sales commissions under certain circumstances including but not limited to when contracts are returned under the free look period. PAYMENTS WE MAKE TO SELLING FIRMS - - We may use compensation plans which vary by selling firm. For example, some of these plans pay selling firms a commission of up to 5.75% each time a purchase payment is made for contract Option L and 1% for contract Option C. We may also pay ongoing trail commissions of up to 1.25% of the contract value. We do not pay or withhold payment of trail commissions based on which investment options you select. - - We may pay selling firms a temporary additional sales commission of up to 1% of purchase payments for both contract options offered for a period of time we select. For example, we may offer to pay a temporary additional sales commission to get selling firms to market a new or enhanced contract or to increase sales during the period. - - In addition to commissions, we may, in order to promote sales of the contracts, and as permitted by applicable laws and regulation, pay or provide selling firms with other promotional incentives in cash, credit or other compensation. We generally (but may not) offer these promotional incentives to all selling firms. The terms of such arrangements differ between selling firms. These promotional incentives may include but are not limited to: - sponsorship of marketing, educational, due diligence and compliance meetings and conferences we or the selling firm may conduct for investment professionals, including subsidy of travel, meal, lodging, entertainment and other expenses related to these meetings; - marketing support related to sales of the contract including for example, the creation of marketing materials, advertising and newsletters; - providing service to contract owners; and - funding other events sponsored by a selling firm that may encourage the selling firm's investment professionals to sell the contract. These promotional incentives or reimbursements may be calculated as a percentage of the selling firm's aggregate, net or anticipated sales and/or total assets attributable to sales of the contract, and/or may be a fixed dollar amount. As noted below this additional compensation may cause the selling firm and its investment professionals to favor the contracts. SOURCES OF PAYMENTS TO SELLING FIRMS We pay the commissions and other compensation described above from our assets. Our assets may include: - - revenues we receive from fees and expenses that you will pay when buying, owning and making a withdrawal from the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds - The Funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds - The Funds"); and - - revenues we receive from other contracts we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part or all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including withdrawal charges; and - - fees and expenses charged by the underlying subaccount funds in which you invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 81 POTENTIAL CONFLICTS OF INTEREST Compensation payment arrangements with selling firms can potentially: - - give selling firms a heightened financial incentive to sell the contract offered in this prospectus over another investment with lower compensation to the selling firm. - - cause selling firms to encourage their investment professionals to sell you the contract offered in this prospectus instead of selling you other alternative investments that may result in lower compensation to the selling firm. - - cause selling firms to grant us access to its investment professionals to promote sales of the contract offered in this prospectus, while denying that access to other firms offering similar contracts or other alternative investments which may pay lower compensation to the selling firm. PAYMENTS TO INVESTMENT PROFESSIONALS - - The selling firm pays its investment professionals. The selling firm decides the compensation and benefits it will pay its investment professionals. - - To inform yourself of any potential conflicts of interest, ask the investment professional before you buy, how the selling firm and its investment professionals are being compensated and the amount of the compensation that each will receive if you buy the contract. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI - -------------------------------------------------------------------------------- 82 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 83 APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE # Appendix A: Example -- Market Value Adjustment (MVA) p. 85 Guarantee Period Accounts (GPAs) p. 33 Appendix B: Example -- Withdrawal Charges for Charges -- Withdrawal Charges Contract Option L p. 87 p. 39 Appendix C: Example -- Death Benefits p. 92 Benefits in Case of Death p. 56 Appendix D: Example -- Accumulation Protector Benefit Optional Benefits -- Accumulation Protector Benefit Rider p. 95 Rider p. 59 Appendix E: Example -- SecureSource Riders p. 97 Optional Benefits -- SecureSource Riders p. 61 Appendix F: SecureSource Riders -- Additional RMD p. Optional Benefits -- SecureSource Riders Disclosure 101 p. 61 Appendix G: Example -- Benefit Protector Death p. Optional Benefits -- Benefit Protector Death Benefit Benefit Rider 103 Rider p. 73 Appendix H: Example -- Benefit Protector Plus Death p. Optional Benefits -- Benefit Protector Plus Death Benefit Rider 105 Benefit Rider p. 74 Appendix I: Asset Allocation Program for Contracts p. Purchased Before May 1, 2006 107 Appendix J: Guarantor Withdrawal Benefit for Life p. N/A Rider Disclosure 108 Appendix K: Guarantor Withdrawal Benefit Rider p. N/A Disclosure 120 Appendix L: Example -- Income Assurer Benefit Riders p. N/A Disclosure 128 Appendix M: Condensed Financial Information p. Condensed Financial Information (Unaudited) (Unaudited) 137 p. 13
The purpose of these appendices is first to illustrate the operation of various contract features and riders; second, to provide additional disclosure regarding various contract features and riders; and lastly, to provide condensed financial history (unaudited) of the subaccounts. In order to demonstrate the contract features and riders, an example may show hypothetical contract values. These contract values do not represent past or future performance. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts, GPAs, DCA fixed account, and one-year fixed account and the fees and charges that apply to your contract. The examples of death benefits and optional riders in appendices C through E and J through L include a partial withdrawal to illustrate the effect of a partial withdrawal on the particular benefit. These examples are intended to show how the optional riders operate, and do not take into account whether the rider is part of a qualified contract. Qualified contracts are subject to required minimum distributions at certain ages which may require you to take partial withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you are considering the addition of certain death benefits and/or optional riders to a qualified contract, you should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. - -------------------------------------------------------------------------------- 84 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA) As the examples below demonstrate, the application of an MVA may result in either a gain or a loss of principal. We refer to all of the transactions described below as "early withdrawals." ASSUMPTIONS: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; and - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your guarantee period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate and, so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES -- MVA Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your guarantee period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and your purchase payment is in its fourth year from receipt at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 85 requested after we apply the MVA (and any applicable withdrawal charge under contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. - -------------------------------------------------------------------------------- 86 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L For purposes of calculating any withdrawal charge, including the examples illustrated below, we treat amounts withdrawn from your contract value in the following order: 1. First, in each contract year, we withdraw amounts totaling: - up to 10% of your prior anniversary's contract value or your contract's remaining benefit payment if you elected the Guarantor Withdrawal Benefit rider and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. - up to 10% of your prior anniversary's contract value or the greater of your contract's remaining benefit payment or remaining annual lifetime payment if you elected the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider, and the greater of your remaining annual lifetime payment and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. 2. Next, we withdraw contract earnings, if any, that are greater than the amount described in number one above. We do not assess a withdrawal charge on contract earnings. 3. Next we withdraw purchase payments received prior to the withdrawal charge period shown in your contract. We do not assess a withdrawal charge on these purchase payments. 4. Finally, if necessary, we withdraw purchase payments received that are still within the withdrawal charge period you selected and shown in your contract. We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do assess a withdrawal charge on these payments. After withdrawing earnings in numbers one and two above, we next withdraw enough additional contract value (ACV) to meet your requested withdrawal amount. If the amount described in number one above was greater than contract earnings prior to the withdrawal, the excess (XSF) will be excluded from the purchase payments being withdrawn that were received most recently when calculating the withdrawal charge. We determine the amount of purchase payments being withdrawn (PPW) in numbers three and four above as: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) If the additional contract value withdrawn is less than XSF, then PPW will equal ACV. We determine current contract earnings (CE) by looking at the entire contract value (CV), not the earnings of any particular subaccount, GPA, the one-year fixed account or the DCA fixed account. If the contract value is less than purchase payments received and not previously withdrawn (PPNPW) then contract earnings are zero. The examples below show how the withdrawal charge for a full and partial withdrawal is calculated for Contract Option L with a four-year withdrawal charge schedule. Each example illustrates the amount of the withdrawal charge for both a contract that experiences gains and a contract that experiences losses, given the same set of assumptions. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 87 FULL WITHDRAWAL CHARGE CALCULATION -- FOUR YEAR WITHDRAWAL CHARGE SCHEDULE: - -------------------------------------------------------------------------------- This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You withdraw the contract for its total value during the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00 WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS: STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously 50,000.00 50,000.00 withdrawn (PPNPW): ---------- ---------- Earnings in the contract (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 60,000.00 40,000.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 50,000.00 40,000.00 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's Contract Value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) * (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 50,000.00 40,000.00 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 50,000.00 50,000.00
- -------------------------------------------------------------------------------- 88 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 50,000.00 50,000.00 less XSF: 0.00 4,200.00 --------- --------- amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00 multiplied by the withdrawal charge rate: x 6.0% x 6.0% --------- --------- withdrawal charge: 3,000.00 2,748.00 STEP 7. The dollar amount you will receive as a result of your full withdrawal is determined as: Contract value withdrawn: 60,000.00 40,000.00 WITHDRAWAL CHARGE: (3,000.00) (2,748.00) Contract charge (assessed upon full withdrawal): (40.00) (40.00) --------- --------- NET FULL WITHDRAWAL PROCEEDS: 56,960.00 37,212.00
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 89 PARTIAL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You request a net partial withdrawal of $15,000.00 during the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for the net partial withdrawal proceeds to match the amount requested. We start with an estimate of the amount of contract value to withdraw and calculate the resulting withdrawal charge and net partial withdrawal proceeds as illustrated below. We then adjust our estimate and repeat until we determine the amount of contract value to withdraw that generates the desired net partial withdrawal proceeds. WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS FOLLOWS: STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously 50,000.00 50,000.00 withdrawn (PPNPW): --------- --------- Earnings in the contract (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 --------- --------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 15,319.15 15,897.93 Less earnings in the contract: 10,000.00 0.00 --------- --------- ACV (but not less than zero): 5,319.15 15,897.93 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 --------- --------- XSF (but not less than zero): 0.00 4,200.00
- -------------------------------------------------------------------------------- 90 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) * (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 5,319.15 15,897.93 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 --------- --------- PPW = 5,319.15 19,165.51 STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 5,319.15 19,165.51 less XSF: 0.00 4,200.00 --------- --------- amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51 multiplied by the withdrawal charge rate: x 6.0% x 6.0% --------- --------- withdrawal charge: 319.15 897.93 STEP 7. The dollar amount you will receive as a result of your partial withdrawal is determined as: Contract value withdrawn: 15,319.15 15,897.93 WITHDRAWAL CHARGE: (319.15) (897.93) --------- --------- NET PARTIAL WITHDRAWAL PROCEEDS: 15,000.00 15,000.00
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 91 APPENDIX C: EXAMPLE -- DEATH BENEFITS EXAMPLE -- ROP DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $20,000. You select contract Option L; and - - on the first contract anniversary you make an additional purchase payment of $5,000; and - - during the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal, including withdrawal charge; and - - during the third contract year the contract value grows to $23,000. WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $23,000.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45 EXAMPLE -- MAV DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000. You select contract Option L; and - - on the first contract anniversary the contract value grows to $26,000; and - - during the second contract year the contract value falls to $22,000, at which point you take a $1,500 (including withdrawal charge) partial withdrawal, leaving a contract value of $20,500. WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $20,500.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- 3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH: Greatest of your contract anniversary values: $26,000.00 plus purchase payments made since the prior anniversary: +0.00 minus the death benefit adjusted partial withdrawals, calculated as: $1,500 X $26,000 ---------------- = -1,772.73 $22,000 ---------- for a death benefit of: $24,227.27 ----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE MAV: $24,227.27 - -------------------------------------------------------------------------------- 92 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - on the first contract anniversary, the GPA value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - during the second contract year, the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a death benefit of: $23,456.79 ---------- 3. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: 1.05 $21,000.00 X $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 ---------- 5% variable account floor (value of the GPAs, one-year fixed account and the variable account floor): $24,642.11 ----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 93 EXAMPLE -- ENHANCED DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - on the first contract anniversary, the GPAs value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - during the second contract year, the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP Death Benefit of: $23,456.79 ---------- 3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV Death Benefit of: $23,456.79 ---------- 4. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: 1.05 X $20,000 = $21,000.00 plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 ---------- 5% variable account floor (value of the GPAs and the variable account floor): $24,642.11 ----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- 94 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER AUTOMATIC STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) in the second, third and seventh contract anniversaries. These increases occur because of the automatic step up feature of the rider. The automatic step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - - you take partial withdrawals from the contract on the fifth and eighth contract anniversaries in the amounts of $2,000 and $5,000, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and - - you do not exercise the elective step up option available under the rider; and - - you do not change model portfolios. Based on these assumptions, the waiting period expires at the end of the 10th contract year. The rider then ends. On the benefit date the hypothetical assumed contract value is $108,118 and the MCAV is $136,513, so the contract value would be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT ADJUSTED ASSUMED ASSUMED DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 0 0 0 12.0% 140,000 125,000 2 0 0 0 15.0% 161,000 128,800(2) 3 0 0 0 3.0% 165,830 132,664(2) 4 0 0 0 -8.0% 152,564 132,664 5 0 2,000 2,046 -15.0% 127,679 130,618 6 0 0 0 20.0% 153,215 130,618 7 0 0 0 15.0% 176,197 140,958(2) 8 0 5,000 4,444 -10.0% 153,577 136,513 9 0 0 0 -20.0% 122,862 136,513 10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date. (2) These values indicate where the automatic step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. ELECTIVE STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) on the first, second, third and seventh contract anniversaries. These increases occur only if you exercise the elective step up option within 30 days following the contract anniversary. The contract value on the date we receive your written request to step up must be greater than the MCAV on that date. The elective step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 95 - - you take partial withdrawals from the contract on the fifth, eighth and thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and, - - the elective step up is exercised on the first, second, third and seventh contract anniversaries; and - - you do not change model portfolios. Based on these assumptions, the 10 year waiting period restarts each time you exercise the elective step up option (on the first, second, third and seventh contract anniversaries in this example). The waiting period expires at the end of the 10th contract year following the last exercise of the elective step up option. When the waiting period expires, the rider ends. On the benefit date the hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 10(2) 0 0 0 12.0% 140,000 140,000(3) 2 10(2) 0 0 0 15.0% 161,000 161,000(3) 3 10(2) 0 0 0 3.0% 165,830 165,830(3) 4 9 0 0 0 -8.0% 152,564 165,830 5 8 0 2,000 2,558 -15.0% 127,679 163,272 6 7 0 0 0 20.0% 153,215 163,272 7 10(2) 0 0 0 15.0% 176,197 176,197(3) 8 9 0 5,000 5,556 -10.0% 153,577 170,642 9 8 0 0 0 -20.0% 122,862 170,642 10 7 0 0 0 -12.0% 108,118 170,642 11 6 0 0 0 3.0% 111,362 170,642 12 5 0 0 0 4.0% 115,817 170,642 13 4 0 7,500 10,524 5.0% 114,107 160,117 14 3 0 0 0 6.0% 120,954 160,117 15 2 0 0 0 -5.0% 114,906 160,117 16 1 0 0 0 -11.0% 102,266 160,117 17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB benefit date. (2) The waiting period restarts when the elective step up is exercised. (3) These values indicate when the elective step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Exercising the elective step up provision may result in an increase in the charge that you pay for this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. - -------------------------------------------------------------------------------- 96 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract. - - You are the sole owner and also the annuitant. You are age 60. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - - You elect the Moderate model portfolio at issue. On the 1st contract anniversary, you elect to change to the Moderately Aggressive model portfolio. The target model portfolio under the contract is the Moderate model portfolio.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 2 0 0 81,000 90,000 90,000 6,300 6,300 5 0 0 75,000 90,000 90,000 6,300 6,300 5.5 0 5,400 70,000 90,000 84,600 6,300 900 6 0 0 69,000 90,000 84,600 6,300 6,300 6.5 0 6,300 62,000 90,000 78,300 6,300 0 7 0 0 64,000 90,000 78,300 6,300 6,300 7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 8 0 0 55,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 2 N/A N/A 5 5,400(2) 5,400(2) 5.5 5,400 0 6 5,400 5,400 6.5 3,720(3) 0 7 3,840 3,840 7.5 3,060(4) 0 8 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation, contract ownership change, or model portfolio changes), you can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your death or the RBA is reduced to zero. (1) Allocation to the Moderately Aggressive model portfolio during a withdrawal phase will reset the benefit. The GBA is reset to the lesser of the prior GBA or the contract value. The RBA is reset to the lesser of the prior RBA or the contract value. The ALP (if established) is reset to the lesser of the prior ALP or 6% of the contract value. Any future withdrawals will reallocate your contract value to the Moderate model portfolio if you are invested more aggressively than the Moderate model portfolio. (2) The ALP and RALP are established on the contract anniversary date following the date the Covered Person reaches age 65 as 6% of the RBA. (3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the basic withdrawal benefit and the $3,840 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 97 EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract. - - You are the sole owner and also the annuitant. You are age 65. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - -Your death occurs after 6 1/2 contract years and your spouse continues the contract and rider. Your spouse is over age 65 and is the new Covered Person.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 6.5 0 0 110,000 125,000 125,000 8,750 8,750 7 0 0 105,000 125,000 125,000 8,750 8,750 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500 6.5 6,600(5) 6,600(5) 7 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, contract ownership change, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $6,600 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The Annual Step-up has not been applied to the RBP or RALP because any withdrawal after step up during the Waiting Period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the Waiting Period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the Waiting Period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or 6% of the contract value and the RALP is reset to the ALP. - -------------------------------------------------------------------------------- 98 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract. - - You are age 59 and your spouse is age 60. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - - You elect the Moderate model portfolio at issue. On the 1st contract anniversary, you elect to change to the Moderately Aggressive model portfolio. The target model portfolio under the contract is the Moderate model portfolio. - - Your death occurs after 9 1/2 contract years and your spouse continues the contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 2 0 0 81,000 90,000 90,000 6,300 6,300 6 0 0 75,000 90,000 90,000 6,300 6,300 6.5 0 5,400 70,000 90,000 84,600 6,300 900 7 0 0 69,000 90,000 84,600 6,300 6,300 7.5 0 6,300 62,000 90,000 78,300 6,300 0 8 0 0 64,000 90,000 78,300 6,300 6,300 8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 9 0 0 55,000 55,000 55,000 3,850 3,850 9.5 0 0 54,000 55,000 55,000 3,850 3,850 10 0 0 52,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 2 N/A N/A 6 5,400(2) 5,400(2) 6.5 5,400 0 7 5,400 5,400 7.5 3,720(3) 0 8 3,840 3,840 8.5 3,060(4) 0 9 3,300 3,300 9.5 3,300 3,300 10 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The ALP and RALP are established on the contract anniversary date following the date the younger Covered Spouse reaches age 65 as 6% of the RBA. (2) Allocation to the Moderately Aggressive model portfolio during a withdrawal phase will reset the benefit. The GBA is reset to the lesser of the prior GBA or the contract value. The RBA is reset to the lesser of the prior RBA or the contract value. The ALP is reset to the lesser of the prior ALP or 6% of the contract value. Any future withdrawals will reallocate your contract value to the Moderate model portfolio if you are invested more aggressively than the Moderate model portfolio. (3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the basic withdrawal benefit and the $3,840 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 99 EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract - - You are age 71 and your spouse is age 70. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - - Your death occurs after 6 1/2 contract years and your spouse continues the contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL ASSUMED BASIC WITHDRAWAL BENEFIT CONTRACT PURCHASE PARTIAL CONTRACT ---------------------------------------- DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 6.5 0 0 110,000 125,000 125,000 8,750 8,750 7 0 0 105,000 125,000 125,000 8,750 8,750 LIFETIME WITHDRAWAL BENEFIT CONTRACT ---------------------------- DURATION ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500 6.5 7,500 7,500 7 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $7,500 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The Annual Step-up has not been applied to the RBP or RALP because any withdrawal after step up during the Waiting Period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the Waiting Period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the Waiting Period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 100 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX F: SECURESOURCE RIDERS -- ADDITIONAL RMD DISCLOSURE This appendix describes our current administrative practice for determining the amount of withdrawals in any contract year which an owner may take under the SecureSource rider to satisfy the RMD rules under 401(a)(9) of the Code without application of the excess withdrawal processing described in the rider. We reserve the right to modify this administrative practice at any time upon 30 days' written notice to you. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If on the date we calculated your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA), it is greater than the RBP from the beginning of the current contract year, - Basic Additional Benefit Amount (BABA) will be set equal to that portion of your ALERMDA that exceeds the RBP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. - Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the BABA. These withdrawals will not be considered excess withdrawals with regard to the GBA and RBA as long as they do not exceed the remaining BABA. - Once the BABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the GBA and RBA and will subject them all to the excess withdrawal processing described in the SecureSource rider. (2) If on the date we calculated your ALERMDA, it is greater than the RALP from the beginning of the current Contract Year, - A Lifetime Additional Benefit Amount (LABA) will be set equal to that portion of your ALERMDA that exceeds the RALP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RALP for that contract year. - Once the RALP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the LABA. These withdrawals will not be considered excess withdrawals with regard to the ALP as long as they do not exceed the remaining LABA. - Once the LABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the ALP and will subject the ALP to the excess withdrawal processing described by the SecureSource rider. (3) If the ALP is established on a policy anniversary where your current ALERMDA is greater than the new RALP, - An initial LABA will be set equal to that portion of your ALERMDA that exceeds the new RALP. - This new LABA will be immediately reduced by the amount that total withdrawals in the current calendar year exceed the new RALP, but shall not be reduced to less than zero. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the SecureSource rider is attached as of the date we make the determination; (3) based on your recalculated life expectancy taken from the Uniform Lifetime Table under the Code; and (4) based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable on the effective date of this prospectus, to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a SIMPLE IRA (Section 408(p)); 4. a Simplified Employee Pension plan (Section 408(k)); 5. Custodial and investment only plans (Section 401(a)); 6. a tax-sheltered annuity rollover (Section 403(b)). In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your SecureSource rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your available RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP as described under the excess withdrawal provision of the rider. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 101 In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g., ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. Please contact your tax advisor about the impact of those rules prior to purchasing the SecureSource rider. - -------------------------------------------------------------------------------- 102 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit on May 1, 2008 equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $58,667 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 103 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
- -------------------------------------------------------------------------------- 104 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR PLUS ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV Death Benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV Death Benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 -------- Total death benefit of: $64,167 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 105 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
- -------------------------------------------------------------------------------- 106 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX I: ASSET ALLOCATION PROGRAM FOR CONTRACTS PURCHASED BEFORE MAY 1, 2006 ASSET ALLOCATION PROGRAM For contracts purchased before May 1, 2006, we offered an asset allocation program called Portfolio Navigator. You could elect to participate in the asset allocation program, and there is no additional charge. If you purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider, you are required to participate in the asset allocation program under the terms of the rider. This asset allocation program allows you to allocate your contract value to a model portfolio that consists of subaccounts and may include certain GPAs (if available under the asset allocation program), which represent various asset classes. By spreading your contract value among these various asset classes, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will occur. Asset allocation does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. If you choose or are required to participate in the asset allocation program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool that can help you determine which model portfolio is suited to your needs based on factors such as your investment goals, your tolerance for risk, and how long you intend to invest. Currently, there are five model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. You are allowed to request a change to another model portfolio twice per contract year. Each model portfolio specifies allocation percentages to each of the subaccounts and any GPAs that make up that model portfolio. By participating in the asset allocation program, you authorize us to invest your contract value in the subaccounts and any GPAs according to the allocation percentages stated for the specific model portfolio you have selected. You also authorize us to automatically rebalance your contract value quarterly beginning three months after the effective date of your contract in order to maintain alignment with the allocation percentages specified in the model portfolio. Special rules will apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio (see "Guarantee Period Accounts -- Market Value Adjustment"). Under the asset allocation program, the subaccounts and/or any GPAs that make up the model portfolio you selected and the allocation percentages to those subaccounts and/or any GPAs will not change unless we adjust the composition of the model portfolio to reflect the liquidation, substitution or merger of an underlying fund, a change of investment objective by an underlying fund or when an underlying fund stops selling its shares to the variable account. We reserve the right to change the terms and conditions of the asset allocation program upon written notice to you. If permitted under applicable securities law, we reserve the right to: - - reallocate your current model portfolio to an updated version of your current model portfolio; or - - substitute a fund of funds for your current model portfolio. We also reserve the right to discontinue the asset allocation program. We will give you 30 days' written notice of any such change. If you elected to participate in the asset allocation program, you may discontinue your participation in the program at any time by giving us written notice. Upon cancellation, automated rebalancing associated with the asset allocation program will end. You can elect to participate in the asset allocation program again at any time. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 107 APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you may select for an additional annual charge if(1): - - you purchase your contract on or after May 1, 2006; - - the rider is available in your state; and - - you and the annuitant are 80 or younger on the date the contract is issued. (1) The Guarantor Withdrawal Benefit for Life rider is not available under an inherited qualified annuity. You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase your contract. The rider effective date will be the contract issue date. The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able to withdraw up to a certain amount each year from the contract, regardless of the investment performance of your contract before the annuity payments begin, until you have recovered at minimum all of your purchase payments. And, under certain limited circumstances defined in the rider, you have the right to take a specified amount of partial withdrawals in each contract year until death (see "At Death" heading below) -- even if the contract value is zero. Your contract provides for annuity payouts to begin on the retirement date (see "Buying Your Contract -- The Retirement Date"). Before the retirement date, you have the right to withdraw some or all of your contract value, less applicable administrative, withdrawal and rider charges imposed under the contract at the time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals"). Because your contract value will fluctuate depending on the performance of the underlying funds in which the subaccounts invest, the contract itself does not guarantee that you will be able to take a certain withdrawal amount each year before the annuity payouts begin, nor does it guarantee the length of time over which such withdrawals can be made before the annuity payouts begin. The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if you intend to make periodic withdrawals from your annuity contract and wish to ensure that market performance will not adversely affect your ability to withdraw your principal over time. Under the terms of the Guarantor Withdrawal Benefit for Life rider, the calculation of the amount which can be withdrawn in each contract year varies depending on several factors, including but not limited to the waiting period (see "Waiting period" heading below) and whether or not the lifetime withdrawal benefit has become effective: (1) The basic withdrawal benefit gives you the right to take limited partial withdrawals in each contract year and guarantees that over time the withdrawals will total an amount equal to, at minimum, your purchase payments. Key terms associated with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP)," "Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See these headings below for more information. (2) The lifetime withdrawal benefit gives you the right, under certain limited circumstances defined in the rider, to take limited partial withdrawals until the later of death (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero. Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime Payment (ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and "Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for more information. Only the basic withdrawal benefit will be in effect prior to the date that the lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit becomes effective automatically on the rider anniversary date after the covered person reaches age 65, or the rider effective date if the covered person is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" heading below). Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for Life rider guarantees that you may take the following partial withdrawal amounts each contract year: - - After the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the GBP; - - During the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the value of the RBP at the beginning of the contract year; - - After the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal the ALP or the GBP, but the rider does not guarantee withdrawals of the sum of both the ALP and the GBP in a contract year; - -------------------------------------------------------------------------------- 108 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - During the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RALP or the RBP at the beginning of the contract year, but the rider does not guarantee withdrawals of the sum of both the RALP and the RBP in a contract year. If you withdraw less than the allowed partial withdrawal amount in a contract year, the unused portion cannot be carried over to the next contract year. As long as your partial withdrawals in each contract year do not exceed the annual partial withdrawal amount allowed under the rider, and there has not been a contract ownership change or spousal continuation of the contract, the guaranteed amounts available for partial withdrawals are protected (i.e., will not decrease). If you withdraw more than the allowed partial withdrawal amount in a contract year, we call this an "excess withdrawal" under the rider. Excess withdrawals trigger an adjustment of a benefit's guaranteed amount, which may cause it to be reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and "ALP Excess Withdrawal Processing" headings below). Please note that each of the two benefits has its own definition of the allowed annual withdrawal amount. Therefore a partial withdrawal may be considered an excess withdrawal for purposes of the lifetime withdrawal benefit only, the basic withdrawal benefit only, or both. If your withdrawals exceed the greater of the RBP or the RALP, withdrawal charges under the terms of the contract may apply (see "Charges -- Withdrawal Charges"). The amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Making the Most of Your Contract -- Withdrawals"). The rider's guaranteed amounts can be increased at the specified intervals if your contract value has increased. An annual step up feature is available at each contract anniversary, subject to certain conditions, and may be applied automatically to your contract or may require you to elect the step up (see "Annual Step Up" heading below). If you exercise the annual step up election, the spousal continuation step up election (see "Spousal Continuation Step Up" heading below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). If you take withdrawals during the waiting period, any prior steps ups applied will be reversed and step ups will not be available until the third rider anniversary. You may take withdrawals after the waiting period without reversal of prior step ups. You should consider whether the Guarantor Withdrawal Benefit for Life rider is appropriate for you because: - - LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is subject to certain limitations, including but not limited to: (a) Once the contract value equals zero, payments are made for as long as the oldest owner or annuitant is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the first death of any owner or annuitant except as otherwise provided below (see "At Death" heading below). Therefore, if there are multiple contract owners or the annuitant is not an owner, the rider may terminate or the lifetime withdrawal benefit may be reduced. This possibility may present itself when: (i) There are multiple contract owners -- when one of the contract owners dies the benefit terminates even though other contract owners are still living (except if the contract is continued under the spousal continuation provision of the contact); or (ii) The owner and the annuitant are not the same persons -- if the annuitant dies before the owner, the benefit terminates even though the owner is still living. This is could happen, for example, when the owner is younger than the annuitant. This risk increases as the age difference between owner and annuitant increases. (b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA, GBP and/or RBP values are greater than zero. If the both the ALP and the contract value are zero, the lifetime withdrawal benefit will terminate. (c) When the lifetime withdrawal benefit is first established, the initial ALP is based on the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below), unless there has been a spousal continuation or ownership change. Any withdrawal you take before the ALP is established reduces the RBA and therefore may result in a lower amount of lifetime withdrawals you are allowed to take. (d) Withdrawals can reduce both the contract value and the RBA to zero prior to the establishment of the ALP. If this happens, the contract and the Guarantor Withdrawal Benefit for Life rider will terminate. - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts, one-year fixed account and GPAs (if available) to those that - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 109 are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program.") Subject to state restrictions, we reserve the right to limit the number of model portfolios from which you can select based on the dollar amount of purchase payments you make. - - LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the Guarantor Withdrawal Benefit for Life rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw from the contract in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than the RBP or RALP under this rider. Any amount you withdraw under the contract's TFA provision that exceeds the RBP or RALP is subject to the excess withdrawal processing described below for the GBA, RBA and ALP. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation: - - TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income tax law, withdrawals under nonqualified annuities, including partial withdrawals taken from the contract under the terms of this rider, are treated less favorably than amounts received as annuity payments under the contract (see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income. - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD that exceeds the specified amount of withdrawal available under the rider. Partial withdrawals in any contract year that exceed the guaranteed amount available for withdrawal may reduce future benefits guaranteed under the rider. While the rider permits certain excess withdrawals to be made for the purpose of satisfying RMD requirements for this contract alone without reducing future benefits guaranteed under the rider, there can be no guarantee that changes in the federal income tax law after the effective date of the rider will not require a larger RMD to be taken, in which case, future guaranteed withdrawals under the rider could be reduced. Additionally, RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If on the date we calculated your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA), it is greater than the RBP from the beginning of the current contract year, - Basic Additional Benefit Amount (BABA) will be set equal to that portion of your ALERMDA that exceeds the RBP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. - Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the BABA. These withdrawals will not be considered excess withdrawals with regard to the GBA and RBA as long as they do not exceed the remaining BABA. - Once the BABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the GBA and RBA and will subject them all to the excess withdrawal processing described in the Guarantor Withdrawal Benefit for Life rider. (2) If on the date we calculated your ALERMDA, it is greater than the RALP from the beginning of the current Contract Year, - A Lifetime Additional Benefit Amount (LABA) will be set equal to that portion of your ALERMDA that exceeds the RALP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RALP for that contract year. - -------------------------------------------------------------------------------- 110 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - Once the RALP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the LABA. These withdrawals will not be considered excess withdrawals with regard to the ALP as long as they do not exceed the remaining LABA. - Once the LABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the ALP and will subject the ALP to the excess withdrawal processing described by the Guarantor Withdrawal Benefit for Life rider. (3) If the ALP is established on a policy anniversary where your current ALERMDA is greater than the new RALP, - An initial LABA will be set equal to that portion of your ALERMDA that exceeds the new RALP. - This new LABA will be immediately reduced by the amount that total withdrawals in the current calendar year exceed the new RALP, but shall not be reduced to less than zero. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the Guarantor Withdrawal Benefit for Life rider is attached as of the date we make the determination; and (3) is otherwise based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable on the effective date of this prospectus, to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a Simplified Employee Pension plan (Section 408(k)); 4. a tax-sheltered annuity rollover (Section 403(b)). We reserve the right to modify our administrative practice described above and will give you 30 days' written notice of any such change. In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your available RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP as described under the excess withdrawal provision of the rider. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g., ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit for Life rider may be of limited value to you. For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below. KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE DESCRIBED BELOW: PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a surrender of the contract. The partial withdrawal amount is a gross amount and will include any withdrawal charge and any market value adjustment. WAITING PERIOD: The period of time starting on the rider effective date during which the annual step up is not available if you take withdrawals. The current waiting period is three years. GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for partial withdrawals over the life of the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not payable as a death benefit. Rather, the GBA is an interim value used to calculate the amount available for withdrawals each year under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of the individual GBAs associated with each purchase payment. THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 111 - - When an individual RBA is reduced to zero -- the GBA that is associated with that RBA will also be set to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBA remains unchanged. If there have been multiple purchase payments, both the total GBA and each payment's GBA remain unchanged. (b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. GBA EXCESS WITHDRAWAL PROCESSING The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that is guaranteed by this rider as future withdrawals. At any point in time, the RBA equals the amount of GBA that remains available for withdrawals for the remainder of the contract's life, and total RBA is the sum of the individual RBAs associated with each purchase payment. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the RBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own RBA initially set equal to that payment's GBA (the amount of the purchase payment). - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the RBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the total RBA is reduced by the amount of the withdrawal. If there have been multiple purchase payments, each payment's RBA is reduced in proportion to its RBP. (b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. RBA EXCESS WITHDRAWAL PROCESSING The total RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the total RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, both the total RBA and each payment's RBA will be reset. The total RBA will be reset according to the excess withdrawal processing described above. Each payment's RBA will be reset in the following manner: 1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in proportion to its individual RBP at the time of the withdrawal; and 2. The withdrawal amount above the total RBP and any amount determined by the excess withdrawal processing are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial withdrawals in each contract year after the waiting period, until the RBA is reduced to zero, under the basic withdrawal benefit. At any point in time, each purchase - -------------------------------------------------------------------------------- 112 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS payment has its own GBP, which is equal to the lesser of that payment's RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual GBPs. During the waiting period, the guaranteed annual withdrawal amount may be less than the GBP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual withdrawal amount during the waiting period is equal to the value of the RBP at the beginning of the contract year. THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBP is established as 7% of the GBA value. - - At each contract anniversary -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value. - - When you make additional purchase payments -- each additional purchase payment has its own GBP equal to 7% of the purchase payment amount. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBP associated with that RBA will also be reset to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA and the RBA associated with each purchase payment will be reset to the amount of that purchase payment. Each payment's GBP will be reset to 7% of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBP remains unchanged. (b) is greater than the total RBP -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value, based on the RBA and GBA after the withdrawal. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals for the remainder of the contract year under the basic withdrawal benefit. At any point in time, the total RBP is the sum of the RBPs for each purchase payment. During the waiting period, when the guaranteed amount may be less than the GBP, the value of the RBP at the beginning of the contract year will be that amount that is actually guaranteed each contract year. THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At the beginning of each contract year during the waiting period and prior to any withdrawal -- the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. - - At the beginning of any other contract year -- the RBP for each purchase payment is set equal to that purchase payment's GBP. - - When you make additional purchase payments -- each additional purchase payment has its own RBP equal to that payment's GBP. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At spousal continuation -- (see "Spousal Option to Continue the Contract" heading below). - - When an individual RBA is reduced to zero -- the RBP associated with that RBA will also be reset to zero. - - When you make any partial withdrawal -- the total RBP is reset to equal the total RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. If there have been multiple purchase payments, each payment's RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in the excess withdrawal processing, the applicable RBP will not yet reflect the amount of the current withdrawal. COVERED PERSON: The person whose life is used to determine when the ALP is established, and the duration of the ALP payments. The Covered Person is the oldest contract owner or annuitant. The covered person may change during the contract's life if there is a spousal continuation or a change of contract ownership. If the covered person changes, we recompute the benefits guaranteed by the rider, based on the life of the new covered person, which may reduce the amount of the lifetime withdrawal benefit. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 113 ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after which time the lifetime benefit can be established. Currently, the lifetime benefit can be established on the later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65. ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the amount available for withdrawals in each contract year after the waiting period until the later of death (see "At Death" heading below), or the RBA is reduced to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the ALP is zero. During the waiting period, the guaranteed annual lifetime withdrawal amount may be less than the ALP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual lifetime withdrawal amount during the waiting period is equal to the value of the RALP at the beginning of the contract year. THE ALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65 -- the ALP is established as 6% of the total RBA. - - When you make additional purchase payments -- each additional purchase payment increases the ALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At contract ownership change -- (see "Spousal Option to Continue the Contract" and "Contract Ownership Change" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the ALP will be reset to equal total purchase payments multiplied by 6%. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the RALP -- the ALP remains unchanged. (b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE ALP. If the partial withdrawal is made during the waiting period, the excess withdrawal processing are applied AFTER any previously applied annual step ups have been reversed. ALP EXCESS WITHDRAWAL PROCESSING The ALP is reset to the lesser of the ALP immediately prior to the withdrawal, or 6% of the contract value immediately following the withdrawal. REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial withdrawals for the remainder of the contract year under the lifetime withdrawal benefit. During the waiting period, when the guaranteed annual withdrawal amount may be less than the ALP, the value of the RALP at the beginning of the contract year will be the amount that is actually guaranteed each contract year. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the RALP is zero. THE RALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date following the date the covered person reaches age 65, and: (a) During the waiting period and prior to any withdrawals -- the RALP is established equal to 6% of purchase payments. (b) At any other time -- the RALP is established equal to the ALP. - - At the beginning of each contract year during the waiting period and prior to any withdrawals -- the RALP is set equal to the total purchase payments, multiplied by 6%. - - At the beginning of any other contract year -- the RALP is set equal to ALP. - - When you make additional purchase payments -- each additional purchase payment increases the RALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make any partial withdrawal -- the RALP equals the RALP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in excess withdrawal processing, the applicable RALP will not yet reflect the amount of the current withdrawal. - -------------------------------------------------------------------------------- 114 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS STEP UP DATE: The date any step up becomes effective, and depends on the type of step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may extend the payment period or increase the allowable payment. The annual step up is subject to the following rules: - - The annual step up is available when the RBA or, if established, the ALP, would increase on the step up date. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the waiting period, any previously applied step ups will be reversed and the Annual step up will not be available until the end of the waiting period. - - If the application of the step up does not increase the rider charge, the annual step up will be automatically applied to your contract, and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - The ALP and RALP are not eligible for step ups until they are established. Prior to being established, the ALP and RALP values are both zero. - - Please note it is possible for the ALP and RALP to step up even if the RBA or GBA do not step up, and it is also possible for the RBA and GBA to step up even if the ALP or RALP do not step up. The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as follows: - - The total RBA will be reset to the greater of the total RBA immediately prior to the step up date or the contract value on the step up date. - - The total GBA will be reset to the greater of the total GBA immediately prior to the step up date or the contract value on the step up date. - - The total GBP will be reset using the calculation as described above based on the increased GBA and RBA. - - The total RBP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made in the current contract year, but never less than zero. - - The ALP will be reset to the greater of the ALP immediately prior to the step up date or 6% of the contract value on the step up date. - - The RALP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RALP will not be affected by the step up. (b) At any other time, the RALP will be reset as the increased ALP less all prior withdrawals made in the current contract year, but not less than zero. SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to continue the contract, the Guarantor Withdrawal Benefit for Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled; the covered person will be re-determined and is the covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP values are affected as follows: - - The GBA, RBA, and GBP values remain unchanged. - - The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the date of continuation -- the ALP will be established on the contract anniversary following the date the covered person reaches age 65 as the lesser of the RBA or the contract anniversary value, multiplied by 6%. The RALP will be established on the same date equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the date of continuation -- the ALP will be established on the date of continuation as the lesser of the RBA or the contract value, multiplied by 6%. The - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 115 RALP will be established on the same date in an amount equal to the ALP less all prior partial withdrawals made in the current contract year, but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the date of continuation -- the ALP and RALP will be automatically reset to zero for the period of time beginning with the date of continuation and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%, and the RALP will be reset to equal the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the date of continuation -- the ALP will be automatically reset to the lesser of the current ALP or 6% of the contract value on the date of continuation. The RALP will be reset to the ALP less all prior withdrawals made in the current contract year, but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the spousal continuation. SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the contract, another elective step up option becomes available. To exercise the step up, the spouse or the spouse's investment professional must submit a request within 30 days of the date of continuation. The step up date is the date we receive the spouse's request to step up. If the request is received after the close of business, the step up date will be the next valuation day. The GBA, RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step up. The spousal continuation step up is subject to the following rules: - - If the spousal continuation step up option is exercised and we have increased the charge for the rider, the spouse will pay the charge that is in effect on the step up date. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the total RBA remains greater than zero, you will be paid in the following scenarios: 1) The ALP has not yet been established and the contract value is reduced to zero for any reason other than full withdrawal of the contract. In this scenario, you can choose to: (a) receive the remaining schedule of GBPs until the RBA equals zero; or (b) wait until the rider anniversary on/following the date the covered person reaches age 65, and then receive the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 2) The ALP has been established and the contract value reduces to zero as a result of fees or charges, or a withdrawal that is less than or equal to both the RBP and the RALP. In this scenario, you can choose to receive: (a) the remaining schedule of GBPs until the RBA equals zero; or (b) the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 3) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP. In this scenario, the remaining schedule of GBPs will be paid until the RBA equals zero. 4) The ALP has been established and the contract value falls to zero as a result of a partial withdrawal that is greater than the RBP but less than or equal to the RALP. In this scenario, the ALP will be paid annually until the death of the covered person. Under any of these scenarios: - - The annualized amounts will be paid to you in the frequency you elect. You may elect a frequency offered by us at the time payments begin. Available payment frequencies will be no less frequent than annually; - - We will no longer accept additional purchase payments; - - You will no longer be charged for the rider; - - Any attached death benefit riders will terminate; and - -------------------------------------------------------------------------------- 116 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - The death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. The Guarantor Withdrawal Benefit for Life rider and the contract will terminate under either of the following two scenarios: - - If the contract value falls to zero as a result of a withdrawal that is greater than both the RALP and the RBP. This is full withdrawal of the contract. - - If the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP, and the total RBA is reduced to zero. AT DEATH: If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may elect to take the death benefit as a lump sum under the terms of the contract (see "Benefits in Case of Death") or the annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option" heading below). If the contract value equals zero and the death benefit becomes payable, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person dies and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person is still alive and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the later of the death of the covered person or the RBA equals zero. - - If the covered person is still alive and the RBA equals zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the death of the covered person. - - If the covered person dies and the RBA equals zero, the benefit terminates. No further payments will be made. CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing Ownership"), the covered person will be redetermined and is the covered person referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP and RALP will be reset as follows: - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be established on the contract anniversary following the date the covered person reaches age 65. The ALP will be set equal to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the anniversary date occurs during the waiting period and prior to a withdrawal, the RALP will be set to the lesser of the ALP or total purchase payments multiplied by 6%. If the anniversary date occurs at any other time, the RALP will be set to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be established on the ownership change date. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be set equal to the ALP less all prior withdrawals made in the current contract year but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be reset to zero for the period of time beginning with the ownership change date and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the time period ends during the waiting period and prior to any withdrawals, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the time period ends at any other time, the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be reset on the ownership change date. The ALP will be reset to the lesser of the current ALP or 6% of the contract value. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be reset to the ALP less all prior withdrawals made in the current contract year but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the ownership change. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit for Life rider. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity payout option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 117 This option may not be available if the contract is issued to qualify under Section 403 or 408 of the Code, as amended. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed under the mortality table we then use to determine current life annuity purchase rates under the contract to which this rider is attached. This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the future schedule of GBPs if necessary to comply with the Code. RIDER TERMINATION The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by you or us except as follows: 1. Annuity payouts under an annuity payout plan will terminate the rider. 2. Termination of the contract for any reason will terminate the rider. EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 60. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 7,000 92,000 100,000 93,000 7,000 0 1 0 0 91,000 100,000 93,000 7,000 7,000 1.5 0 7,000 83,000 100,000 86,000 7,000 0 2 0 0 81,000 100,000 86,000 7,000 7,000 5 0 0 75,000 100,000 86,000 7,000 7,000 5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 6 0 0 69,000 100,000 80,840 7,000 7,000 6.5 0 7,000 62,000 100,000 73,840 7,000 0 7 0 0 70,000 100,000 73,840 7,000 7,000 7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 8 0 0 55,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 1.5 N/A N/A 2 N/A N/A 5 5,160(1) 5,160(1) 5.5 5,160 0 6 5,160 5,160 6.5 3,720(2) 0 7 4,200 4,200 7.5 3,060(3) 0 8 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your death or the RBA is reduced to zero. (1) The ALP and RALP are established on the contract anniversary date following the date the covered person reaches age 65. (2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the basic withdrawal benefit and the $4,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 118 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 65. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $7,500 each year until the later of your death or the RBA is reduced to zero. (1) The annual step-up has not been applied to the RBP or RALP because any withdrawal after step up during the waiting period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the waiting period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the waiting period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 119 APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT RIDER GUARANTOR WITHDRAWAL BENEFIT RIDER We have offered two versions of the Guarantor Withdrawal Benefit that have been referred to in previous disclosure as Rider A and Rider B. The description of the Guarantor Withdrawal Benefit in this section applies to both Rider A and Rider B, unless noted otherwise. Rider B is no longer available for purchase. The Guarantor Withdrawal Benefit is an optional benefit that was offered for an additional annual charge if(1): RIDER A - - you purchase(d) your contract on or after April 30, 2005 in those states where the SecureSource rider and/or the Guarantor Withdrawal Benefit for Life rider are/were not available; - - you and the annuitant were 79 or younger on the date the contract was issued. RIDER B (NO LONGER AVAILABLE FOR PURCHASE) - - you purchased your contract prior to April 29, 2005; - - the rider was available in your state; and - - you and the annuitant were 79 or younger on the date the contract was issued. (1) The Guarantor Withdrawal Benefit is not available under an inherited qualified annuity. You must elect the Guarantor Withdrawal Benefit rider when you purchase your contract (original rider). The original rider you receive at contract issue offers an elective annual step-up and any withdrawal after a step up during the first three years is considered an excess withdrawal, as described below. The rider effective date of the original rider is the contract issue date. We will offer you the option of replacing the original rider with a new Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The enhanced rider offers an automatic annual step-up and a withdrawal after a step up during the first three years is not necessarily an excess withdrawal, as described below. The effective date of the enhanced rider will be the contract issue date except for the automatic step-up which will apply to contract anniversaries that occur after you accept the enhanced rider. The descriptions below apply to both the original and enhanced riders unless otherwise noted. The Guarantor Withdrawal Benefit initially provides a guaranteed minimum withdrawal benefit that gives you the right to take limited partial withdrawals in each contract year that over time will total an amount equal to your purchase payments. Certain withdrawals and step ups, as described below, can cause the initial guaranteed withdrawal benefit to change. The guarantee remains in effect if your partial withdrawals in a contract year do not exceed the allowed amount. As long as your withdrawals in each contract year do not exceed the allowed amount, you will not be assessed a withdrawal charge. Under the original rider, the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third contract anniversary, as described below). Under the enhanced rider, the allowed amount is equal to 7% of purchase payments for the first three years, and the GBP in all other years. If you withdraw an amount greater than the allowed amount in a contract year, we call this an "excess withdrawal" under the rider. If you make an excess withdrawal under the rider: - - withdrawal charges, if applicable, will apply only to the amount of the withdrawal that exceeds the allowed amount; - - the guaranteed benefit amount will be adjusted as described below; and - - the remaining benefit amount will be adjusted as described below. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Withdrawals"). Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. If you select the Guarantor Withdrawal Benefit rider, you may not select an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. If you exercise the annual step up election (see "Elective Step Up" and "Annual Step Up" below), the special spousal continuation step up election (see "Spousal Continuation and Special Spousal Continuation Step Up" below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). - -------------------------------------------------------------------------------- 120 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS You should consider whether the Guarantor Withdrawal Benefit is appropriate for you because: - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the Portfolio Navigator program if you purchase a contract on or after May 1, 2006 with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). If you selected this Guarantor Withdrawal Benefit rider before May 1, 2006, you must participate in the asset allocation program (see "Appendix J: Asset Allocation Program for Contracts Purchased Before May 1, 2006"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider. - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than GBP under this rider. Any amount you withdraw in a contract year under the contract's TFA provision that exceeds the GBP is subject to the excess withdrawal processing for the GBA and RBA described below. - - RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the Guarantor Withdrawal Benefit rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. You should consult your tax advisor if you have any questions about the use of this rider in your tax situation: - - TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income; - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD. If you make a withdrawal in any contract year to satisfy an RMD, this may constitute an excess withdrawal, as defined below, and the excess withdrawal processing described below will apply. Under the terms of the enhanced rider, we allow you to satisfy the RMD based on the life expectancy RMD for your contract and the requirements of the Code and regulations in effect when you purchase your contract, without the withdrawal being treated as an excess withdrawal. It is our current administrative practice to make the same accommodation under the original rider, however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is greater than the RBP from the beginning of the current contract year, an Additional Benefit Amount (ABA) will be set equal to that portion of your ALERMDA that exceeds the RBP. (2) Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. (3) Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce any ABA. These withdrawals will not be considered excess withdrawals as long as they do not exceed the remaining ABA. (4) Once the ABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals and will initiate the excess withdrawal processing described in the Guarantor Withdrawal Benefit rider. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the Guarantor Withdrawal Benefit rider is attached as of the date we make the determination; and - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 121 (3) based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable, on the effective date of this prospectus to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a Simplified Employee Pension plan (Section 408(k)); 4. a tax-sheltered annuity rollover (Section 403(b)). We reserve the right to discontinue our administrative practice described above and will give you 30 days' written notice of any such change. In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your RBP amount and may result in the reduction of your GBA and RBA as described under the excess withdrawal provision of the rider. Please note that RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not subject to excess withdrawal processing. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g. ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit rider may be of limited value to you. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION. GUARANTEED BENEFIT AMOUNT The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment, adjusted for subsequent purchase payments, partial withdrawals in excess of the GBP, and step ups. The maximum GBA is $5,000,000. THE GBA IS DETERMINED AT THE FOLLOWING TIMES: - - At contract issue -- the GBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. The total GBA when an additional purchase payment is added is the sum of the individual GBAs immediately prior to the receipt of the additional purchase payment, plus the GBA associated with the additional purchase payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: (a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the GBA remains unchanged. Note that if the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; (b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: (c) under the original rider in a contract year after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: - -------------------------------------------------------------------------------- 122 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS GBA EXCESS WITHDRAWAL PROCEDURE The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT The remaining benefit amount (RBA) at any point is the total guaranteed amount available for future partial withdrawals. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES: - - At contract issue -- the RBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own RBA equal to the amount of the purchase payment. The total RBA when an additional purchase payment is added is the sum of the individual RBAs immediately prior to the receipt of the additional purchase payment, plus the RBA associated with the additional payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: (a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the RBA becomes the RBA immediately prior to the partial withdrawal, less the partial withdrawal. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; (b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; (c) under the original rider after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; RBA EXCESS WITHDRAWAL PROCEDURE The RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, any reduction of the RBA will be taken out of each payment's RBA in the following manner: The withdrawal amount up to the remaining benefit payment (defined below) is taken out of each RBA bucket in proportion to its remaining benefit payment at the time of the withdrawal; and the withdrawal amount above the remaining benefit payment and any amount determined by the excess withdrawal procedure are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT Under the original rider, the GBP is the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third anniversary. Under the enhanced rider, the GBP is the withdrawal amount that you are entitled to take each contract year after the third anniversary until the RBA is depleted. RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA. Under both the original and enhanced riders, if you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. RIDER B: Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. REMAINING BENEFIT PAYMENT Under the original rider, at the beginning of each contract year, the remaining benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 123 Under the enhanced rider, at the beginning of each contract year, during the first three years and prior to any withdrawal, the RBP for each purchase payment is set equal to that purchase payment, multiplied by 7%. At the beginning of any other contract year, each individual RBP is set equal to each individual GBP. Each additional purchase payment has its own RBP established equal to that payment's GBP. The total RBP is equal to the sum of the individual RBPs. Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY) You have the option to increase the RBA, the GBA, the GBP and the RBP beginning with the first contract anniversary. An annual elective step up option is available for 30 days after the contract anniversary. The elective step up option allows you to step up the remaining benefit amount and guaranteed benefit amount to the contract value on the valuation date we receive your written request to step up. The elective step up is subject to the following rules: - - if you do not take any withdrawals during the first three years, you may step up annually beginning with the first contract anniversary; - - if you take any withdrawals during the first three years, the annual elective step up will not be available until the third contract anniversary; - - if you step up but then take a withdrawal prior to the third contract anniversary, you will lose any prior step ups and the withdrawal will be considered an excess withdrawal subject to the GBA and RBA excess withdrawal processing discussed under the "Guaranteed Benefit Amount" and "Remaining Benefit Amount" headings above; and - - you may take withdrawals on or after the third contract anniversary without reversal of previous step ups. You may elect a step up only once each contract year within 30 days after the contract anniversary. Once a step up has been elected, another step up may not be elected until the next contract anniversary. RIDER A: You may only step up if your contract value on the valuation date we receive your written request to step up is greater than the RBA. The elective step up will be determined as follows: - - The effective date of the elective step up is the valuation date we receive your written request to step up. - - The RBA will be increased to an amount equal to the contract value on the valuation date we receive your written request to step up. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract value on the valuation date we receive your written request to step up. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up less any withdrawals made during that contract year. RIDER B: You may only step up if your contract anniversary value is greater than the RBA. The elective step up will be determined as follows: - - The effective date of the elective step up is the contract anniversary. - - The RBA will be increased to an amount equal to the contract anniversary value. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract anniversary value. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up. ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY) Beginning with the first contract anniversary after you accept the enhanced rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A step up does not create contract value, guarantee performance of any investment options, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP and RBP, and may extend the payment period or increase allowable payment. The annual step up is subject to the following rules: - - The annual step up is available when the RBA would increase on the step up date. The applicable step up date depends on whether the annual step up is applied on an automatic or elective basis. - -------------------------------------------------------------------------------- 124 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - If the application of the step does not increase the rider charge, the annual step up will be automatically applied to your contract and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the first three years, any previously applied step ups will be reversed and the annual step up will not be available until the third contract anniversary; - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. The annual step up will be determined as follows: - - The RBA will be increased to an amount equal to the contract value on the step up date. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the annual step up; or (b) the contract value on the step up date. - - The GBP will be calculated as described earlier, but based on the increased GBA and RBA. - - The RBP will be reset as follows: (a) Prior to any withdrawals during the first three years, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made during the current contract year, but never less than zero. SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP If a surviving spouse elects to continue the contract, this rider also continues. The spousal continuation step up is in addition to the elective step up or the annual step up. When a spouse elects to continue the contract, any rider feature processing particular to the first three years of the contract as described in this prospectus no longer applies. The GBA, RBA and GBP values remain unchanged. The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. RIDER A: A surviving spouse may elect a spousal continuation step up by written request within 30 days following the spouse's election to continue the contract. This step up may be made even if withdrawals have been taken under the contract during the first three years. Under this step up, the RBA will be reset to the greater of the RBA or the contract value on the valuation date we receive the spouse's written request to step up; the GBA will be reset to the greater of the GBA or the contract value on the same valuation date. If a spousal continuation step up is elected and we have increased the charge for the rider for new contract owners, the spouse will pay the charge that is in effect on the valuation date we receive the written request to step up. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. RIDER B: A spousal continuation step up occurs automatically when the spouse elects to continue the contract. The rider charge will not change upon this automatic step up. Under this step up, the RBA will be reset to the greater of the RBA on the valuation date we receive the spouse's written request to continue the contract and the death benefit that would otherwise have been paid; the GBA will be reset to the greater of the GBA on the valuation date we receive the spouse's written request to continue the contract and the death benefit that would otherwise have been paid. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 125 no less frequent than annually. If, at the death of the owner, total payments have been made for less than the RBA, the remaining payments will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. IF CONTRACT VALUE REDUCES TO ZERO If the contract value reduces to zero and the RBA remains greater than zero, the following will occur: - - you will be paid according to the annuity payout option described above; - - we will no longer accept additional purchase payments; - - you will no longer be charged for the rider; - - any attached death benefit riders will terminate; and - - the death benefit becomes the remaining payments under the annuity payout option described above. If the contract value falls to zero and the RBA is depleted, the Guarantor(SM) Withdrawal Benefit rider and the contract will terminate. EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B) ASSUMPTION: - - You purchase the contract with a payment of $100,000. The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000 The Guaranteed Benefit Payment (GBP) equals 7% of your GBA: 0.07 X $100,000 = $ 7,000 The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000 On the first contract anniversary the contract value grows to $110,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $110,000 The GBA equals 100% of your contract value: $110,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $110,000 = $ 7,700 During the fourth contract year you decide to take a partial withdrawal of $7,700. You took a partial withdrawal equal to your GBP, so your RBA equals the prior RBA less the amount of the partial withdrawal: $110,000 - $7,700 = $102,300 The GBA equals the GBA immediately prior to the partial withdrawal: $110,000 The GBP equals 7% of your GBA: 0.07 X $110,000 = $ 7,700 On the fourth contract anniversary you make an additional purchase payment of $50,000. The new RBA for the contract is equal to your prior RBA plus 100% of the additional purchase payment: $102,300 + $50,000 = $152,300 The new GBA for the contract is equal to your prior GBA plus 100% of the additional purchase payment: $110,000 + $50,000 = $160,000 The new GBP for the contract is equal to your prior GBP plus 7% of the additional purchase payment: $7,700 + $3,500 = $ 11,200 On the fifth contract anniversary your contract value grows to $200,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $200,000 The GBA equals 100% of your contract value: $200,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $200,000 = $ 14,000
- -------------------------------------------------------------------------------- 126 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS During the seventh contract year your contract value grows to $230,000. You decide to take a partial withdrawal of $20,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 OR (2) your prior RBA less the amount of the partial withdrawal. $200,000 - $20,000 = $180,000 Reset RBA = lesser of (1) or (2) = $180,000 The GBA gets reset to the lesser of: (1) your prior GBA $200,000 OR (2) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 Reset GBA = lesser of (1) or (2) = $200,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $200,000 = $ 14,000 During the eight contract year your contract value falls to $175,000. You decide to take a partial withdrawal of $25,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 OR (2) your prior RBA less the amount of the partial withdrawal. $180,000 - $25,000 = $155,000 Reset RBA = lesser of (1) or (2) = $150,000 The GBA gets reset to the lesser of: (1) your prior GBA; $200,000 OR (2) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 Reset GBA = lesser of (1) or (2) = $150,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $150,000 = $ 10,500
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 127 APPENDIX L : INCOME ASSURER BENEFIT RIDERS INCOME ASSURER BENEFIT RIDERS The following three optional Income Assurer Benefit riders were available under your contract if you purchased your contract prior to May 1, 2007. These riders are no longer available for purchase. - - Income Assurer Benefit - MAV; - - Income Assurer Benefit - 5% Accumulation Benefit Base; or - - Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. The Income Assurer Benefit riders are intended to provide you with a guaranteed minimum income regardless of the volatility inherent in the investments in the subaccounts. The riders benchmark the contract growth at each anniversary against several comparison values and set the guaranteed income benefit base (described below) equal to the largest value. The guaranteed income benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the rider. If the guaranteed income benefit base is greater than the contract value, the guaranteed income benefit base may provide a higher annuity payout level than is otherwise available. However, the riders use guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we may apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the riders may be less than the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the riders, you will receive the higher standard payout option. The guaranteed income benefit base does not create contract value or guarantee the performance of any investment option. The general information in this section applies to each Income Assurer Benefit rider. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT RIDERS IN THE SECTIONS BELOW: GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value that will be used to determine minimum annuity payouts when the rider is exercised. It is an amount we calculate, depending on the Income Assurer Benefit rider you choose, that establishes a benefit floor. When the benefit floor amount is greater than the contract value, there may be a higher annuitization payout than if you annuitized your contract without the Income Assurer Benefit. Your annuitization payout will never be less than that provided by your contract value. EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your contract under contract data and will include the RiverSource Variable Portfolio - Cash Management Fund and, if available under your contract, the GPAs and/or the one-year fixed account. Excluded investment options are not used in the calculation of this riders' variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. EXCLUDED PAYMENTS: These are purchase payments paid in the last five years before exercise of the benefit, which we reserve the right to exclude from the calculation of the guaranteed income benefit base. PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the product of (a) times (b) where: (a) is the ratio of the amount of the partial withdrawal (including any withdrawal charges or MVA) to the contract value on the date of (but prior to) the partial withdrawal; and (b) is the benefit on the date of (but prior to) the partial withdrawal. PROTECTED INVESTMENT OPTIONS: All investment options available under this contract that are not defined as Excluded Investment options under contract data are known as protected investment options for purposes of this rider and are used in the calculation of the variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. WAITING PERIOD: This rider can only be exercised after the expiration of a 10-year waiting period. We reserve the right to restart the waiting period if you elect to change your model portfolio to one that causes the rider charge to increase. THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT: EXERCISING THE RIDER Rider exercise conditions are: - - you may only exercise the Income Assurer Benefit rider within 30 days after any contract anniversary following the expiration of the waiting period; - - the annuitant on the retirement date must be between 50 to 86 years old; and - -------------------------------------------------------------------------------- 128 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - you can only take an annuity payment in one of the following annuity payout plans: Plan A -- Life Annuity - No Refund; Plan B -- Life Annuity with Ten or Twenty Years Certain; Plan D -- Joint and Last Survivor Life Annuity - No Refund; Joint and Last Survivor Life Annuity with Twenty Years Certain; or Plan E -- Twenty Years Certain. After the expiration of the waiting period, the Income Assurer Benefit rider guarantees a minimum amount of fixed annuity lifetime income during annuitization or the option of variable annuity payouts with a guaranteed minimum initial payout or a combination of the two options. If your contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time, the contract and all its riders, including this rider, will terminate without value and no benefits will be paid on account of such termination. EXCEPTION: if you are still living, and the annuitant is between 50 and 86 years old, an amount equal to the guaranteed income benefit base will be paid to you under the annuity payout plan and frequency that you select, based upon the fixed or variable annuity payouts described above. The guaranteed income benefit base will be calculated and annuitization will occur at the following times. - - If the contract value falls to zero during the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur on the valuation date after the expiration of the waiting period, or when the annuitant attains age 50 if later. - - If the contract value falls to zero after the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur immediately, or when the annuitant attains age 50 if later. Fixed annuity payouts under this rider will occur at the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" with 100% Projection Scale G and a 2.0% interest rate for contracts purchased on or after May 1, 2006 and if available in your state.(1) These are the same rates used in Table B of the contract (see "The Annuity Payout Period -- Annuity Tables"). Your annuity payouts remain fixed for the lifetime of the annuity payout period. First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your variable annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your variable annuity payout will be unchanged from the previous variable annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous variable annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous variable annuity payout. (1) For all other contracts, the guaranteed annuity purchase rates are based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale G and a 2.0% interest rate. TERMINATING THE RIDER Rider termination conditions are: - - you may terminate the rider within 30 days following the first anniversary after the effective date of the rider; - - you may terminate the rider any time after the expiration of the waiting period; - - the rider will terminate on the date you make a full withdrawal from the contract, or annuitization begins, or on the date that a death benefit is payable; and - - the rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday, however, if you exercise the Income Assurer Benefit(SM) rider before this time, your benefits will continue according to the annuity payout plan you have selected. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 129 YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW: INCOME ASSURER BENEFIT - MAV The guaranteed income benefit base for the Income Assurer Benefit - MAV is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the maximum anniversary value. MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus proportionate adjustments for partial withdrawals. Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by proportionate adjustments for partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments; or 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the MAV, less market value adjusted excluded payments. MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded purchase payment multiplied by the ratio of the current contract value over the estimated contract value on the anniversary prior to such purchase payment. The estimated contract value at such anniversary is calculated by assuming that payments, any credits, and partial withdrawals occurring in a contract year take place at the beginning of the year for that anniversary and every year after that to the current contract year. INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit - 5% Accumulation Benefit Base is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor. 5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded investment options plus the variable account floor. The Income Assurer Benefit 5% variable account floor is calculated differently and is not the same value as the death benefit 5% variable account floor. The variable account floor is zero from the effective date of this rider and until the first contract anniversary after the effective date of this rider. On the first contract anniversary after the effective date of this rider the variable account floor is: - - the total purchase payments made to the protected investment options minus adjusted partial withdrawals and transfers from the protected investment options; plus - - an amount equal to 5% of your initial purchase payment allocated to the protected investment options. On any day after the first contract anniversary following the effective date of this rider, when you allocate additional purchase payments to or withdraw or transfer amounts from the protected investment options, we adjust the variable account floor by adding the additional purchase payment and subtracting adjusted withdrawals and adjusted transfers. On each subsequent contract anniversary after the first anniversary of the effective date of this rider, prior to the earlier of your or the annuitant's 81st birthday, we increase the variable account floor by adding the amount ("roll-up amount") equal to 5% of the prior contract anniversary's variable account floor. The amount of purchase payment withdrawn from or transferred between the excluded investment options and the protected investment options is calculated as (a) times (b) where: (a) is the amount of purchase payment in the investment options being withdrawn or transferred on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount of the transfer or withdrawal to the value in the investment options being withdrawn or transferred on the date of (but prior to) the current withdrawal or transfer. - -------------------------------------------------------------------------------- 130 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The roll-up amount prior to the first anniversary is zero. Also, the roll-up amount on every anniversary after the earlier of your or the annuitant's 81st birthday is zero. Adjusted withdrawals and adjusted transfers for the variable account floor are equal to the amount of the withdrawal or transfer from the protected investment options as long as the sum of the withdrawals and transfers from the protected investment options in a contract year do not exceed the roll-up amount from the prior contract anniversary. If the current withdrawal or transfer from the protected investment options plus the sum of all prior withdrawals and transfers made from the protected investment options in the current policy year exceeds the roll-up amount from the prior contract anniversary we will calculate the adjusted withdrawal or adjusted transfer for the variable account floor as the result of (a) plus [(b) times (c)] where: (a) is the roll-up amount from the prior contract anniversary less the sum of any withdrawals and transfers made from the protected investment options in the current policy year but prior to the current withdrawal or transfer. However, (a) can not be less than zero; and (b) is the variable account floor on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a); and (c) is the ratio of [the amount of the current withdrawal (including any withdrawal charges or MVA) or transfer from the protected investment options less the value from (a)] to [the total in the protected investment options on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a)]. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments (described above); or 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor, less 5% adjusted excluded payments. 5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment and any credit accumulated at 5% for the number of full contract years they have been in the contract. INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base is the greater of these four values: 1. the contract value; 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; 3. the MAV (described above); or 4. the 5% variable account floor (described above). IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF: 1. contract value less the market value adjusted excluded payments (described above); 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; 3. the MAV, less market value adjusted excluded payments (described above); or 4. the 5% Variable Account Floor, less 5% adjusted excluded payments (described above). EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS The purpose of these following examples is to illustrate the operation of the Income Assurer Benefit Riders. The examples compare payouts available under the contract's standard annuity payout provisions with annuity payouts available under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts (referred to in the riders as "protected investment options") and the fees and charges that apply to your contract. For each of the riders, we provide two annuity payout plan comparisons based on the hypothetical contract values we have assumed. The first comparison assumes that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The second comparison assumes that you select annuity payout Plan D, Joint and Last Survivor Annuity - No Refund. Remember that the riders require you to choose a Portfolio Navigator asset allocation model portfolio. The riders are intended to offer protection against market volatility in the subaccounts (protected investment options). Some Portfolio Navigator model - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 131 portfolios include protected investment options and excluded investment options (RiverSource Variable Portfolio - Cash Management Fund, and if available under the contract, GPAs and/or the one-year fixed account). Excluded investment options are not included in calculating the 5% variable account floor under the Income Assurer Benefit - 5% Accumulation Benefit Base rider and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base riders. Because the examples which follow are based on hypothetical contract values, they do not factor in differences in Portfolio Navigator model portfolios. ASSUMPTIONS: - - You purchase the contract during the 2006 calendar year with a payment of $100,000; and - - you invest all contract value in the subaccounts (protected investment options); and - - you make no additional purchase payments, partial withdrawals or changes in model portfolio; and - - the annuitant is male and age 55 at contract issue; and - - the joint annuitant is female and age 55 at contract issue. EXAMPLE -- INCOME ASSURER BENEFIT - MAV Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
ASSUMED MAXIMUM GUARANTEED CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE - MAV(2) - ---------------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $108,000 $108,000 2 125,000 none 125,000 125,000 3 132,000 none 132,000 132,000 4 150,000 none 150,000 150,000 5 85,000 none 150,000 150,000 6 121,000 none 150,000 150,000 7 139,000 none 150,000 150,000 8 153,000 none 153,000 153,000 9 140,000 none 153,000 153,000 10 174,000 none 174,000 174,000 11 141,000 none 174,000 174,000 12 148,000 none 174,000 174,000 13 208,000 none 208,000 208,000 14 198,000 none 208,000 208,000 15 203,000 none 208,000 208,000 - ----------------------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- 132 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - -------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 12 148,000 691.16 692.64 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 203,000 1,025.15 1,027.18 - -------------------------------------------------------------------------- IAB - MAV PROVISIONS ---------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - MAV PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------- ---------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 174,000 791.70 793.44 12 174,000 812.58 814.32 13 208,000 996.32 998.40 14 208,000 1,023.36 1,025.44 15 208,000 1,050.40 1,052.48 - --------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS ----------------------------------------------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2) - ------------------------------------------------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 $174,000 $629.88 11 141,000 521.70 516.06 174,000 643.80 12 148,000 559.44 553.52 174,000 657.72 13 208,000 807.04 796.64 208,000 807.04 14 198,000 786.06 778.14 208,000 825.76 15 203,000 826.21 818.09 208,000 846.56 - ------------------------------------------------------------------------------------------------------------------- IAB - MAV PROVISIONS --------------------- CONTRACT OLD TABLE(1) ANNIVERSARY PLAN D - LAST AT EXERCISE SURVIVOR NO REFUND(2) - ----------- --------------------- 10 $622.92 11 636.84 12 650.76 13 796.64 14 817.44 15 838.24 - -------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 133 EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME ASSUMED BENEFIT BASE - CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2) - ------------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $105,000 $108,000 2 125,000 none 110,250 125,000 3 132,000 none 115,763 132,000 4 150,000 none 121,551 150,000 5 85,000 none 127,628 127,628 6 121,000 none 134,010 134,010 7 139,000 none 140,710 140,710 8 153,000 none 147,746 153,000 9 140,000 none 155,133 155,133 10 174,000 none 162,889 174,000 11 141,000 none 171,034 171,034 12 148,000 none 179,586 179,586 13 208,000 none 188,565 208,000 14 198,000 none 197,993 198,000 15 203,000 none 207,893 207,893 - -------------------------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - -------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 12 148,000 691.16 692.64 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 203,000 1,025.15 1,027.18 - -------------------------------------------------------------------------- IAB - 5% RF PROVISIONS ---------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - 5% RF PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------- ---------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 171,034 778.20 779.91 12 179,586 838.66 840.46 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 207,893 1,049.86 1,051.94 - --------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. - -------------------------------------------------------------------------------- 134 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D -- Joint and Last Survivor Life Annuity -- No Refund would be:
STANDARD PROVISIONS -------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ---------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 11 141,000 521.70 516.06 12 148,000 559.44 553.52 13 208,000 807.04 796.64 14 198,000 786.06 778.14 15 203,000 826.21 818.09 - ---------------------------------------------------------------------------- IAB - 5% RF PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - 5% RF PLAN D - LAST PLAN D - LAST AT EXERCISE BENEFIT BASE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ----------- ------------------------------------------------------------ 10 $174,000 $629.88 $622.92 11 171,034 632.83 625.98 12 179,586 678.83 671.65 13 208,000 807.04 796.64 14 198,000 786.06 778.14 15 207,893 846.12 837.81 - ----------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th, 13th or the 14th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME BENEFIT BASE - GREATER OF ASSUMED MAXIMUM MAV OR 5% CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2) - --------------------------------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $108,000 $105,000 $108,000 2 125,000 none 125,000 110,250 125,000 3 132,000 none 132,000 115,763 132,000 4 150,000 none 150,000 121,551 150,000 5 85,000 none 150,000 127,628 150,000 6 121,000 none 150,000 134,010 150,000 7 139,000 none 150,000 140,710 150,000 8 153,000 none 153,000 147,746 153,000 9 140,000 none 153,000 155,133 155,133 10 174,000 none 174,000 162,889 174,000 11 141,000 none 174,000 171,034 174,000 12 148,000 none 174,000 179,586 179,586 13 208,000 none 208,000 188,565 208,000 14 198,000 none 208,000 197,993 208,000 15 203,000 none 208,000 207,893 208,000 - ---------------------------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 135 PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - -------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 12 148,000 691.16 692.64 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 203,000 1,025.15 1,027.18 - -------------------------------------------------------------------------- IAB - MAX PROVISIONS ---------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - MAX PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------- ---------------------------------------------------------- 10 $ 174,000 $ 772.56 $ 774.30 11 174,000 791.70 793.44 12 179,586 838.66 840.46 13 208,000 996.32 998.40 14 208,000 1,023.36 1,025.44 15 208,000 1,050.40 1,052.48 - --------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS -------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ---------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 11 141,000 521.70 516.06 12 148,000 559.44 553.52 13 208,000 807.04 796.64 14 198,000 786.06 778.14 15 203,000 826.21 818.09 - ---------------------------------------------------------------------------- IAB -- MAX PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - MAX PLAN D - LAST PLAN D - LAST AT EXERCISE BENEFIT BASE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ----------- ------------------------------------------------------------ 10 $174,000 $629.88 $622.92 11 174,000 643.80 636.84 12 179,586 678.83 671.65 13 208,000 807.04 796.64 14 208,000 825.76 817.44 15 208,000 846.56 838.24 - ----------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- 136 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX M: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (07/31/2002) Accumulation unit value at beginning of period $1.56 $1.41 $1.36 $1.24 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.56 $1.56 $1.41 $1.36 $1.24 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,554 2,791 3,249 1,479 220 70 -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (03/01/2002) Accumulation unit value at beginning of period $1.16 $1.12 $1.05 $1.00 $0.79 $1.00 -- -- Accumulation unit value at end of period $1.28 $1.16 $1.12 $1.05 $1.00 $0.79 -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,110 3,472 324 329 238 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.52 $1.42 $1.25 $0.94 $1.00 -- -- Accumulation unit value at end of period $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 -- -- Number of accumulation units outstanding at end of period (000 omitted) 133 147 153 163 29 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.03 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 9 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.04 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13,924 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.24 $1.14 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.33 $1.24 $1.14 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 808 912 1,051 427 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED SHARES PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.09 $1.07 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.19 $1.09 $1.07 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.50 $1.40 $1.38 $1.33 $0.94 $1.00 -- -- Accumulation unit value at end of period $1.76 $1.50 $1.40 $1.38 $1.33 $0.94 -- -- Number of accumulation units outstanding at end of period (000 omitted) 107 16 16 16 15 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.60 $1.39 $1.35 $1.24 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 154 167 189 109 52 8 -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.82 $1.37 $1.20 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.82 $1.37 $1.20 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 21,915 15,378 8,725 1,580 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.05 $1.05 $1.00 -- -- -- -- Accumulation unit value at end of period $1.13 $1.05 $1.05 $1.05 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 23,568 25,472 20,290 3,919 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INTERNATIONAL, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.53 $1.24 $1.12 $1.00 -- -- -- -- Accumulation unit value at end of period $1.77 $1.53 $1.24 $1.12 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 7 5 -- -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 137
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.90 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 9 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.01 $1.06 $1.06 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.01 $1.06 $1.06 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 8,361 23,813 6,935 1,154 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.31 $1.12 $1.09 $1.00 -- -- -- -- Accumulation unit value at end of period $1.22 $1.31 $1.12 $1.09 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 74 88 26 18 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA HIGH YIELD FUND, VARIABLE SERIES, CLASS B (04/28/2006) Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- -- -- -- Accumulation unit value at end of period $1.07 $1.07 -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,145 9,940 -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA MARSICO GROWTH FUND, VARIABLE SERIES, CLASS A (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.12 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 30,376 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES FUND, VARIABLE SERIES, CLASS B (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.13 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 17 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA SMALL CAP VALUE FUND, VARIABLE SERIES, CLASS B (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.21 $1.17 $1.00 -- -- -- -- Accumulation unit value at end of period $1.36 $1.42 $1.21 $1.17 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 20,212 23 4 2 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.10 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 135 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.28 $1.21 $1.13 $1.00 -- -- -- -- Accumulation unit value at end of period $1.28 $1.28 $1.21 $1.13 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 19 22 15 13 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.07 $1.05 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.07 $1.05 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,154 7,113 2,763 500 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.20 $1.05 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.26 $1.20 $1.05 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1 1 1 1 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.09 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 18 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.51 $1.25 $1.14 $1.00 -- -- -- -- Accumulation unit value at end of period $1.54 $1.51 $1.25 $1.14 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 115 87 57 9 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.98 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 16,330 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.58 $1.38 $1.22 $0.97 $1.00 -- -- Accumulation unit value at end of period $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 -- -- Number of accumulation units outstanding at end of period (000 omitted) 43,300 45,089 16,531 3,067 152 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 138 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.04 $0.99 $0.96 $0.94 $0.73 $1.00 -- -- Accumulation unit value at end of period $1.29 $1.04 $0.99 $0.96 $0.94 $0.73 -- -- Number of accumulation units outstanding at end of period (000 omitted) 305 368 324 327 68 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.06 $1.03 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.08 $1.06 $1.03 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 40,253 12,953 8,188 1,336 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 $1.00 -- Accumulation unit value at end of period $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 -- Number of accumulation units outstanding at end of period (000 omitted) 11,091 7,570 3,100 1,208 722 290 13 -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.28 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.71 $1.49 $1.28 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,416 4,843 4,036 1,573 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 $1.00 Accumulation unit value at end of period $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 3,051 2,743 2,554 2,119 1,118 777 413 157 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.28 $1.11 $1.09 $1.00 -- -- -- -- Accumulation unit value at end of period $1.22 $1.28 $1.11 $1.09 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 160 63 38 14 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $0.57 $0.54 $0.52 $0.48 $0.35 $0.50 $0.60 $1.00 Accumulation unit value at end of period $0.63 $0.57 $0.54 $0.52 $0.48 $0.35 $0.50 $0.60 Number of accumulation units outstanding at end of period (000 omitted) 1,427 1,612 1,719 1,992 1,273 1,008 617 120 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $1.75 $1.50 $1.38 $1.25 $1.01 $1.17 $1.11 $1.00 Accumulation unit value at end of period $1.78 $1.75 $1.50 $1.38 $1.25 $1.01 $1.17 $1.11 Number of accumulation units outstanding at end of period (000 omitted) 2,787 9,197 2,844 3,112 870 324 24 6 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.11 $1.16 $1.00 -- -- -- -- Accumulation unit value at end of period $1.34 $1.23 $1.11 $1.16 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,814 23,082 7,734 1,493 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.44 $1.20 $1.12 $1.00 -- -- -- -- Accumulation unit value at end of period $1.45 $1.44 $1.20 $1.12 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 510 376 226 177 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000) Accumulation unit value at beginning of period $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 $1.00 Accumulation unit value at end of period $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 Number of accumulation units outstanding at end of period (000 omitted) 11,638 9,377 4,128 1,284 550 386 321 60 - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000) Accumulation unit value at beginning of period $1.02 $0.92 $0.87 $0.77 $0.61 $0.79 $0.91 $1.00 Accumulation unit value at end of period $0.98 $1.02 $0.92 $0.87 $0.77 $0.61 $0.79 $0.91 Number of accumulation units outstanding at end of period (000 omitted) 587 636 956 816 519 391 286 102 - --------------------------------------------------------------------------------------------------------------------------------- JANUS ASPEN SERIES LARGE CAP GROWTH PORTFOLIO: SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 36,050 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE SMALL CAP GROWTH PORTFOLIO, CLASS I (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.03 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.16 $1.10 $1.07 $1.00 -- -- -- -- Accumulation unit value at end of period $1.27 $1.16 $1.10 $1.07 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 11 11 11 11 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 139
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.15 $1.04 $1.00 $0.96 $0.73 $1.00 -- -- Accumulation unit value at end of period $1.16 $1.15 $1.04 $1.00 $0.96 $0.73 -- -- Number of accumulation units outstanding at end of period (000 omitted) 141 155 155 138 107 1 -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.28 $1.16 $1.15 $1.06 $0.93 $1.00 -- -- Accumulation unit value at end of period $1.30 $1.28 $1.16 $1.15 $1.06 $0.93 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,039 1,095 1,130 1,184 348 7 -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $2.13 $1.65 $1.44 $1.13 $0.85 $1.00 -- -- Accumulation unit value at end of period $2.67 $2.13 $1.65 $1.44 $1.13 $0.85 -- -- Number of accumulation units outstanding at end of period (000 omitted) 103 85 72 63 37 9 -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.41 $1.33 $1.29 $1.24 $0.97 $1.00 -- -- Accumulation unit value at end of period $1.58 $1.41 $1.33 $1.29 $1.24 $0.97 -- -- Number of accumulation units outstanding at end of period (000 omitted) 7,383 8,562 6,720 1,419 14 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.64 $1.42 $1.27 $1.08 $0.77 $1.00 -- -- Accumulation unit value at end of period $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 -- -- Number of accumulation units outstanding at end of period (000 omitted) 831 683 680 562 136 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.92 $1.70 $1.58 $1.35 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 221 168 168 143 64 18 -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.34 $1.27 $1.26 $1.18 $1.03 $1.00 -- -- Accumulation unit value at end of period $1.44 $1.34 $1.27 $1.26 $1.18 $1.03 -- -- Number of accumulation units outstanding at end of period (000 omitted) 44,474 21,466 9,445 2,076 137 5 -- -- - --------------------------------------------------------------------------------------------------------------------------------- PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.03 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 37,481 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (05/01/2002) Accumulation unit value at beginning of period $1.15 $1.14 $1.02 $0.97 $0.84 $1.00 -- -- Accumulation unit value at end of period $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 -- -- Number of accumulation units outstanding at end of period (000 omitted) 136 162 175 177 188 73 -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000) Accumulation unit value at beginning of period $0.95 $0.75 $0.68 $0.60 $0.47 $0.58 $0.75 $1.00 Accumulation unit value at end of period $1.01 $0.95 $0.75 $0.68 $0.60 $0.47 $0.58 $0.75 Number of accumulation units outstanding at end of period (000 omitted) 1,511 1,624 1,716 1,786 1,760 1,350 1,244 708 - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.44 $1.25 $1.18 $1.00 -- -- -- -- Accumulation unit value at end of period $1.23 $1.44 $1.25 $1.18 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 355 5,948 89 5 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (03/03/2000) Accumulation unit value at beginning of period $0.57 $0.55 $0.50 $0.43 $0.33 $0.48 $0.73 $1.00 Accumulation unit value at end of period $0.58 $0.57 $0.55 $0.50 $0.43 $0.33 $0.48 $0.73 Number of accumulation units outstanding at end of period (000 omitted) 632 916 1,031 1,143 1,270 1,246 1,676 814 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND (05/01/2007) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.99 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 28,284 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.24 $1.08 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.29 $1.24 $1.08 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 7 8 8 2 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 140 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.55 $1.31 $1.26 $1.07 $0.79 $1.00 -- -- Accumulation unit value at end of period $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 -- -- Number of accumulation units outstanding at end of period (000 omitted) 11,900 10,097 9,125 1,935 72 20 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (03/01/2002) Accumulation unit value at beginning of period $1.00 $0.97 $0.96 $0.97 $0.99 $1.00 -- -- Accumulation unit value at end of period $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 -- -- Number of accumulation units outstanding at end of period (000 omitted) 5,476 2,192 1,151 399 76 -- -- -- *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.76% and 2.80%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.10 $1.07 $1.07 $1.04 $1.01 $1.00 -- -- Accumulation unit value at end of period $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 -- -- Number of accumulation units outstanding at end of period (000 omitted) 67,959 33,990 1,077 842 152 40 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 $1.00 Accumulation unit value at end of period $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 35,371 27,624 9,764 608 392 325 144 40 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- -- -- -- -- Accumulation unit value at end of period $1.09 $1.02 -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,149 26,599 -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.25 $1.14 $1.07 $1.00 -- -- -- -- Accumulation unit value at end of period $1.27 $1.25 $1.14 $1.07 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,798 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (03/03/2000) Accumulation unit value at beginning of period $1.25 $1.14 $1.12 $1.02 $0.83 $0.90 $0.87 $1.00 Accumulation unit value at end of period $1.25 $1.25 $1.14 $1.12 $1.02 $0.83 $0.90 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 6,703 8,935 4,144 855 325 80 90 8 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (06/01/2004) Accumulation unit value at beginning of period $1.18 $1.11 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.19 $1.18 $1.11 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 20,776 8,355 8 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2000) Accumulation unit value at beginning of period $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 $1.00 Accumulation unit value at end of period $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 Number of accumulation units outstanding at end of period (000 omitted) 14,409 15,807 17,584 7,616 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP VALUE FUND (04/30/2004) Accumulation unit value at beginning of period $1.32 $1.13 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.29 $1.32 $1.13 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2 3 3 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (08/30/2002) Accumulation unit value at beginning of period $1.40 $1.42 $1.31 $1.22 $1.02 $1.00 -- -- Accumulation unit value at end of period $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 597 708 735 335 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP VALUE FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.00 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 136 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.11 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.30 $1.26 $1.11 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 367 227 227 174 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/03/2000) Accumulation unit value at beginning of period $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 $1.00 Accumulation unit value at end of period $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 6,207 5,084 3,085 1,544 1,019 864 413 65 - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 141
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.02 $1.54 $1.17 $1.00 -- -- -- -- Accumulation unit value at end of period $2.75 $2.02 $1.54 $1.17 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10,106 9,010 5,172 1,070 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND) Accumulation unit value at beginning of period $1.56 $1.28 $1.14 $1.00 -- -- -- -- Accumulation unit value at end of period $1.73 $1.56 $1.28 $1.14 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 20 20 16 1 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.70 $1.49 $1.45 $1.26 $0.98 $1.00 -- -- Accumulation unit value at end of period $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 -- -- Number of accumulation units outstanding at end of period (000 omitted) 36,774 36,888 18,912 3,700 73 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.85 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 7,208 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.12 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 8 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $2.14 $1.58 $1.37 $1.00 -- -- -- -- Accumulation unit value at end of period $1.74 $2.14 $1.58 $1.37 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 553 510 443 177 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- WANGER INTERNATIONAL SMALL CAP* (04/30/2004) Accumulation unit value at beginning of period $1.94 $1.44 $1.20 $1.00 -- -- -- -- Accumulation unit value at end of period $2.21 $1.94 $1.44 $1.20 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10,278 8,406 4,181 858 -- -- -- -- *Effective June 1, 2008, the Fund will change its name to Wanger International. - --------------------------------------------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.26 $1.15 $1.00 -- -- -- -- Accumulation unit value at end of period $1.39 $1.34 $1.26 $1.15 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13,828 7,563 5,332 946 -- -- -- -- *Effective June 1, 2008, the Fund will change its name to Wanger USA. - ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.22 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.21 $1.22 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- 5 5 6 - ----------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.17 $1.13 $1.06 $1.00 Accumulation unit value at end of period $1.28 $1.17 $1.13 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.18 $1.10 $1.00 Accumulation unit value at end of period $1.45 $1.34 $1.18 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.02 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.04 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 22 -- -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 142 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- AIM V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.22 $1.13 $1.07 $1.00 Accumulation unit value at end of period $1.31 $1.22 $1.13 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- 1 1 1 - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED SHARES PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.18 $1.08 $1.06 $1.00 Accumulation unit value at end of period $1.18 $1.18 $1.08 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.15 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.29 $1.26 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.80 $1.36 $1.19 $1.00 Accumulation unit value at end of period $1.85 $1.80 $1.36 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 59 67 39 6 - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.03 $1.04 $1.05 $1.00 Accumulation unit value at end of period $1.11 $1.03 $1.04 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 141 224 126 22 - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INTERNATIONAL, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.50 $1.23 $1.11 $1.00 Accumulation unit value at end of period $1.74 $1.50 $1.23 $1.11 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.89 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.00 $1.06 $1.06 $1.00 Accumulation unit value at end of period $1.18 $1.00 $1.06 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 91 149 50 -- - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.09 $1.00 Accumulation unit value at end of period $1.20 $1.29 $1.11 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- COLUMBIA HIGH YIELD FUND, VARIABLE SERIES, CLASS B (04/28/2006) Accumulation unit value at beginning of period $1.06 $1.00 -- -- Accumulation unit value at end of period $1.06 $1.06 -- -- Number of accumulation units outstanding at end of period (000 omitted) 42 70 -- -- - ----------------------------------------------------------------------------------------------- COLUMBIA MARSICO GROWTH FUND, VARIABLE SERIES, CLASS A (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.12 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 43 -- -- -- - ----------------------------------------------------------------------------------------------- COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES FUND, VARIABLE SERIES, CLASS B (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.13 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- COLUMBIA SMALL CAP VALUE FUND, VARIABLE SERIES, CLASS B (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.20 $1.16 $1.00 Accumulation unit value at end of period $1.34 $1.40 $1.20 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 30 -- -- -- - ----------------------------------------------------------------------------------------------- CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.10 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 143
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.20 $1.13 $1.00 Accumulation unit value at end of period $1.25 $1.26 $1.20 $1.13 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.06 $1.04 $1.03 $1.00 Accumulation unit value at end of period $1.18 $1.06 $1.04 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 19 30 12 -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.18 $1.04 $1.02 $1.00 Accumulation unit value at end of period $1.24 $1.18 $1.04 $1.02 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.09 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.24 $1.14 $1.00 Accumulation unit value at end of period $1.51 $1.49 $1.24 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.98 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13 -- -- -- - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.37 $1.26 $1.10 $1.00 Accumulation unit value at end of period $1.58 $1.37 $1.26 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 177 296 101 8 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.10 $1.06 $1.03 $1.00 Accumulation unit value at end of period $1.37 $1.10 $1.06 $1.03 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.04 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.06 $1.04 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 166 215 115 19 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.53 $1.40 $1.21 $1.00 Accumulation unit value at end of period $1.73 $1.53 $1.40 $1.21 Number of accumulation units outstanding at end of period (000 omitted) 38 39 16 -- - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.27 $1.10 $1.00 Accumulation unit value at end of period $1.68 $1.47 $1.27 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 2 5 6 5 - ----------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.12 $1.00 Accumulation unit value at end of period $1.30 $1.29 $1.11 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.10 $1.09 $1.00 Accumulation unit value at end of period $1.20 $1.26 $1.10 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.17 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.27 $1.17 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.36 $1.18 $1.09 $1.00 Accumulation unit value at end of period $1.38 $1.36 $1.18 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 6 16 -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 144 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.21 $1.10 $1.16 $1.00 Accumulation unit value at end of period $1.31 $1.21 $1.10 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 64 78 39 8 - ----------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.19 $1.12 $1.00 Accumulation unit value at end of period $1.42 $1.42 $1.19 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.32 $1.19 $1.00 Accumulation unit value at end of period $1.51 $1.49 $1.32 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 58 65 28 3 - ----------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.93 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- JANUS ASPEN SERIES LARGE CAP GROWTH PORTFOLIO: SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.05 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 55 -- -- -- - ----------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE SMALL CAP GROWTH PORTFOLIO, CLASS I (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.03 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.15 $1.09 $1.07 $1.00 Accumulation unit value at end of period $1.24 $1.15 $1.09 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.18 $1.07 $1.04 $1.00 Accumulation unit value at end of period $1.18 $1.18 $1.07 $1.04 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.09 $1.08 $1.00 Accumulation unit value at end of period $1.21 $1.19 $1.09 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.81 $1.41 $1.24 $1.00 Accumulation unit value at end of period $2.25 $1.81 $1.41 $1.24 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.08 $1.06 $1.00 Accumulation unit value at end of period $1.27 $1.14 $1.08 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 57 87 48 8 - ----------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.53 $1.47 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.25 $1.16 $1.00 Accumulation unit value at end of period $1.35 $1.40 $1.25 $1.16 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.07 $1.07 $1.00 Accumulation unit value at end of period $1.20 $1.12 $1.07 $1.07 Number of accumulation units outstanding at end of period (000 omitted) 120 136 68 12 - ----------------------------------------------------------------------------------------------- PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.03 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 46 -- -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 145
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.14 $1.03 $1.00 Accumulation unit value at end of period $1.11 $1.14 $1.14 $1.03 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.56 $1.25 $1.14 $1.00 Accumulation unit value at end of period $1.66 $1.56 $1.25 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.23 $1.18 $1.00 Accumulation unit value at end of period $1.21 $1.42 $1.23 $1.18 Number of accumulation units outstanding at end of period (000 omitted) 4 12 -- -- - ----------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.28 $1.24 $1.13 $1.00 Accumulation unit value at end of period $1.30 $1.28 $1.24 $1.13 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND (05/01/2007) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.98 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 41 -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.22 $1.08 $1.09 $1.00 Accumulation unit value at end of period $1.26 $1.22 $1.08 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.40 $1.19 $1.15 $1.00 Accumulation unit value at end of period $1.30 $1.40 $1.19 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 56 72 43 5 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (04/30/2004) Accumulation unit value at beginning of period $1.02 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.04 $1.02 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- 7 4 -- *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.27% and 2.29%, respectively. - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.08 $1.05 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 66 40 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (04/30/2004) Accumulation unit value at beginning of period $1.50 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.58 $1.50 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 160 181 83 -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- Accumulation unit value at end of period $1.08 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 38 29 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.13 $1.07 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.13 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.19 $1.19 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 38 55 30 4 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (06/01/2004) Accumulation unit value at beginning of period $1.17 $1.10 $1.09 $1.00 Accumulation unit value at end of period $1.17 $1.17 $1.10 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 31 14 -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 146 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.09 $1.05 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.09 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 2 14 21 19 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP VALUE FUND (04/30/2004) Accumulation unit value at beginning of period $1.31 $1.12 $1.10 $1.00 Accumulation unit value at end of period $1.27 $1.31 $1.12 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.15 $1.06 $1.00 Accumulation unit value at end of period $1.25 $1.12 $1.15 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- 1 1 1 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP VALUE FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.99 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.24 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.28 $1.24 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (04/30/2004) Accumulation unit value at beginning of period $1.00 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.03 $1.00 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- 9 5 -- - ----------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.00 $1.52 $1.16 $1.00 Accumulation unit value at end of period $2.70 $2.00 $1.52 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 32 46 24 3 - ----------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND) Accumulation unit value at beginning of period $1.54 $1.27 $1.14 $1.00 Accumulation unit value at end of period $1.70 $1.54 $1.27 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.30 $1.15 $1.13 $1.00 Accumulation unit value at end of period $1.24 $1.30 $1.15 $1.13 Number of accumulation units outstanding at end of period (000 omitted) 192 235 119 13 - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.84 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 11 -- -- -- - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.12 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $2.11 $1.57 $1.37 $1.00 Accumulation unit value at end of period $1.71 $2.11 $1.57 $1.37 Number of accumulation units outstanding at end of period (000 omitted) -- 3 3 3 - ----------------------------------------------------------------------------------------------- WANGER INTERNATIONAL SMALL CAP* (04/30/2004) Accumulation unit value at beginning of period $1.91 $1.42 $1.20 $1.00 Accumulation unit value at end of period $2.17 $1.91 $1.42 $1.20 Number of accumulation units outstanding at end of period (000 omitted) 46 61 32 3 *Effective June 1, 2008, the Fund will change its name to Wanger International. - ----------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.32 $1.25 $1.15 $1.00 Accumulation unit value at end of period $1.36 $1.32 $1.25 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 49 56 28 4 *Effective June 1, 2008, the Fund will change its name to Wanger USA. - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 147 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- 148 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 149 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 150 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 151 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 45307 H (5/08) PROSPECTUS MAY 1, 2008 RIVERSOURCE FLEXCHOICE(SM) VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT NEW RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY BEING OFFERED. This prospectus contains information that you should know before investing in RiverSource FlexChoice Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds - Series I Shares Fidelity(R) Variable Insurance Products - Service Class Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 MFS(R) Variable Insurance Trust(SM) Putnam Variable Trust - Class IB Shares RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. RiverSource Life offers several different annuities which your investment professional may or may not be authorized to offer to you. Each annuity has different features and benefits that may be appropriate for you based on your financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges may also be different between each annuity. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 1 TABLE OF CONTENTS KEY TERMS........................................ 3 THE CONTRACT IN BRIEF............................ 5 EXPENSE SUMMARY.................................. 7 CONDENSED FINANCIAL INFORMATION (UNAUDITED)...... 11 FINANCIAL STATEMENTS............................. 11 THE VARIABLE ACCOUNT AND THE FUNDS............... 11 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............. 17 THE ONE YEAR FIXED ACCOUNT....................... THE FIXED ACCOUNT................................ 20 BUYING YOUR CONTRACT............................. 20 CHARGES.......................................... 22 VALUING YOUR INVESTMENT.......................... 25 MAKING THE MOST OF YOUR CONTRACT................. 26 WITHDRAWALS...................................... 31 TSA -- SPECIAL PROVISIONS........................ 32 CHANGING OWNERSHIP............................... 32 BENEFITS IN CASE OF DEATH........................ 32 OPTIONAL BENEFITS................................ 36 THE ANNUITY PAYOUT PERIOD........................ 44 TAXES............................................ 46 VOTING RIGHTS.................................... 49 SUBSTITUTION OF INVESTMENTS...................... 49 ABOUT THE SERVICE PROVIDERS...................... 50 ADDITIONAL INFORMATION........................... 51 APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED).............. 52 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............ 56
- -------------------------------------------------------------------------------- 2 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of the funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you may allocate purchase payments or transfer contract value of at least $1,000. These accounts have guaranteed interest rates for Guarantee Periods we declare when you allocate purchase payments or transfer contract value to a GPA. Withdrawals and transfers from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a Guarantee Period Account is withdrawn or transferred more than 30 days before the end of its guarantee period. ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts you allocate to this account earn interest at rates that we declare periodically. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life" refer to RiverSource Life Insurance Company. VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 3 administrative office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our administrative office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Contract Option L offers a four year withdrawal charge schedule and investment options in the GPAs, one-year fixed account and/or the subaccounts. Contract Option C eliminates the withdrawal charge schedule in exchange for a higher mortality and expense risk fee and allows investment in the subaccounts only.(1) Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to invest. PURPOSE: The purpose of these contracts is to allow you to accumulate money for retirement or similar long-term goal. You do this by making one or more purchase payments. For contract Option L, you may allocate your purchase payments to the GPAs, one-year fixed account and/or subaccounts. For contract Option C, you may allocate purchase payments to the subaccounts. For both contract Option L and contract Option C, you risk losing amounts you invest in the subaccounts of the variable account. These accounts, in turn, may earn returns that increase the value of a contract. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract. We will not deduct any contract charges or fees. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: Generally, you may allocate purchase payments to the GPAs, one-year fixed account and/or the subaccounts, depending on the contract option you select. If you select contract Option L, you may allocate your purchase payments among any or all of: - - the subaccounts, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - GPAs which earn interest at rates declared when you make an allocation to that account. The required minimum investment in each GPA is $1,000. These accounts may not be available in all states. (see "The Guarantee Period Accounts (GPAs)") - - one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "The Fixed Account -- One-Year Fixed Account") If you select contract Option C, you may allocate purchase payments to the subaccounts only. BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the option of making additional purchase payments in the future. (see "Buying Your Contract") TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to an MVA, unless an exception applies. You may establish automated transfers among the accounts. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract. (see "Making the Most of Your Contract -- Transferring A Money Accounts") (1) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs and one-year fixed account for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 5 WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") OPTIONAL BENEFITS: These contracts offer optional features that are available for additional charges if you meet certain criteria. (see "Optional Benefits") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount based on the death benefit selected. (see "Benefits in Case of Death") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you buy a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs are not available during the payout period. (see "The Annuity Payout Period") TAXES: Generally, income earned on your contract value grows tax deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and nonqualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. (see "Taxes") - -------------------------------------------------------------------------------- 6 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSE THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (contingent deferred sales charge as a percentage of the amount withdrawn) You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE CONTRACT OPTION L PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if the assumed investment rate is 5%. For contract Option C, the discount rate we use in the calculation will be 5.55% if the assumed investment rate is 3.5% and 7.05% if the assumed investment rate is 5%. The withdrawal charge equals the present value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) You can choose either contract Option L or Option C and the death benefit guarantee provided. The combination you choose determines the fees you pay. The table below shows the combinations available to you and their cost.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES ROP death benefit 0.15% 1.25% 1.40% MAV death benefit 0.15 1.35 1.50 EDB 0.15 1.55 1.70 IF YOU SELECT CONTRACT OPTION C AND: ROP death benefit 0.15 1.35 1.50 MAV death benefit 0.15 1.45 1.60 EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the current contract anniversary.) BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER (BENEFIT 0.25%* PROTECTOR) FEE
(As a percentage of the contract value charged annually on the contract anniversary.) BENEFIT PROTECTOR PLUS(R) DEATH BENEFIT RIDER (BENEFIT 0.40%* PROTECTOR PLUS) FEE
(As a percentage of the contract value charged annually on the contract anniversary.) GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract anniversary.) * This fee applies only if you elect this optional feature. ** For applications signed prior to May 1, 2003, the following current annual rider charges apply: GMIB - 0.30%. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 7 ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDING DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(a)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense 0.60% 1.26% reimbursements
(a) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor and/or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Capital Appreciation Fund, 0.61% 0.25% 0.27% --% 1.13% Series II Shares AIM V.I. Core Equity Fund, Series II 0.60 0.25 0.28 0.02 1.15(1) Shares Fidelity(R) VIP Balanced Portfolio 0.41 0.25 0.16 -- 0.82 Service Class 2 Fidelity(R) VIP Growth & Income 0.46 0.25 0.12 -- 0.83 Portfolio Service Class 2 Fidelity(R) VIP Growth Portfolio 0.56 0.25 0.09 -- 0.90 Service Class 2 Fidelity(R) VIP Mid Cap Portfolio 0.56 0.25 0.10 -- 0.91 Service Class 2 FTVIPT Franklin Small Cap Value 0.51 0.25 0.15 0.02 0.93(2) Securities Fund - Class 2 FTVIPT Franklin Small-Mid Cap Growth 0.47 0.25 0.28 0.01 1.01(2) Securities Fund - Class 2 FTVIPT Mutual Shares Securities 0.59 0.25 0.13 -- 0.97 Fund - Class 2 FTVIPT Templeton Foreign Securities 0.63 0.25 0.14 0.02 1.04(2) Fund - Class 2 MFS(R) Investors Trust 0.75 0.25 0.10 -- 1.10 Series - Service Class MFS(R) New Discovery Series - Service 0.90 0.25 0.11 -- 1.26 Class MFS(R) Total Return Series - Service 0.75 0.25 0.08 -- 1.08(3) Class MFS(R) Utilities Series - Service 0.75 0.25 0.10 -- 1.10(3) Class Putnam VT Growth and Income 0.50 0.25 0.05 -- 0.80 Fund - Class IB Shares Putnam VT Income Fund - Class IB 0.62 0.25 0.09 0.01 0.97(4) Shares Putnam VT International Equity 0.73 0.25 0.11 0.01 1.10 Fund - Class IB Shares Putnam VT Vista Fund - Class IB 0.65 0.25 0.11 -- 1.01 Shares RVST RiverSource(R) Variable 0.53 0.13 0.14 -- 0.80 Portfolio - Balanced Fund RVST RiverSource(R) Variable 0.33 0.13 0.14 -- 0.60 Portfolio - Cash Management Fund RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.59 0.13 0.15 -- 0.87 Portfolio - High Yield Bond Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund RVST RiverSource(R) Variable 0.48 0.13 0.18 -- 0.79 Portfolio - Short Duration U.S. Government Fund RVST RiverSource(R) Variable 0.68 0.13 0.20 -- 1.01(5) Portfolio - Small Cap Advantage Fund
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series II shares to 1.45% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the - -------------------------------------------------------------------------------- 8 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 1.14% for AIM V.I. Core Equity Fund, Series II Shares. (2) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the acquired fund) to the extent that the Fund's fees and expenses are due to those of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. After fee reductions net expenses would be 0.91% for FTVIPT Franklin Small Cap Value Securities Fund - Class 2, 1.00% for FTVIPT Franklin Small-Mid Cap Growth Securities Fund - Class 2 and 1.02% for FTVIPT Templeton Foreign Securities Fund - Class 2. (3) MFS has agreed in writing to reduce its management fee to 0.65% for MFS Total Return Series annually on average daily net assets in excess of $3 billion and 0.70% for MFS Utilities Series annually on average daily net assets in excess of $1 billion. After fee reductions net expenses would be 1.05% for MFS Total Return Series - Service Class and 1.07% for MFS Utilities Series - Service Class. This written agreement will remain in effect until modified by the Fund's Board of Trustees. (4) Putnam Management has a contractual agreement to limit expenses through Dec. 31, 2008. After fee waivers and expense reimbursements net expenses would be 0.83% for Putnam VT Income Fund - Class IB Shares. (5) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed 1.13% for RVST RiverSource(R) Variable Portfolio - Small Cap Advantage Fund. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 9 EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the EDB and the GMIB. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with EDB $1,189 $1,885 $1,971 $4,141 $379 $1,160 $1,971 $4,141 Contract Option C with EDB 390 1,192 2,024 4,240 390 1,192 2,024 4,240
MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP death benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with ROP death benefit $1,031 $1,403 $1,099 $2,368 $207 $640 $1,099 $2,368 Contract Option C with ROP death benefit 218 674 1,155 2,482 218 674 1,155 2,482
(1) In these examples, the $40 contract administrative charge is approximated as a .030% charge for Option C and a .022% charge for Option L. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. - -------------------------------------------------------------------------------- 10 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and highest total annual variable account expense combinations in the Appendix. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statement date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. This contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 11 various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under any asset allocation program we offer or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and upon any substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - Subaccounting, transaction processing, recordkeeping and administration. - -------------------------------------------------------------------------------- 12 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 13 YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Capital Growth of capital. Invests principally in common Invesco Aim Advisors, Inc. adviser, Appreciation Fund, Series II stocks of companies likely to benefit from new advisory entities affiliated with Shares or innovative products, services or processes as Invesco Aim Advisors, Inc., well as those with above-average long-term subadvisers. growth and excellent prospects for future growth. The Fund can invest up to 25% of its total assets in foreign securities that involve risks not associated with investing solely in the United States. AIM V.I. Core Equity Fund, Growth of capital. Invests normally at least 80% Invesco Aim Advisors, Inc. Series II Shares of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, including convertible securities of established companies that have long-term above-average growth in earnings and dividends and growth companies that are believed to have the potential for above-average growth in earnings and dividends. The Fund may invest up to 25% of its total assets in foreign securities. Fidelity(R) VIP Balanced Income and capital growth consistent with Fidelity Management & Research Company Portfolio Service Class 2 reasonable risk. Invests approximately 60% of (FMR), investment manager; FMR U.K., assets in stocks and other equity securities and FMR Far East and Fidelity Investments the remainder in bonds and other debt Money Market Management Inc. (FIMM), securities, including lower-quality debt sub- advisers. securities, when its outlook is neutral. Invests at least 25% of total assets in fixed-income senior securities (including debt securities and preferred stock). The Fund invests in domestic and foreign issuers. Fidelity(R) VIP Growth & High total return through a combination of Fidelity Management & Research Company Income Portfolio Service current income and capital appreciation. (FMR), investment manager; FMR U.K., Class 2 Normally invests a majority of assets in common FMR Far East, sub- advisers. stocks with a focus on those that pay current dividends and show potential for capital appreciation. May invest in bonds, including lower-quality debt securities, as well as stocks that are not currently paying dividends, but offer prospects for future income or capital appreciation. Invests in domestic and foreign issuers. The Fund invests in either "growth" stocks or "value" stocks or both. Fidelity(R) VIP Growth Achieve capital appreciation. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Invests in companies (FMR), investment manager; FMR U.K., that it believes have above-average growth FMR Far East, sub- advisers. potential (stocks of these companies are often called "growth" stocks). The Fund invests in domestic and foreign issuers. Fidelity(R) VIP Mid Cap Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Normally invests at (FMR), investment manager; FMR U.K., least 80% of assets in securities of companies FMR Far East, sub- advisers. with medium market capitalizations. May invest in companies with smaller or larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER FTVIPT Franklin Small Cap Long-term total return. The Fund normally Franklin Advisory Services, LLC Value Securities invests at least 80% of its net assets in Fund - Class 2 investments of small capitalization companies, and normally invests predominantly in equity securities. The Fund invests mainly in equity securities of companies that the manager believes are undervalued. FTVIPT Franklin Small-Mid Long-term capital growth. The Fund normally Franklin Advisers, Inc. Cap Growth Securities invests at least 80% of its net assets in Fund - Class 2 investments of small capitalization and mid capitalization companies and normally invests predominantly in equity securities. FTVIPT Mutual Shares Capital appreciation, with income as a secondary Franklin Mutual Advisers, LLC Securities Fund - Class 2 goal. The Fund normally invests primarily in equity securities of companies that the manager believes are undervalued. The Fund also invests, to a lesser extent in risk arbitrage securities and distressed companies. FTVIPT Templeton Foreign Long-term capital growth. The Fund normally Templeton Investment Counsel, LLC Securities Fund - Class 2 invests at least 80% of its net assets in investments of issuers located outside the U.S., including those in emerging markets, and normally invests predominantly in equity securities. MFS(R) Investors Trust Capital appreciation. Normally invests in equity MFS Investment Management(R) Series - Service Class securities of companies MFS believes to have above average earnings growth potential compared to other companies (growth companies), in the stocks of companies it believes are undervalued compared to their perceived worth (value companies), or in a combination of growth and value companies. Generally focuses on companies with large capitalizations. MFS(R) New Discovery Capital appreciation. Invests in stocks of MFS Investment Management(R) Series - Service Class companies MFS believes to have above average earnings growth potential compared to other companies (growth companies). Growth companies tend to have stock prices that are high relative to their earnings, dividends, book value, or other financial measures. The Fund generally focuses on companies with small capitalizations. MFS(R) Total Return Total return. Invests primarily in equity and MFS Investment Management(R) Series - Service Class fixed income securities. MFS invests between 40% and 75% of the fund's net assets in equity securities and at least 25% of the fund's total assets in fixed-income senior securities. MFS(R) Utilities Series - Total return. Normally invests at least 80% of MFS Investment Management(R) Service Class the fund's net assets in securities of issuers in the utilities industry. The Fund's assets may be invested in companies of any size. Putnam VT Growth and Income Capital growth and current income. The fund Putnam Investment Management, LLC Fund - Class IB Shares pursues its goal by investing mainly in common stocks of U.S. companies, with a focus on value stocks that offer the potential for capital growth, current income or both.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Putnam VT Income Fund - High current income consistent with what Putnam Putnam Investment Management, LLC Class IB Shares Management believes to be prudent risk. The fund pursues its goal by investing mainly in bonds that (i) are obligations of corporations and governments worldwide denominated in U.S. dollars, (ii) are either investment-grade or below investment-grade and (iii) have intermediate to long-term maturities (three years or longer). Putnam VT International Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Equity Fund - Class IB by investing mainly in common stocks of Shares companies outside the United States that Putnam Management believes have favorable investment potential. Under normal circumstances, the fund invests at least 80% of its net assets in equity investments. Putnam VT Vista Fund - Class Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC IB Shares by investing mainly in common stocks of U.S. companies, with a focus on growth stocks. RVST RiverSource Variable Maximum total investment return through a RiverSource Investments, LLC Portfolio - Balanced Fund combination of capital growth and current income. Invests primarily in a combination of common and preferred stocks, bonds and other debt securities. Under normal market conditions, at least 50% of the Fund's total assets are invested in common stocks and no less than 25% of the Fund's total assets are invested in debt securities. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Maximum current income consistent with liquidity RiverSource Investments, LLC Portfolio - Cash Management and stability of principal. Invests primarily in Fund money market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper. RVST RiverSource Variable High level of current income while attempting to RiverSource Investments, LLC Portfolio - Diversified Bond conserve the value of the investment for the Fund longest period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage- and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets.
- -------------------------------------------------------------------------------- 16 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable High level of current income and, as a secondary RiverSource Investments, LLC Portfolio - Diversified goal, steady growth of capital. Under normal Equity Income Fund market conditions, the Fund invests at least 80% of its net assets in dividend- paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable High current income, with capital growth as a RiverSource Investments, LLC Portfolio - High Yield Bond secondary objective. Under normal market Fund conditions, the Fund invests at least 80% of its net assets in high-yield debt instruments (commonly referred to as "junk") including corporate debt securities as well as bank loans rated below investment grade by a nationally recognized statistical rating organization, or if unrated, determined to be of comparable quality. Up to 25% of the Fund may be invested in high yield debt instruments of foreign issuers. RVST RiverSource Variable Capital appreciation. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Equity conditions, the Fund invests at least 80% of its Fund net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable High level of current income and safety of RiverSource Investments, LLC Portfolio - Short Duration principal consistent with investment in U.S. U.S. Government Fund government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. RVST RiverSource Variable Long-term capital growth. Under normal market RiverSource Investments, LLC, adviser; Portfolio - Small Cap conditions, at least 80% of the Fund's net Kenwood Capital Management LLC, Advantage Fund assets are invested in equity securities of sub-adviser. companies with market capitalization of up to $2 billion or that fall within the range of the Russell 2000(R) Index at the time of investment.
THE GUARANTEE PERIOD ACCOUNTS (GPAS) Investment in the GPAs is not available under contract Option C(1). The GPAs may not be available in some states. For contract Option L, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The minimum required investment in each GPA is $1,000. There are restrictions on the amount you can allocate to these accounts as well as on transfers from these accounts (see "Buying Your Contract" and "Transfer policies"). These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the guarantee period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion ("Future Rates"). We will determine Future Rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. (1) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs for contract Option C has been filed in the various states in which the contract is offered. Please check with your sales representative to determine if this restriction applies to your state. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 17 You may transfer or withdraw contract value out of the GPAs within 30 days before the end of the Guarantee Period without receiving a MVA (see "Market Value Adjustment (MVA)" below.) During this 30 day window you may choose to start a new Guarantee Period of the same length, transfer the contract value to another GPA, transfer the contract value to any of the subaccounts, or withdraw the contract value from the contract (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your Guarantee Period our current practice is to automatically transfer the contract value into the one-year fixed account. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable Guarantee Periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly Duff & Phelp's) -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We guarantee the contract value allocated to your GPA, including the interest credited, if you do not make any transfers or withdrawals from that GPA prior to 30 days before the end of the Guarantee Period. However, we will apply an MVA if a transfer or withdrawal occurs prior to this time, unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. The MVA also affects amounts withdrawn from a GPA prior to 30 days before the end of the Guarantee Period that are used to purchase payouts under an annuity payout plan. We will refer to all of these transactions as "early withdrawals" in the discussion below. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your Guarantee Period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
- -------------------------------------------------------------------------------- 18 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS GENERAL EXAMPLES As the examples below demonstrate, the application of an MVA may result in either a gain or loss of principal. We refer to all of the transactions described below as "early withdrawals." Assume: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and your purchase payment is in its fourth year from receipt at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 19 requested after we apply the MVA (and any applicable withdrawal charge schedule under contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. We will not apply MVAs to amounts withdrawn for annual contract charges, to amounts we pay as death claims or to automatic transfers from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep Strategy. THE ONE-YEAR FIXED ACCOUNT Investment in the one-year fixed account is not available under contract Option C(1). For contract Option L, you may allocate purchase payments and transfer accumulated value to the one-year fixed account. Some states may restrict the amount you can allocate to this account. We back the principal and interest guarantees relating to the one-year fixed account. These guarantees are based on the continued claims-paying ability of the company. The value of the one-year fixed account increases as we credit interest to the account. Purchase payments and transfers to the one-year fixed account become part of our general account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. The interest rate we apply to each purchase payment and transfer to the one-year fixed account is guaranteed for one year. Thereafter we will change the rates from time-to-time at our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns earned on investments backing these annuities, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed minimum interest rate offered may vary by state but will not be lower than state law allows. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "Buying Your Contract" and "Transfer policies"). Interest in the one-year fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the one-year fixed account, however, disclosures regarding the one-year fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. (1) For applications dated May 1, 2003 or after. Restriction of investment in the one-year fixed account for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. BUYING YOUR CONTRACT New contracts are not currently being offered. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. As the owner, you have all rights and may receive all benefits under the contract. You can own a qualified or nonqualified annuity. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 90 or younger. (The age limit may be younger for qualified annuities in some states.) When you applied, you selected (if available in your state): - - contract Option L or Option C; - - a death benefit option(1); - - the optional Benefit Protector Death Benefit Rider(2); - - the optional Benefit Protector Plus Death Benefit Rider(2); - - the optional Guaranteed Minimum Income Benefit Rider(3); - - the GPAs, the one-year fixed account and/or subaccounts in which you want to invest(4); - - how you want to make purchase payments; and - - a beneficiary. (1) If you and the annuitant are 79 or younger at contract issue, you may select from either the ROP death benefit, MAV death benefit or EDB. If you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. EDB may not be available in all states. (2) Not available with the EDB. May not be available in all states. (3) Available at the time you purchase your contract if the annuitant is 75 or younger at contract issue and you also select the EDB. May not be available in all states. - -------------------------------------------------------------------------------- 20 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS (4) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs and one-year fixed account under contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine whether this restriction applies to your state. Some states restrict the amount you can allocate to the GPAs and the one-year fixed account. GPAs are not available under contracts issued in Maryland, Oregon, Pennsylvania or Washington and may not be available in other states. The contract provides for allocation of purchase payments to the subaccounts of the variable account, to the GPAs and/or to the one-year fixed account in even 1% increments subject to the $1,000 minimum required investment for the GPAs. For contracts with applications signed on or after June 16, 2003, the amount of any purchase payment allocated to the GPAs and the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish a dollar cost averaging arrangement with respect to the purchase payment according to procedures currently in effect, or you are participating according to the rules of an asset allocation model portfolio program available under the contract, if any. We applied your initial purchase payment to the GPAs, one-year fixed account and subaccounts you selected within two business days after we received it at our administrative office. We will credit additional purchase payments you make to your accounts on the valuation date we receive them. If we receive an additional purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our corporate office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a SIP. To begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts are scheduled to begin on the retirement date. When we processed your application, we established the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. You can also select a date within the maximum limits. Your selected date can align with your actual retirement from a job, or it can be a different future date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75, or on such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE RETIREMENT DATE GENERALLY MUST BE: - - for IRAs, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 85th birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, then the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 21 PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM PURCHASE PAYMENTS If paying by SIP: $50 initial payment $50 for additional payments. If paying by any other method: $10,000 initial payment. $100 for additional payments. MAXIMUM ALLOWABLE PURCHASE PAYMENTS* $1,000,000 for issue ages up to 85. $100,000 for issue ages 86 to 90. * This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the tax-deferred retirement plan's or the Code's limits on annual contributions also apply. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including, but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values or to satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers, withdrawals or death benefits until instructions are received from the appropriate governmental authority or a court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary, or earlier if the contract is withdrawn. We prorate this charge among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. Some states limit the amount of any contract charge allocated to the GPAs and one-year fixed account. We will waive this charge when your contract value is $100,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct the charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the one-year fixed account. We cannot - -------------------------------------------------------------------------------- 22 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS increase these fees. These fees are based on the contract you select (either Option L or Option C) and the death benefit that applies to your contract:
CONTRACT OPTION L CONTRACT OPTION C ROP death benefit 1.25% 1.35% MAV death benefit 1.35 1.45 EDB(1) 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the payout period even if the annuity payout plan does not include a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L discussed in the below will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts. If you select contract Option L and you withdraw all or part of your contract, you may be subject to a withdrawal charge. A withdrawal charge applies if you make a withdrawal in the first four contract years. You may withdraw amounts totaling up to 10% of your prior anniversary's contract value free of charge during the first four years of your contract. (We consider your initial purchase payment to be the prior anniversary's contract value during the first contract year.) We do not assess a withdrawal charge on this amount. The withdrawal charge percentages that apply to you are shown below and are stated in your contract. In addition, amounts withdrawn from a GPA more than 30 days before the end of the applicable Guarantee Period are generally subject to a MVA. (See "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR WITHDRAWAL CHARGE CONTRACT OPTION L PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. The withdrawal charge percentage is applied to this total amount. We pay you the amount you requested. EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal charge of 7%. The total amount we actually deduct from your contract is $1,075.27. We determine this amount as follows: AMOUNT REQUESTED $1,000 ------------------------ OR ------ = $1,075.27 1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is $75.27. We pay you the $1,000 you requested. If you make a full withdrawal of your contract, we also will deduct the applicable contract administrative charge. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if the assumed investment rate is 5%. For contract Option C, the discount rate we use in the calculation will be 5.55% if the - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 23 assumed investment rate is 3.5% and 7.05% if the assumed investment rate is 5%. The withdrawal charge equals the present value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. WAIVER OF WITHDRAWAL CHARGES We do not assess withdrawal charges for: - - withdrawals of amounts totaling up to 10% of your prior contract anniversary's contract value; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required minimum distribution amount calculated under your specific contract currently in force; - - contracts settled using an annuity payout plan; - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. - - Withdrawals you make if you or the annuitant become disabled within the meaning of the Code Section 72(m)(7) after contract issue. The disabled person must also be receiving Social Security disability or state long term disability benefits. The disabled person must be age 70 or younger at the time of withdrawal. You must provide us with a signed letter from the disabled person stating that he or she meets the above criteria, a legible photocopy of Social Security disability or state long term disability benefit payments and the application for such payments. POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. OPTIONAL DEATH BENEFIT CHARGES BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the subaccounts, the GPAs and one-year fixed account in the same proportion your interest in each account bears to your total contract value. - -------------------------------------------------------------------------------- 24 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. OPTIONAL LIVING BENEFIT CHARGES GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE* We charge a fee (currently 0.70%) based on the GMIB benefit base for this optional feature only if you select it. If selected, we deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate the GMIB fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the GMIB fee from the proceeds payable adjusted for the number of calendar days coverage was in place. We cannot increase the GMIB fee after the rider effective date and it does not apply after annuity payouts begin. * For applications signed prior to May 1, 2003, the following current annual rider charges apply: GMIB - 0.30%. VALUING YOUR INVESTMENT We value your accounts as follows: GPAS AND ONE-YEAR FIXED ACCOUNT We value the amounts you allocated to the GPAs and the one-year fixed account directly in dollars. The value of these accounts equals: - - the sum of your purchase payments and transfer amounts allocated to the one-year fixed account and the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after the MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Benefit Protector rider; - Benefit Protector Plus rider; and/or - Guaranteed Minimum Income Benefit rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: to calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 25 Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and the deduction of a prorated portion of: - - the fee for any of the following benefits you have selected: - Benefit Protector rider; - Benefit Protector Plus rider; and/or - Guaranteed Minimum Income Benefit rider. Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten year GPAs are not available for automated transfers. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from either the one-year fixed account or the two-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low .... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. - -------------------------------------------------------------------------------- 26 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY If you select contract Option L and your net contract value(1) is at least $10,000, you can choose to participate in the Special DCA program. There is no charge for the Special DCA program. Under the Special DCA program, you can allocate a new purchase payment to a six-month or twelve-month Special DCA account. You may only allocate a new purchase payment of at least $1,000 to a Special DCA account. You cannot transfer existing contract values into a Special DCA account. Each Special DCA account lasts for either six or twelve months (depending on the time period you select) from the time we receive your first purchase payment. We make monthly transfers of your total Special DCA account value into the GPAs, one-year fixed account and/or subaccounts you selected over the time period you selected (either six or twelve months). If you elect to transfer into a GPA, you must meet the $1,000 minimum required investment limitation for each transfer. We reserve the right to credit a lower interest rate to each Special DCA account if you select the GPAs or the one-year fixed account as part of your Special DCA transfers. We will change the interest rate on each Special DCA account from time to time at our discretion. We base these rates on competition and on the interest rate we are crediting to the one-year fixed account at the time of the change. Once we credit interest to a particular purchase payment that rate does not change even if we change the rate we credit on new purchase payments or if your net contract value changes. We credit each Special DCA account with current guaranteed annual rate that is in effect on the date we receive your purchase payment. However, we credit this annual rate over the six or twelve-month period on the balance remaining in your Special DCA account. Therefore, the net effective interest rate you receive is less than the stated annual rate. We do not credit this interest after we transfer the value out of the Special DCA account into the accounts you selected. Once you establish a Special DCA account, you cannot allocate additional purchase payments to it. However, you may establish another new Special DCA account and allocate new purchase payments to it when we change the interest rates we offer on these accounts. If you are funding a Special DCA account from multiple sources, we apply each purchase payment to the account and credit interest on that purchase payment on the date we receive it. This means that all purchase payments may not be in the Special DCA account at the beginning of the six or twelve-month period. Therefore, you may receive less total interest than you would have if all your purchase payments were in the Special DCA account from the beginning. If we receive any of your multiple payments after the six or twelve-month period ends, you can either allocate those payments to a new Special DCA account (if available) or to any other accounts available under your contract. You cannot participate in the Special DCA program if you are making payments under a Systematic Investment Plan. You may simultaneously participate in the Special DCA program and the asset-rebalancing program as long as your subaccount allocation is the same under both programs. If you elect to change your subaccount allocation under one program, we automatically will change it under the other program so they match. If you participate in more than one Special DCA account, the asset allocation for each account may be different as long as you are not also participating in the asset-rebalancing program. You may terminate your participation in the Special DCA program at any time. If you do, we will not credit the current guaranteed annual interest rate on any remaining Special DCA account balance. We will transfer the remaining balance from your Special DCA account to the other accounts you selected for your DCA transfers or we will allocate it in any manner you specify. Similarly, if we cannot accept any additional purchase payments into the Special DCA program, we will allocate the purchase payments to the other accounts you selected for your DCA transfers or in any other manner you specify. We can modify the terms or discontinue the Special DCA program at any time. Any modifications will not affect any purchase payments that are already in a Special DCA account. For more information on the Special DCA program, contact your investment professional. The Special DCA program does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. Asset rebalancing does not - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 27 apply to the GPAs or the one-year fixed account. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. If you are also participating in the Special DCA program and you change your subaccount asset allocation for the asset rebalancing program, we will change your subaccount asset allocation under the Special DCA program to match. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your sales representative. TRANSFERRING AMONG ACCOUNTS You may transfer contract value from any one subaccount, GPAs or the one-year fixed account, to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. We reserve the right to limit transfers to the GPAs and one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - It is our general policy to allow you to transfer contract values from the one-year fixed account to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to a MVA. For contracts issued before June 16, 2003, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at any time. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. For contracts with applications signed on or after June 16, 2003, the amount of contract value transferred to the GPAs and the one-year fixed account cannot result in the value of the GPAs and the one-year fixed account in total being greater than 30% of the contract value. The time limitations on transfers from the GPAs and one-year fixed account will be enforced, and transfers out of the GPAs and one-year fixed account are limited to 30% of the GPA and one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the Guarantee Period will receive a MVA*, which may result in a gain or loss of contract value. - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - If you select a variable payout, once annuity payouts begin, you may make transfers once per contract year among the subaccounts and we reserve the right to limit the number of subaccounts in which you may invest. - - Once annuity payouts begin, you may not make any transfers to the GPAs. * Unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. - -------------------------------------------------------------------------------- 28 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under an automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 29 THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund, may require us to reject your transfer request. For example, while we disregard transfers permitted under an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our administrative office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers or partial withdrawals among your subaccounts, GPAs or the one-year fixed accounts. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated transfers from the one-year fixed account to any one of the subaccounts may not exceed an amount that, if continued, would deplete the one-year fixed account within 12 months. Until further notice, however, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at any time. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. - - Automated withdrawals may be restricted by applicable law under some contracts. - -------------------------------------------------------------------------------- 30 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly $250 quarterly, semiannually or annually 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our administrative office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our administrative office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay withdrawal charges if you selected contract Option L, contract charges or any applicable optional rider charges (see "Charges"). Additionally, IRS taxes and penalties may apply (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Plan E (see "The Annuity Payout Period -- Annuity Payout Plans"). Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will withdraw money from all your subaccounts, GPAs and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless you request otherwise. After executing a partial withdrawal, the value in each subaccount, GPA and one-year fixed account must be either zero or at least $50. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 31 - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider will terminate upon transfer of ownership of your annuity contract (see "Optional Benefits"). BENEFITS IN CASE OF DEATH There are three death benefit options under your contract: - - Return of Purchase Payment (ROP) death benefit; - -------------------------------------------------------------------------------- 32 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS - - Maximum Anniversary Value (MAV) death benefit; and - - Enhanced Death Benefit Rider (EDB). If it is available in your state and if both you and the annuitant are 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. If you select the GMIB you must elect the EDB. Once you elect a death benefit, you cannot change it. We show the option that applies in your contract. The combination of the contract and death benefit option you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under all options, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you chose when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. RETURN OF PURCHASE PAYMENTS DEATH BENEFIT (ROP) The ROP is intended to help protect your beneficiaries financially in that they will never receive less than your purchase payments adjusted for withdrawals. If you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greater of: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH = PW X DB BENEFIT ------------ CV
PW = the partial withdrawal including any applicable MVA or withdrawal charge (contract Option L only). DB = the death benefit on the date of (but prior to) the partial withdrawal. CV = contract value on the date of (but prior to) the partial withdrawal. EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary you make an additional purchase payment of $5,000. - - During the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal. - - During the third contract year the contract value grows to $23,000. We calculate the ROP death benefit as follows: Contract value at death: $23,000.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- ROP death benefit, calculated as the greatest of these two values: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT (MAV) The MAV death benefit is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. The MAV death benefit does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not the MAV death benefit is appropriate for your situation. If it is available in your state and if both you and the annuitant are age 79 or younger at contract issue, you may choose to add the MAV death benefit to your contract at the time of purchase. Once you select the MAV death benefit you may not cancel it. The MAV death benefit provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of the following: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 33 MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each contract anniversary through age 80. There is no MAV prior to the first contract anniversary. On the first contract anniversary we set the MAV equal to the greater of: (a) your current contract value, or (b) total purchase payments minus adjusted partial withdrawals. Every contract anniversary after that, through age 80, we compare the previous anniversary's MAV (plus any purchase payments since that anniversary minus adjusted partial withdrawals since that anniversary) to the current contract value and we reset the MAV to the higher value. We stop resetting the MAV after you or the annuitant reach age 81. However, we continue to add subsequent purchase payments and subtract adjusted partial withdrawals from the MAV. EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary the contract value grows to $29,000. - - During the second contract year the contract value falls to $22,000, at which point you take a $1,500 partial withdrawal, leaving a contract value of $20,500. We calculate the MAV death benefit as follows: Contract value at death: $20,500.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments $20,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $20,000 ---------------- = -1,363.64 $22,000 ---------- for a ROP death benefit of: $18,636.36 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $29,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $29,000 ---------------- = -1,977.27 $22,000 ---------- for a MAV death benefit of: $27,022.73 ---------- The MAV death benefit, calculated as the greatest of these three values, which is the $27,022.73 MAV:
ENHANCED DEATH BENEFIT RIDER (EDB) The EDB is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. The EDB does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not the EDB is appropriate for your situation. If it is available in your state and both you and the annuitant are 79 or younger at contract issue, you may choose to add the EDB to your contract at the time you purchase your contract. If you select the GMIB you must select the EDB. The EDB provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. 5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts at issue increased by 5%, - - plus any subsequent amounts allocated to the subaccounts, - - minus adjusted transfers and partial withdrawals from the subaccounts. - -------------------------------------------------------------------------------- 34 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS Thereafter, we continue to add subsequent amounts allocated to the subaccounts and subtract adjusted transfers and partial withdrawals from the subaccounts. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. PWT X VAF 5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = --------------- SV
PWT = the amount transferred from the subaccounts or the amount of the partial withdrawal (including any applicable MVA and any applicable withdrawal charge for contract Option L) from the subaccounts. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts on the date of (but prior to) the transfer or partial withdrawal.
EXAMPLE - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the one-year fixed account and $20,000 allocated to the subaccounts. - - On the first contract anniversary, the one-year fixed account value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200. - - During the second contract year the one-year fixed account value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal all from the subaccounts, leaving the contract value at $22,800. The death benefit is calculated as follows: Contract value at death: $22,800.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP death benefit of: $23,456.79 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV death benefit of: $23,456.79 ---------- The 5% rising floor: The variable account floor on the first contract anniversary is, calculated as: $21,000.00 1.05 X $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% rising floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the one-year fixed account value: +5,300.00 ---------- 5% rising floor (value of the GPAs, one-year fixed account and the variable $24,642.11 account floor): ---------- EDB, calculated as the greatest of these three values, which is the 5% rising floor: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. If requested, we will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 35 NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and Benefit Protector Plus rider, if selected, will terminate. Continuance of the Benefit Protector(SM) rider is optional. (See "Optional Benefits.") If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the Code; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and the Benefit Protector Plus riders, if selected, will terminate. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus or the EDB. We reserve the right to discontinue offering the Benefit Protector for new contracts. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. - -------------------------------------------------------------------------------- 36 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit (see "Benefits in Case of Death"), plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with the MAV death benefit. - - During the first contract year the contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 - - On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 - - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $58,667 - - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect.
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 37 - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000 - - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000 - - During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. NOTE: For special tax considerations associated with the Benefit Protector, see "Taxes." BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to your contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is available only for purchase through a transfer, exchange, or rollover from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector or the EDB. We reserve the right to discontinue offering the Benefit Protector Plus for new contracts. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking required minimum distributions. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. - -------------------------------------------------------------------------------- 38 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus: - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) IF YOU OR THE ANNUITANT ARE AGE 70 CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% X (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR PLUS - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with the MAV death benefit. - - During the first contract year the contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 - - On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 39 - - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 -------- Total death benefit of: $64,167 - - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000 - - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000 - - During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (death benefit Option B minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). NOTE: For special tax considerations associated with the Benefit Protector Plus, see "Taxes." - -------------------------------------------------------------------------------- 40 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) The GMIB is intended to provide you with a guaranteed minimum lifetime income regardless of the volatility inherent in the investments in the subaccounts. If the annuitant is between age 70 and age 75 at contract issue, you should consider whether the GMIB is appropriate for your situation because: - - you must hold the GMIB for 10 years*, - - the GMIB terminates** on the contract anniversary after the annuitant's 86th birthday, - - you can only exercise the GMIB within 30 days after a contract anniversary*, - - the MAV and the 5% rising floor values we use in the GMIB benefit base to calculate annuity payouts under the GMIB are limited after age 81, and - - there are additional costs associated with the rider. Be sure to discuss whether or not the GMIB is appropriate for your situation with your investment professional. * Unless the annuitant qualifies for a contingent event (see "Charges -- Contingent events"). ** The rider and annual fee terminate on the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. If you are purchasing the contract as a qualified annuity, such as an IRA, and you are planning to begin annuity payouts after the date on which minimum distributions required by the IRS must begin, you should consider whether the GMIB is appropriate for you. Partial withdrawals you take from the contract, including those taken to satisfy RMDs, will reduce the GMIB benefit base (defined below), which in turn may reduce or eliminate the amount of any annuity payments available under the rider (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Consult a tax advisor before you purchase any GMIB with a qualified annuity, such as an IRA. If this rider is available in your state and the annuitant is 75 or younger at contract issue, you may choose to add this optional benefit to your contract for an additional annual charge which we describe below. If you select the GMIB, you must elect the EDB at the time you purchase your contract and your rider effective date will be the contract issue date. In some instances, we may allow you to add the GMIB to your contract at a later date if it was not available when you initially purchased your contract. In these instances, we would add the GMIB on the next contract anniversary and this would become the rider effective date. For purposes of calculating the GMIB benefit base under these circumstances, we consider the contract value on the rider effective date to be the initial purchase payment; we disregard all previous purchase payments, transfers and withdrawals in the GMIB calculations. INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate your purchase payments or transfers to any of the subaccounts, GPAs or the one-year fixed account. For contract Option C, you may allocate payments to the subaccounts. We reserve the right to limit the amount you allocate to subaccounts investing in the RiverSource Variable Portfolio -- Cash Management Fund to 10% of the total amount in the subaccounts. If we are required to activate this restriction, and you have more than 10% of your subaccount value in this fund, we will send you a notice and ask that you reallocate your contract value so that the 10% limitation is satisfied within 60 days. We will terminate the GMIB if you have not satisfied the limitation after 60 days. GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit base is the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the maximum anniversary value at the last contract anniversary plus any payments made since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. Keep in mind that the MAV and the 5% rising floor values are limited after age 81. We reserve the right to exclude from the GMIB benefit base any purchase payments you make in the five years before you exercise the GMIB. We would do so only if such payments total $50,000 or more or if they are 25% or more of total contract payments. If we exercise this right, we: - - subtract each payment adjusted for market value from the contract value and the MAV. - - subtract each payment from the 5% rising floor. We adjust the payments made to the GPAs and the one-year fixed account for market value. We increase payments allocated to the subaccounts by 5% for the number of full contract years they have been in the contract before we subtract them from the 5% rising floor. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 41 For each payment, we calculate the market value adjustment to the contract value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor as: PMT X CVG --------- ECV
PMT = each purchase payment made in the five years before you exercise the GMIB. CVG = current contract value at the time you exercise the GMIB. ECV = the estimated contract value on the anniversary prior to the payment in question. We assume that all payments and partial withdrawals occur at the beginning of a contract year. For each payment, we calculate the 5% increase of payments allocated to the subaccounts as: PMT X (1.05)(CY)
CY = the full number of contract years the payment has been in the contract. EXERCISING THE GMIB - - you may only exercise the GMIB within 30 days after any contract anniversary following the expiration of a ten-year waiting period from the rider effective date. However, there is an exception if at any time the annuitant experiences a "contingent event" (disability, terminal illness or confinement to a nursing home or hospital, see "Charges -- Contingent events" for more details.) - - the annuitant on the retirement date must be between 50 and 86 years old. - - you can only take an annuity payout under one of the following annuity payout plans: - Plan A -- Life Annuity - no refund - Plan B -- Life Annuity with ten years certain - Plan D -- Joint and last survivor life annuity - no refund - - you may change the annuitant for the payouts. When you exercise your GMIB, you may select a fixed or variable annuity payout plan. Fixed annuity payouts are calculated using the annuity purchase rates based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale G. Your annuity payouts remain fixed for the lifetime of the annuity payout period. First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. If you exercise the GMIB under a contingent event, you can take up to 50% of the benefit base in cash. You can use the balance of the GMIB benefit base for annuity payouts calculated using the guaranteed annuity purchase rates under any one of the payout plans listed above as long as the annuitant is between 50 and 86 years old on the retirement date. The GMIB benchmarks the contract growth at each anniversary against several comparison values and sets the GMIB benefit base equal to the largest value. The GMIB benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the GMIB. If the GMIB benefit base is greater than the contract value, the GMIB may provide a higher annuity payout level than is otherwise available. However, the GMIB uses guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we will apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the GMIB may be less than the income the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the GMIB, - -------------------------------------------------------------------------------- 42 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS you will receive the higher standard payout option. The GMIB does not create contract value or guarantee the performance of any investment option. TERMINATING THE GMIB - - You may terminate the rider within 30 days after the first and fifth rider anniversaries. - - You may terminate the rider any time after the tenth rider anniversary. - - The rider will terminate on the date: - you make a full withdrawal from the contract; - a death benefit is payable; or - you choose to begin taking annuity payouts under the regular contract provisions. - - The rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. EXAMPLE - - You purchase the contract during the 2006 calendar year with a payment of $100,000 and you allocate all your purchase payments to the subaccounts. - - There are no additional purchase payments and no partial withdrawals. - - Assume the annuitant is male and age 55 at contract issue. For the joint and last survivor option (annuity payout Plan D), the joint annuitant is female and age 55 at contract issue. Taking into account fluctuations in contract value due to market conditions, we calculate the GMIB benefit base as:
CONTRACT GMIB ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE 1 $107,000 $107,000 $105,000 2 125,000 125,000 110,250 3 132,000 132,000 115,763 4 150,000 150,000 121,551 5 85,000 150,000 127,628 6 120,000 150,000 134,010 7 138,000 150,000 140,710 8 152,000 152,000 147,746 9 139,000 152,000 155,133 10 126,000 152,000 162,889 $162,889 11 138,000 152,000 171,034 171,034 12 147,000 152,000 179,586 179,586 13 163,000 163,000 188,565 188,565 14 159,000 163,000 197,993 197,993 15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally, the GMIB benefit base may increase if the contract value increases. However, you should keep in mind that you are always entitled to annuitize using the contract value without exercising the GMIB. If you annuitize the contract within 30 days after a contract anniversary, the payout under a fixed annuity option (which is the same as the minimum payout for the first year under a variable annuity option) would be:
CONTRACT PLAN A - ANNIVERSARY GMIB LIFE ANNUITY -- AT EXERCISE BENEFIT BASE NO REFUND 10 $162,889 (5% rising floor) $ 840.51 15 212,000 (MAV) 1,250.80 MINIMUM GUARANTEED MONTHLY INCOME CONTRACT PLAN B - PLAN D - JOINT AND ANNIVERSARY LIFE ANNUITY WITH LAST SURVIVOR LIFE AT EXERCISE TEN YEARS CERTAIN ANNUITY -- NO REFUND 10 $ 817.70 $672.73 15 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates of 3% stated in Table B of the contract. Payouts under the standard provisions of this contract will be based on our annuity rates in effect at annuitization and are guaranteed to be greater than or - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 43 equal to the guaranteed annuity rates stated in Table B of the contract. The fixed annuity payout available under the standard provisions of this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND 10 $126,000 $ 650.16 $ 632.52 $520.38 15 212,000 1,250.80 1,193.56 968.84
At the 15th contract anniversary you would not experience a benefit from the GMIB as the payout available to you is equal to or less than the payout available under the standard provisions of the contract. When the GMIB payout is less than the payout available under the standard provisions of the contract, you will receive the higher standard payout. Remember that after the first year, lifetime income payouts under a variable annuity payout option will depend on the investment performance of the subaccounts you select. If your subaccount performance is 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. This fee currently costs 0.70% of the GMIB benefit base annually and it is taken in a lump sum from the contract value on each contract anniversary at the end of each contract year. If the contract is terminated or if annuity payouts begin, we will deduct the fee at that time adjusted for the number of calendar days coverage was in place. We calculate the fee as follows: BB + AT - FAV
BB = the GMIB benefit base. AT = adjusted transfers from the subaccounts to the GPAs or the one-year fixed account made in the six months before the contract anniversary calculated as: PT X VAT -------- SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-year fixed account within six months of the contract anniversary. VAT = variable account floor on the date of (but prior to) the transfer. SVT = value of the subaccounts on the date of (but prior to) the transfer. FAV = the value of your GPAs and the one-year fixed account. The result of AT - FAV will never be greater than zero. This allows us to base the GMIB fee largely on the subaccounts. EXAMPLE - - You purchase the contract with a payment of $100,000 and allocate all of your payment to the subaccounts. - - You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU 1 $ 80,000 0.70% 5% rising floor = $100,000 X 1.05 $ 735 2 150,000 0.70% Contract value = $150,000 1,050 3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below except under annuity payout plan E. You also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - - the annuitant's age and, in most cases, sex; - -------------------------------------------------------------------------------- 44 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin, see "Making the Most of Your Contract -- Transfer policies." ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payment, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we made only one monthly payout, we will not make any more payouts. - - PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly payouts for a guaranteed payout period of five, ten or 15 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect. We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the annuity payout period, you may make full and partial withdrawals. If you make a full withdrawal, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. If the original contract was an Option L contract, the discount rate we use in the calculation will vary between 5.45% and 6.95% depending on the applicable assumed investment rate. If the original contract was an Option C contract, the discount rate we use in the calculation will vary between 5.55% and 7.05% depending on the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes.") ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 45 regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. - -------------------------------------------------------------------------------- 46 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 47 If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial - -------------------------------------------------------------------------------- 48 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or no longer the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource Variable Portfolio -- Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 49 ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate, serves as the principal underwriter of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. Although we no longer offer the contract for sale, you may continue to make purchase payments if permitted under the terms of your contract. We pay commissions to an affiliated selling firm of up to 4.25% of purchase payments on the contract as well as service/trail commissions of up to 1.00% based on annual total contract value for as long as the contract remains in effect. We also may pay a temporary additional sales commission of up to 1.00% of purchase payments for a period of time we select. These commissions do not change depending on which subaccounts you choose to allocate your purchase payments. From time to time and in accordance with applicable laws and regulations, we may also pay or provide the selling firm with various cash and non-cash promotional incentives including, but not limited to bonuses, short-term sales incentive payments, marketing allowances, costs associated with sales conferences and educational seminars and sales recognition awards. A portion of the payments made to the selling firm may be passed on to its sales representatives in accordance with its internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. Ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your contract. We pay the commissions and other compensation described above from our assets. Our assets include: - - revenues we receive from fees and expenses that you will pay when buying, owning and surrendering the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- The funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The funds"); and - - revenues we receive from other contracts and policies we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part of all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including surrender charges; and - - fees and expenses charged by the underlying funds in which the subaccounts you select invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. - -------------------------------------------------------------------------------- 50 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement and other materials we file. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 51 APPENDIX: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (03/01/2002) Accumulation unit value at beginning of period $1.18 $1.13 $1.06 $1.01 $0.79 $1.00 -- -- -- -- Accumulation unit value at end of period $1.30 $1.18 $1.13 $1.06 $1.01 $0.79 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 874 1,950 234 212 71 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006) Accumulation unit value at beginning of period $1.08 $1.00 -- -- -- -- -- -- -- -- Accumulation unit value at end of period $1.15 $1.08 -- -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 39 6 -- -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.25 $1.14 $1.10 $1.06 $0.91 $1.00 -- -- -- -- Accumulation unit value at end of period $1.34 $1.25 $1.14 $1.10 $1.06 $0.91 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 178 81 56 46 13 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.25 $1.12 $1.06 $1.02 $0.85 $1.00 -- -- -- -- Accumulation unit value at end of period $1.38 $1.25 $1.12 $1.06 $1.02 $0.85 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 155 294 312 299 1 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.06 $1.01 $0.97 $0.95 $0.73 $1.00 -- -- -- -- Accumulation unit value at end of period $1.32 $1.06 $1.01 $0.97 $0.95 $0.73 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 726 815 744 882 256 14 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 $1.00 -- -- -- Accumulation unit value at end of period $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,308 3,045 2,336 1,901 1,151 250 94 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.73 $1.50 $1.40 $1.14 $0.88 $1.00 -- -- -- -- Accumulation unit value at end of period $1.66 $1.73 $1.50 $1.40 $1.14 $0.88 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 771 847 873 749 442 55 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $0.59 $0.55 $0.53 $0.48 $0.36 $0.51 $0.61 $1.00 -- -- Accumulation unit value at end of period $0.64 $0.59 $0.55 $0.53 $0.48 $0.36 $0.51 $0.61 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,786 2,054 2,089 2,279 1,928 967 723 260 -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999) Accumulation unit value at beginning of period $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 $1.00 -- Accumulation unit value at end of period $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 -- Number of accumulation units outstanding at end of period (000 omitted) 9,245 10,913 11,340 11,643 4,692 966 546 170 31 -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.66 $1.39 $1.28 $1.09 $0.84 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.66 $1.39 $1.28 $1.09 $0.84 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,425 1,562 1,549 1,200 1,018 286 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.23 $1.11 $1.05 $0.96 $0.80 $1.00 -- -- -- -- Accumulation unit value at end of period $1.33 $1.23 $1.11 $1.05 $0.96 $0.80 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 176 200 184 189 5 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.17 $1.05 $1.01 $0.97 $0.73 $1.00 -- -- -- -- Accumulation unit value at end of period $1.18 $1.17 $1.05 $1.01 $0.97 $0.73 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 149 175 203 227 180 20 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 52 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.29 $1.17 $1.16 $1.06 $0.93 $1.00 -- -- -- -- Accumulation unit value at end of period $1.33 $1.29 $1.17 $1.16 $1.06 $0.93 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,307 3,207 3,304 3,221 1,510 11 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $2.16 $1.67 $1.46 $1.14 $0.85 $1.00 -- -- -- -- Accumulation unit value at end of period $2.72 $2.16 $1.67 $1.46 $1.14 $0.85 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 163 161 159 55 38 6 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (10/05/1998) Accumulation unit value at beginning of period $1.51 $1.32 $1.28 $1.16 $0.93 $1.16 $1.26 $1.18 $1.18 $1.00 Accumulation unit value at end of period $1.40 $1.51 $1.32 $1.28 $1.16 $0.93 $1.16 $1.26 $1.18 $1.18 Number of accumulation units outstanding at end of period (000 omitted) 2,565 3,460 4,185 4,645 5,239 5,706 6,280 6,616 4,302 239 - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INCOME FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.16 $1.12 $1.11 $1.08 $1.05 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.16 $1.12 $1.11 $1.08 $1.05 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 126 77 45 45 82 7 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999) Accumulation unit value at beginning of period $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 $1.00 -- Accumulation unit value at end of period $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 -- Number of accumulation units outstanding at end of period (000 omitted) 1,885 2,110 2,185 2,258 2,177 1,856 1,775 2,192 347 -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (08/26/1999) Accumulation unit value at beginning of period $1.11 $1.07 $0.96 $0.82 $0.63 $0.92 $1.40 $1.48 $1.00 -- Accumulation unit value at end of period $1.14 $1.11 $1.07 $0.96 $0.82 $0.63 $0.92 $1.40 $1.48 -- Number of accumulation units outstanding at end of period (000 omitted) 709 822 851 922 951 888 782 403 1 -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - BALANCED FUND (02/21/1995) Accumulation unit value at beginning of period $2.24 $1.98 $1.93 $1.79 $1.51 $1.76 $1.99 $2.07 $1.83 $1.60 Accumulation unit value at end of period $2.24 $2.24 $1.98 $1.93 $1.79 $1.51 $1.76 $1.99 $2.07 $1.83 Number of accumulation units outstanding at end of period (000 omitted) 1,756 2,335 3,221 4,136 5,043 5,336 6,404 6,779 5,985 4,684 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (02/21/1995) Accumulation unit value at beginning of period $1.29 $1.26 $1.24 $1.25 $1.26 $1.26 $1.24 $1.18 $1.15 $1.11 Accumulation unit value at end of period $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26 $1.24 $1.18 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 3,976 3,923 6,630 7,059 5,254 8,572 8,409 4,421 941 749 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 3.07% and 3.12%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (02/21/1995) Accumulation unit value at beginning of period $1.68 $1.63 $1.62 $1.58 $1.53 $1.47 $1.38 $1.33 $1.33 $1.33 Accumulation unit value at end of period $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47 $1.38 $1.33 $1.33 Number of accumulation units outstanding at end of period (000 omitted) 12,248 8,733 8,279 9,515 7,119 7,272 8,923 9,498 8,127 5,689 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 $1.00 -- -- Accumulation unit value at end of period $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 -- -- Number of accumulation units outstanding at end of period (000 omitted) 6,387 5,210 2,698 1,026 605 238 115 7 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (08/26/1999) Accumulation unit value at beginning of period $1.30 $1.19 $1.16 $1.05 $0.85 $0.93 $0.90 $1.00 $1.00 -- Accumulation unit value at end of period $1.30 $1.30 $1.19 $1.16 $1.05 $0.85 $0.93 $0.90 $1.00 -- Number of accumulation units outstanding at end of period (000 omitted) 3,017 4,475 3,380 3,074 2,699 2,403 5,449 556 8 -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (02/21/1995) Accumulation unit value at beginning of period $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 $1.56 Accumulation unit value at end of period $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 Number of accumulation units outstanding at end of period (000 omitted) 4,871 5,898 4,590 4,708 4,663 5,116 6,019 6,358 5,864 5,163 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/03/2000) Accumulation unit value at beginning of period $1.18 $1.15 $1.15 $1.16 $1.16 $1.11 $1.06 $1.00 -- -- Accumulation unit value at end of period $1.23 $1.18 $1.15 $1.15 $1.16 $1.16 $1.11 $1.06 -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,176 2,281 2,359 2,330 1,256 248 117 39 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND (03/03/2000) Accumulation unit value at beginning of period $1.31 $1.19 $1.15 $0.99 $0.68 $0.83 $0.90 $1.00 -- -- Accumulation unit value at end of period $1.24 $1.31 $1.19 $1.15 $0.99 $0.68 $0.83 $0.90 -- -- Number of accumulation units outstanding at end of period (000 omitted) 215 290 323 274 197 173 89 16 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 53
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (03/01/2002) Accumulation unit value at beginning of period $1.16 $1.11 $1.04 $1.00 $0.79 $1.00 Accumulation unit value at end of period $1.27 $1.16 $1.11 $1.04 $1.00 $0.79 Number of accumulation units outstanding at end of period (000 omitted) 130 452 79 25 -- -- - ----------------------------------------------------------------------------------------------------------------- AIM V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006) Accumulation unit value at beginning of period $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.14 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.19 $1.09 $1.05 $1.02 $0.91 $1.00 Accumulation unit value at end of period $1.28 $1.19 $1.09 $1.05 $1.02 $0.91 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.23 $1.11 $1.05 $1.01 $0.85 $1.00 Accumulation unit value at end of period $1.35 $1.23 $1.11 $1.05 $1.01 $0.85 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.03 $0.99 $0.95 $0.94 $0.72 $1.00 Accumulation unit value at end of period $1.29 $1.03 $0.99 $0.95 $0.94 $0.72 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.90 $1.72 $1.48 $1.21 $0.89 $1.00 Accumulation unit value at end of period $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 Number of accumulation units outstanding at end of period (000 omitted) 458 374 196 54 19 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.69 $1.47 $1.38 $1.14 $0.88 $1.00 Accumulation unit value at end of period $1.62 $1.69 $1.47 $1.38 $1.14 $0.88 Number of accumulation units outstanding at end of period (000 omitted) 15 22 22 23 20 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.22 $1.14 $1.11 $1.01 $0.75 $1.00 Accumulation unit value at end of period $1.33 $1.22 $1.14 $1.11 $1.01 $0.75 Number of accumulation units outstanding at end of period (000 omitted) 8 -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.50 $1.29 $1.19 $1.07 $0.87 $1.00 Accumulation unit value at end of period $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 94 154 -- 138 153 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.60 $1.34 $1.24 $1.07 $0.83 $1.00 Accumulation unit value at end of period $1.82 $1.60 $1.34 $1.24 $1.07 $0.83 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.21 $1.09 $1.04 $0.95 $0.80 $1.00 Accumulation unit value at end of period $1.30 $1.21 $1.09 $1.04 $0.95 $0.80 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.14 $1.03 $1.00 $0.96 $0.73 $1.00 Accumulation unit value at end of period $1.15 $1.14 $1.03 $1.00 $0.96 $0.73 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.25 $1.14 $1.13 $1.04 $0.92 $1.00 Accumulation unit value at end of period $1.27 $1.25 $1.14 $1.13 $1.04 $0.92 Number of accumulation units outstanding at end of period (000 omitted) 49 33 45 -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $2.07 $1.61 $1.41 $1.10 $0.85 $1.00 Accumulation unit value at end of period $2.60 $2.07 $1.61 $1.41 $1.10 $0.85 Number of accumulation units outstanding at end of period (000 omitted) 3 -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.28 $1.12 $1.09 $1.00 $0.81 $1.00 Accumulation unit value at end of period $1.18 $1.28 $1.12 $1.09 $1.00 $0.81 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 54 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT INCOME FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.08 $1.06 $1.05 $1.02 $1.05 $1.00 Accumulation unit value at end of period $1.12 $1.08 $1.06 $1.05 $1.02 $1.05 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.33 $1.20 $1.06 $0.84 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 Number of accumulation units outstanding at end of period (000 omitted) 12 12 14 14 -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.29 $1.24 $1.13 $0.97 $0.74 $1.00 Accumulation unit value at end of period $1.31 $1.29 $1.24 $1.13 $0.97 $0.74 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - BALANCED FUND (03/01/2002) Accumulation unit value at beginning of period $1.18 $1.05 $1.03 $0.96 $0.82 $1.00 Accumulation unit value at end of period $1.18 $1.18 $1.05 $1.03 $0.96 $0.82 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (03/01/2002) Accumulation unit value at beginning of period $1.00 $0.97 $0.96 $0.97 $0.99 $1.00 Accumulation unit value at end of period $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 472 174 48 24 21 132 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.66% and 2.69%, respectively. - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.07 $1.04 $1.04 $1.01 $1.01 $1.00 Accumulation unit value at end of period $1.10 $1.07 $1.04 $1.04 $1.01 $1.01 Number of accumulation units outstanding at end of period (000 omitted) 1,965 638 -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.42 $1.27 $1.10 $0.80 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 Number of accumulation units outstanding at end of period (000 omitted) 1,539 1,423 623 -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.32 $1.21 $1.19 $1.08 $0.92 $1.00 Accumulation unit value at end of period $1.32 $1.32 $1.21 $1.19 $1.08 $0.92 Number of accumulation units outstanding at end of period (000 omitted) 665 974 531 170 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2003) Accumulation unit value at beginning of period $1.60 $1.42 $1.36 $1.31 $1.00 -- Accumulation unit value at end of period $1.62 $1.60 $1.42 $1.36 $1.31 -- Number of accumulation units outstanding at end of period (000 omitted) 647 681 810 502 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/01/2002) Accumulation unit value at beginning of period $1.02 $1.00 $1.00 $1.01 $1.02 $1.00 Accumulation unit value at end of period $1.05 $1.02 $1.00 $1.00 $1.01 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 419 519 197 31 39 -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND (03/01/2002) Accumulation unit value at beginning of period $1.61 $1.47 $1.42 $1.22 $0.84 $1.00 Accumulation unit value at end of period $1.51 $1.61 $1.47 $1.42 $1.22 $0.84 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 55 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- 56 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 57 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 58 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 59 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 45271 K (5/08) PROSPECTUS MAY 1, 2008 RIVERSOURCE(R) ACCESSCHOICE SELECT VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM COMBINATION FIXED/DEFERRED VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM COMBINATION FIXED/DEFERRED VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT This prospectus contains information that you should know before investing in AccessChoice Select Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds, Series II Shares AllianceBernstein Variable Products Series Fund, Inc. (Class B) American Century(R) Variable Portfolios, Inc., Class II Columbia Funds Variable Insurance Trust Credit Suisse Trust Dreyfus Variable Investment Fund, Service Share Class Eaton Vance Variable Trust (VT) Fidelity(R) Variable Insurance Products Service Class 2 Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 Goldman Sachs Variable Insurance Trust (VIT) Janus Aspen Series: Series Shares Legg Mason Variable Portfolios I, Inc. MFS(R) Variable Insurance Trust(SM) - Service Class Oppenheimer Variable Account Funds, Service Shares PIMCO Variable Investment Trust (VIT) Putnam Variable Trust - Class IB Shares RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds The Universal Institutional Funds, Inc., Class II Shares Van Kampen Life Investment Trust Class II Shares Wanger Advisors Trust Some funds may not be available in your contract. Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 1 RiverSource Life offers other variable annuity contracts in addition to the contract described in this prospectus which your investment professional may or may not be authorized to offer to you. Each annuity has different features and optional benefits that may be appropriate for you based on your individual financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges you will pay when buying, owning and withdrawing money from the contract we describe in this prospectus may be more or less than the fees and charges of other variable annuities we issue. A securities broker dealer authorized to sell the contract described in this prospectus (selling firm) may not offer all the variable annuities we issue. In addition, some selling firms may not permit their investment professionals to sell the contract and/or optional benefits described in this prospectus to persons over a certain age (which may be lower than age limits we set), or may otherwise restrict the sale of the optional benefits described in this prospectus by their investment professionals. You should ask your investment professional about his or her selling firm's ability to offer you other variable annuities we issue (which might have lower fees and charges than the contract described in this prospectus), and any limits the selling firm has placed on your investment professional's ability to offer you the contract and/or optional riders described in this prospectus. TABLE OF CONTENTS KEY TERMS....................................... 3 THE CONTRACT IN BRIEF........................... 5 EXPENSE SUMMARY................................. 7 CONDENSED FINANCIAL INFORMATION................. 13 FINANCIAL STATEMENTS............................ 13 THE VARIABLE ACCOUNT AND THE FUNDS.............. 13 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............ 34 THE FIXED ACCOUNT............................... 35 BUYING YOUR CONTRACT............................ 37 CHARGES......................................... 39 VALUING YOUR INVESTMENT......................... 45 MAKING THE MOST OF YOUR CONTRACT................ 47 WITHDRAWALS..................................... 56 TSA -- SPECIAL PROVISIONS....................... 56 CHANGING OWNERSHIP.............................. 57 BENEFITS IN CASE OF DEATH....................... 57 OPTIONAL BENEFITS............................... 60 THE ANNUITY PAYOUT PERIOD....................... 76 TAXES........................................... 78 VOTING RIGHTS................................... 81 SUBSTITUTION OF INVESTMENTS..................... 81 ABOUT THE SERVICE PROVIDERS..................... 82 ADDITIONAL INFORMATION.......................... 83 APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE..................... 85 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)................. 86 APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L...... 88 APPENDIX C: EXAMPLE -- DEATH BENEFITS........... 93 APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER.......... 96 APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS...... 98 APPENDIX F: SECURESOURCE RIDERS -- ADDITIONAL RMD DISCLOSURE..................... 102 APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER......... 104 APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER.... 106 APPENDIX I: ASSET ALLOCATION PROGRAM FOR CONTRACTS PURCHASED BEFORE MAY 1, 2006........ 108 APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER DISCLOSURE......................... 109 APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT RIDER DISCLOSURE.................................... 121 APPENDIX L: INCOME ASSURER BENEFIT RIDERS DISCLOSURE.................................... 129 APPENDIX M: CONDENSED FINANCIAL INFORMATION (UNAUDITED)................................... 138 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........... 149
- -------------------------------------------------------------------------------- 2 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FIXED ACCOUNT: Our general account which includes the one-year fixed account and the DCA fixed account. Amounts you allocate to the fixed account earn interest rates we declare periodically. For Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of these funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you may allocate purchase payments or transfer contract value of at least $1,000. These accounts have guaranteed interest rates for guarantee periods we declare when you allocate purchase payments or transfer contract value to a GPA. These guaranteed rates and periods of time may vary by state. Unless an exception applies, transfers or withdrawals from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a guarantee period account is withdrawn or transferred more than 30 days before the end of its guarantee period. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - SIMPLE IRAs under Section 408(p) of the Code - - Simplified Employee Pension IRA (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code - - Custodial and investment only plans under Section 401(a) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 3 RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life" refer to RiverSource Life Insurance Company. VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our corporate office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our corporate office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Each contract has different expenses. Contract Option L has lower expenses than Contract Option C. Contract Option L has a four-year withdrawal charge schedule that applies to each purchase payment you make. Contract Option C eliminates the purchase payment withdrawal charge schedule, but has a higher mortality and expense risk fee than Contract Option L. Contract Option L includes the option to purchase a living benefit rider; living benefit riders are not currently available on Contract Option C(1). Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to keep your contract. PURPOSE: These contracts allow you to accumulate money for retirement or similar long term goal. You do this by making one or more purchase payments. You may allocate your purchase payments to the one-year fixed account, the DCA fixed account, GPAs and/or subaccounts of the variable account under the contract; however you risk losing amounts you invest in the subaccounts of the variable account. These accounts, in turn, may earn returns that increase the value of a contract. You may be able to purchase an optional benefit to reduce the investment risk you assume. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). BUYING A CONTRACT: There are many factors to consider carefully before you buy a variable annuity and any optional benefit rider. Variable annuities -- with or without optional benefit riders -- are not right for everyone. MAKE SURE YOU HAVE ALL THE FACTS YOU NEED BEFORE YOU PURCHASE A VARIABLE ANNUITY OR CHOOSE AN OPTIONAL BENEFIT RIDER. Some of the factors you may wish to consider include: - - "Tax-free" exchanges: It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. - - Tax-deferred retirement plans: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. - - Taxes: Generally, income earned on your contract value grows tax-deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. (see "Taxes") - - Your age: if you are an older person, you may not necessarily have a need for tax deferral, retirement income or a death benefit. Older persons who are considering buying a variable annuity may find it helpful to consult with or include a family member, friend or other trusted advisor in the decision making process before buying a contract. - - How long you intend to keep the contract: The contract has withdrawal charges (see "Withdrawals"). Does the contract meet your current and anticipated future need for liquidity? - - If you can afford the contract: are your annual income and assets adequate to buy the annuity and any optional benefit riders you may choose? - - The fees and expenses you will pay when buying, owning and withdrawing money from this contract. (see "Charges") - - How and when you plan to take money from the contract: under current tax law, withdrawals, including withdrawals made under optional benefit riders, are taxed differently than annuity payouts. In addition, certain withdrawals may be subject to a federal income tax penalty. (see "Withdrawals") - - Your investment objectives, how much experience you have in managing investments and how much risk you are you willing to accept. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 5 - - Short-term trading: if you plan to manage your investment in the contract by frequent or short-term trading, this contract is not suitable for you and you should not buy it. (see "Making the Most of Your Contract-Transferring Among Accounts") (1) Living benefit riders were available on Contract Option C prior to May 1, 2007. FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract. We will not deduct any contract charges or fees. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: Generally, you may allocate purchase payments among the: - - subaccounts of the variable account, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - GPAs which earn interest at rates that we declare when you allocate purchase payments or transfer contract value to these accounts. Some states restrict the amount you can allocate to these accounts. The required minimum investment in a GPA is $1,000. (see "The Guarantee Period Accounts (GPAs)") - - the one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "Buying Your Contract" and "Transfer policies"). (see "The Fixed Account") - - DCA fixed account, which earns interest at rates that we adjust periodically. There are restrictions on how long contract value can remain in this account (see "DCA Fixed Account"). TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to an MVA, unless an exception applies. You may establish automated transfers among the accounts. Transfers into the DCA fixed account are not permitted. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract. (see "Making the Most of Your Contract-Transferring Among Accounts") WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") OPTIONAL BENEFITS: You can buy additional benefits with your contract. We offer optional death benefits. Under Contract Option L, we also offer optional living benefits, including: a guaranteed contract value on a future date ("Accumulation Protector Benefit Rider") and a guaranteed minimum withdrawal benefit that permits you to withdraw a guaranteed amount from the contract over a period of time, which may include, under limited circumstances, the lifetime of a single person (SecureSource -- Single Life) or the lifetime of you and your spouse (SecureSource -- Joint Life) ("SecureSource Riders"). Optional living benefits require the use of a model portfolio which may limit transfers and allocations; may limit the timing, amount and allocation of purchase payments; and may limit the amount of withdrawals that can be taken under the optional benefit during a contract year. We previously offered other optional living benefits under both Contract Option L and Contract Option C. Optional benefits vary by state and may have eligibility requirements. (see "Optional Benefits") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount based on the death benefit selected. (see "Benefits in Case of Death") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you buy a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs and the DCA fixed account are not available during the payout period. (see "The Annuity Payout Period) - -------------------------------------------------------------------------------- 6 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (Contingent deferred sales charge as a percentage of purchase payments withdrawn) You select either contract Option L or Option C at the time of application. Option C has no withdrawal charge schedule but carries a higher mortality and expense risk fee than Option L.
CONTRACT OPTION L YEARS FROM PURCHASE PAYMENT RECEIPT WITHDRAWAL CHARGE PERCENTAGE 1-2 8% 3 7 4 6 Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal we impose a withdrawal charge. This charge will vary based on the contract option shown below and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in the table below. (See "Charges -- Withdrawal Charge" and "The Annuity Payout Period - -- Annuity Payout Plans.")
IF YOUR AIR IS 3.5%, THEN YOUR IF YOUR AIR IS 5%, THEN YOUR DISCOUNT RATE PERCENT (%) IS: DISCOUNT RATE PERCENT (%) IS: CONTRACT OPTION L 6.55% 8.05% CONTRACT OPTION C 6.65% 8.15%
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE FOUR DEATH BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE ROP Death Benefit 1.55% 0.15% 1.70% MAV Death Benefit 1.75 0.15 1.90 5% Accumulation Death Benefit 1.90 0.15 2.05 Enhanced Death Benefit 1.95 0.15 2.10 IF YOU SELECT CONTRACT OPTION C AND: ROP Death Benefit 1.65% 0.15% 1.80% MAV Death Benefit 1.85 0.15 2.00 5% Accumulation Death Benefit 2.00 0.15 2.15 Enhanced Death Benefit 2.05 0.15 2.20
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 7 OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the current contract anniversary.) OPTIONAL DEATH BENEFITS If eligible, you may select an optional death benefit in addition to the ROP and MAV Death Benefits. The fees apply only if you select one of these benefits. BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25% BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract anniversary.) OPTIONAL LIVING BENEFITS -- CURRENTLY OFFERED UNDER CONTRACT OPTION L(1) If eligible, you may select one of the following optional living benefits if available in your state. Each optional living benefit requires the use of an asset allocation model. The fees apply only if you elect one of these benefits. ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract value or the Minimum Contract Accumulation Value, whichever is greater.) SECURESOURCE(SM) - SINGLE LIFE RIDER FEE(2) MAXIMUM: 1.50% CURRENT: 0.65% SECURESOURCE(SM) - JOINT LIFE RIDER FEE(2) MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract value or the total Remaining Benefit Amount, whichever is greater.) OPTIONAL LIVING BENEFITS -- PREVIOUSLY OFFERED UNDER CONTRACT OPTION L AND CONTRACT OPTION C The following optional living benefits, except as noted, are no longer available for purchase. The fees apply only if you elected one of these benefits when you purchased your contract. Each optional living benefit requires the use of an asset allocation model portfolio. GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE(2) MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract value or the total Remaining Benefit Amount, whichever is greater.) GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE(2) MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract anniversary.) INCOME ASSURER BENEFIT(R) - MAV RIDER FEE(3) MAXIMUM: 1.50% CURRENT: 0.30%(4) INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER FEE(3) MAXIMUM: 1.75% CURRENT: 0.60%(4) INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE RIDER FEE(3) MAXIMUM: 2.00% CURRENT: 0.65%(4)
(As a percentage of the guaranteed income benefit base charged annually on the contract anniversary.) (1) Effective May 1, 2007, optional living benefits are not available on Contract Option C. (2) See disclosure in Appendix K. (3) See disclosure in Appendix L. (4) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. - -------------------------------------------------------------------------------- 8 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(a)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense reimbursements 0.52% 2.09%
(a) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor and/or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Basic Value Fund, Series II 0.67% 0.25% 0.29% --% 1.21% Shares AIM V.I. Capital Appreciation Fund, 0.61 0.25 0.27 -- 1.13 Series II Shares AIM V.I. Capital Development Fund, 0.75 0.25 0.31 -- 1.31(1) Series II Shares AIM V.I. Global Health Care Fund, 0.75 0.25 0.32 0.01 1.33(1) Series II Shares AIM V.I. International Growth Fund, 0.71 0.25 0.36 0.01 1.33(1) Series II Shares AIM V.I. Mid Cap Core Equity Fund, 0.72 0.25 0.29 0.03 1.29(1) Series II Shares AllianceBernstein VPS Balanced Shares 0.55 0.25 0.18 -- 0.98 Portfolio (Class B) AllianceBernstein VPS Global 0.75 0.25 0.17 -- 1.17 Technology Portfolio (Class B) AllianceBernstein VPS Growth and 0.55 0.25 0.04 -- 0.84 Income Portfolio (Class B) AllianceBernstein VPS International 0.75 0.25 0.06 -- 1.06 Value Portfolio (Class B) American Century VP Inflation 0.49 0.25 0.01 -- 0.75 Protection, Class II American Century VP Mid Cap Value, 0.90 0.25 0.01 -- 1.16 Class II American Century VP Ultra(R), Class 0.90 0.25 0.01 -- 1.16 II American Century VP Value, Class II 0.83 0.25 0.01 -- 1.09 Columbia High Yield Fund, Variable 0.78 0.25 0.12 -- 1.15(2) Series, Class B Columbia Marsico Growth Fund, 0.97 -- 0.02 -- 0.99 Variable Series, Class A Columbia Marsico International 1.02 0.25 0.12 -- 1.39 Opportunities Fund, Variable Series, Class B Columbia Small Cap Value Fund, 0.80 0.25 0.09 -- 1.14(3) Variable Series, Class B Credit Suisse Trust - Commodity 0.50 0.25 0.28 -- 1.03(4) Return Strategy Portfolio Dreyfus Investment Portfolios MidCap 0.75 0.25 0.05 -- 1.05(5) Stock Portfolio, Service Shares Dreyfus Variable Investment Fund 0.75 0.25 0.05 -- 1.05 Appreciation Portfolio, Service Shares Dreyfus Variable Investment Fund 0.75 0.25 0.28 -- 1.28 International Equity Portfolio, Service Shares Dreyfus Variable Investment Fund 1.00 0.25 0.19 -- 1.44 International Value Portfolio, Service Shares Eaton Vance VT Floating-Rate Income 0.57 0.25 0.32 -- 1.14 Fund Fidelity(R) VIP Contrafund(R) 0.56 0.25 0.09 -- 0.90 Portfolio Service Class 2 Fidelity(R) VIP Growth Portfolio 0.56 0.25 0.09 -- 0.90 Service Class 2 Fidelity(R) VIP Investment Grade Bond 0.32 0.25 0.11 -- 0.68 Portfolio Service Class 2 Fidelity(R) VIP Mid Cap Portfolio 0.56 0.25 0.10 -- 0.91 Service Class 2 Fidelity(R) VIP Overseas Portfolio 0.71 0.25 0.14 -- 1.10 Service Class 2
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES FTVIPT Franklin Income Securities 0.45% 0.25% 0.02% --% 0.72% Fund - Class 2 FTVIPT Franklin Rising Dividends 0.58 0.25 0.02 0.01 0.86(6) Securities Fund - Class 2 FTVIPT Franklin Small-Mid Cap Growth 0.47 0.25 0.28 0.01 1.01(6) Securities Fund - Class 2 FTVIPT Mutual Shares Securities 0.59 0.25 0.13 -- 0.97 Fund - Class 2 FTVIPT Templeton Global Income 0.50 0.25 0.14 -- 0.89 Securities Fund - Class 2 FTVIPT Templeton Growth Securities 0.73 0.25 0.03 -- 1.01 Fund - Class 2 Goldman Sachs VIT Mid Cap Value 0.80 -- 0.07 -- 0.87 Fund - Institutional Shares Goldman Sachs VIT Structured U.S. 0.65 -- 0.07 -- 0.72(7) Equity Fund - Institutional Shares Janus Aspen Series Large Cap Growth 0.64 0.25 0.02 0.01 0.92 Portfolio: Service Shares Legg Mason Partners Variable Small 0.75 -- 0.35 -- 1.10(8) Cap Growth Portfolio, Class I MFS(R) New Discovery Series - Service 0.90 0.25 0.11 -- 1.26 Class MFS(R) Total Return Series - Service 0.75 0.25 0.08 -- 1.08(9) Class MFS(R) Utilities Series - Service 0.75 0.25 0.10 -- 1.10(9) Class Oppenheimer Capital Appreciation 0.64 0.25 0.02 -- 0.91 Fund/VA, Service Shares Oppenheimer Global Securities 0.62 0.25 0.02 -- 0.89 Fund/VA, Service Shares Oppenheimer Main Street Small Cap 0.70 0.25 0.02 -- 0.97 Fund/VA, Service Shares Oppenheimer Strategic Bond Fund/VA, 0.57 0.25 0.02 0.02 0.86(10) Service Shares PIMCO VIT All Asset Portfolio, 0.18 0.25 0.25 0.69 1.37(11) Advisor Share Class Putnam VT Health Sciences 0.70 0.25 0.13 -- 1.08 Fund - Class IB Shares Putnam VT International Equity 0.73 0.25 0.11 0.01 1.10 Fund - Class IB Shares Putnam VT Small Cap Value 0.77 0.25 0.10 0.07 1.19 Fund - Class IB Shares Putnam VT Vista Fund - Class IB 0.65 0.25 0.11 -- 1.01 Shares RVST RiverSource(R) Partners Variable 0.70 0.13 0.16 -- 0.99(12) Portfolio - Fundamental Value Fund (previously RiverSource(R) Variable Portfolio - Fundamental Value Fund) RVST RiverSource(R) Partners Variable 0.83 0.13 1.13 -- 2.09(12) Portfolio - Select Value Fund (previously RiverSource(R) Variable Portfolio - Select Value Fund) RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(12) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable 0.33 0.13 0.14 -- 0.60 Portfolio - Cash Management Fund RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.44 0.13 0.17 -- 0.74(12) Portfolio - Global Inflation Protected Securities Fund RVST RiverSource(R) Variable 0.60 0.13 0.16 -- 0.89 Portfolio - Growth Fund RVST RiverSource(R) Variable 0.59 0.13 0.15 -- 0.87 Portfolio - High Yield Bond Fund RVST RiverSource(R) Variable 0.61 0.13 0.17 -- 0.91 Portfolio - Income Opportunities Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Mid Cap Growth Fund RVST RiverSource(R) Variable 0.73 0.13 0.17 -- 1.03(12) Portfolio - Mid Cap Value Fund RVST RiverSource(R) Variable 0.22 0.13 0.17 -- 0.52(12) Portfolio - S&P 500 Index Fund RVST RiverSource(R) Variable 0.48 0.13 0.18 -- 0.79 Portfolio - Short Duration U.S. Government Fund RVST Threadneedle(R) Variable 1.11 0.13 0.26 -- 1.50 Portfolio - Emerging Markets Fund (previously RiverSource(R) Variable Portfolio - Emerging Markets Fund) RVST Threadneedle(R) Variable 0.69 0.13 0.19 -- 1.01 Portfolio - International Opportunity Fund (previously RiverSource(R) Variable Portfolio - International Opportunity Fund) Van Kampen Life Investment Trust 0.56 0.25 0.03 -- 0.84 Comstock Portfolio, Class II Shares Van Kampen UIF Global Real Estate 0.85 0.35 0.38 -- 1.58(13) Portfolio, Class II Shares
- -------------------------------------------------------------------------------- 10 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES Van Kampen UIF Mid Cap Growth 0.75% 0.35% 0.35% --% 1.45%(13) Portfolio, Class II Shares Van Kampen UIF U.S. Real Estate 0.74 0.35 0.29 -- 1.38(13) Portfolio, Class II Shares Wanger International Small Cap 0.88 -- 0.11 -- 0.99 (effective June 1, 2008, the Fund will change its name to Wanger International) Wanger U.S. Smaller Companies 0.90 -- 0.05 -- 0.95 (effective June 1, 2008, the Fund will change its name to Wanger USA)
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series II shares to 1.45% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 1.30% for AIM V.I. Capital Development Fund, Series II Shares, 1.32% for AIM V.I. Global Health Care Fund, Series II Shares, 1.32% for AIM V.I. International Growth Fund, Series II Shares and 1.27% for AIM V.I. Mid Cap Core Equity Fund, Series II Shares. (2) The Fund's investment adviser has contractually agreed to waive 0.19% of the distribution (12b-1) fees until April 30, 2009. In addition, the Fund's investment adviser has contractually agreed to waive advisory fees and reimburse the Fund for certain expenses so that the total annual Fund operating expenses (exclusive of distribution fees, brokerage commissions, interest, taxes and extraordinary expenses, (if any)) do not exceed 0.60% annually through April 30, 2009. If these waivers were reflected in the above table, net expenses would be 0.66%. There is no guarantee that these waivers and/or limitations will continue after April 30, 2009. (3) The Distributor and/or the Advisor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, but including custodian charges relating to overdrafts, if any), after giving effect to any balance credits from the Fund's custodian, do not exceed 1.10% of the Fund's average daily net assets. If the waiver were reflected in the above table, net expenses would be 1.10%. The Advisor or the Distributor may modify or terminate these arrangements at any time. (4) Credit Suisse fee waivers are voluntary and may be discontinued at any time. After fee waivers and expense reimbursements net expenses would be 0.95% for Credit Suisse Trust - Commodity Return Strategy Portfolio. (5) The Dreyfus Corporation has agreed, until May 1, 2009, to waive receipt of its fees and/or assume the expenses of the portfolio so that the net expenses (subject to certain exclusions) do not exceed 0.90% for Dreyfus Investment Portfolios MidCap Stock Portfolio, Service Shares. (6) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the acquired fund) to the extent that the Fund's fees and expenses are due to those of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. After fee reductions net expenses would be 0.85% for FTVIPT Franklin Rising Dividends Securities Fund - Class 2 and 1.00% for FTVIPT Franklin Small-Mid Cap Growth Securities Fund - Class 2. (7) The Investment Adviser has voluntarily agreed to reduce or limit "Other expenses" (subject to certain exclusions) equal on an annualized basis to 0.044% of the Fund's average daily net assets. The expense reduction may be terminated at any time at the option of the Investment Adviser. After expense reductions net expenses would be 0.71% for Goldman Sachs VIT Structured U.S. Equity Fund - Institutional Shares. (8) Because of voluntary waivers and/or reimbursements, actual total operating expenses are not expected to exceed 1.00%. These voluntary fee waivers and reimbursements do not cover brokerage, taxes, interest and extraordinary expenses and may be reduced or terminated at any time. After fee waivers and expense reimbursements net expenses would be 1.00%. (9) MFS has agreed in writing to reduce its management fee to 0.65% for MFS Total Return Series annually on average daily net assets in excess of $3 billion and 0.70% for MFS Utilities Series annually on average daily net assets in excess of $1 billion. After fee reductions net expenses would be 1.05% for MFS Total Return Series - Service Class and 1.07% for MFS Utilities Series - Service Class. This written agreement will remain in effect until modified by the Fund's Board of Trustees. (10) The "Other expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year. That undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended Dec. 31, 2007, the transfer agent fees did not exceed this expense limitation. The Manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the acquired fund fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund and OFI Master Loan Fund LLC. After fee waivers and expense reimbursements, the net expenses would be 0.82% for Oppenheimer Strategic Bond Fund/VA, Service Shares. (11) PIMCO has contractually agreed through Dec. 31, 2008, to reduce its advisory fee to the extent that the "Acquired fund fees and expenses" attributable to advisory and administrative fees exceed 0.64% of the total assets invested in the acquired funds. PIMCO may recoup these waivers in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. After fee waivers and expense reimbursements, the net expenses would be 1.35%. (12) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed: 0.98% for RVST RiverSource(R) Partners Variable Portfolio - Fundamental Value Fund, 1.03% for RVST RiverSource(R) Partners Variable Portfolio - Select Value Fund, 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund, 0.72% for RVST RiverSource(R) Variable Portfolio - Global Inflation Protected Securities Fund, 1.05% for RVST RiverSource(R) Variable Portfolio - Mid Cap Value Fund and 0.51% for RVST RiverSource(R) Variable Portfolio - S&P 500 Index Fund. (13) After giving effect to the Adviser's voluntary fee waivers and/or expense reimbursement, the net expenses incurred by investors including certain investment related expenses, was 1.40% for Van Kampen UIF Global Real Estate Portfolio, Class II Shares, 1.16% for Van Kampen UIF Mid Cap Growth Portfolio, Class II Shares and 1.28% for Van Kampen UIF U.S. Real Estate Portfolio, Class II Shares. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 11 EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. CURRENTLY OFFERED UNDER CONTRACT OPTION L MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds, offered on or after May 1, 2007. They assume that you select the MAV Death Benefit, the SecureSource - Joint Life Rider and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,430 $2,565 $3,068 $5,942 $630 $1,865 $3,068 $5,942
CURRENTLY OFFERED UNDER CONTRACT OPTION C MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expense of any of the funds, offered on or after May 1, 2007. They assume that you select the MAV Death Benefit and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option C $450 $1,358 $2,274 $4,606 $450 $1,358 $2,274 $4,606
PREVIOUSLY OFFERED UNDER CONTRACT OPTION L & CONTRACT OPTION C MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds offered prior to May 1, 2007. They assume that you select the MAV Death Benefit, the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,460 $2,691 $3,335 $6,753 $660 $1,991 $3,335 $6,753 Contract Option C 671 2,020 3,380 6,826 671 2,020 3,380 6,826
ALL CONTRACTS MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP Death Benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR IF YOU WITHDRAW YOUR CONTRACT IF YOU SELECT AN ANNUITY PAYOUT PLAN AT AT THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,028 $1,403 $1,204 $2,580 $228 $703 $1,204 $2,580 Contract Option C 238 734 1,255 2,683 238 734 1,255 2,683
(1) In these examples, the $40 contract administrative charge is estimated as a .004% charge for Option L and a .004% for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. (2) Because these examples are intended to illustrate the most expensive combination of contract features, the maximum annual fee for each optional rider is reflected rather than the fee that is currently being charged. - -------------------------------------------------------------------------------- 12 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and the highest total annual variable expense combinations in Appendix M. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statements date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. This contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 13 various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under the asset allocation program we offer (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program") or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and when there is substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue including, but not limited to, expense payments and non-cash compensation a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue, including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - -------------------------------------------------------------------------------- 14 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 15 UNLESS AN ASSET ALLOCATION PROGRAM WE OFFER IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Basic Value Fund, N Y Long-term growth of capital. Invests Invesco Aim Advisors, Series II Shares at least 65% of its total assets in Inc. adviser, advisory equity securities of U.S. issuers that entities affiliated have market capitalizations of greater with Invesco Aim than $500 million and are believed to Advisors, Inc., be undervalued in relation to subadvisers. long-term earning power or other factors. The Fund may invest up to 25% of its total assets in foreign securities. AIM V.I. Capital Y Y Growth of capital. Invests principally Invesco Aim Advisors, Appreciation Fund, Series II in common stocks of companies likely Inc. adviser, advisory Shares to benefit from new or innovative entities affiliated products, services or processes as with Invesco Aim well as those with above-average Advisors, Inc., long-term growth and excellent subadvisers. prospects for future growth. The Fund can invest up to 25% of its total assets in foreign securities that involve risks not associated with investing solely in the United States. AIM V.I. Capital Development Y Y Long-term growth of capital. Invests Invesco Aim Advisors, Fund, Series II Shares primarily in securities (including Inc. adviser, advisory common stocks, convertible securities entities affiliated and bonds) of small-and medium-sized with Invesco Aim companies. The Fund may invest up to Advisors, Inc., 25% of its total assets in foreign subadvisers. securities. AIM V.I. Global Health Care Y Y Capital Growth. The Fund seeks to meet Invesco Aim Advisors, Fund, Series II Shares its objective by investing, normally, Inc. adviser, advisory at least 80% of its assets in entities affiliated securities of health care industry with Invesco Aim companies. The Fund may invest up to Advisors, Inc., 20% of its total assets in companies subadvisers. located in developing countries, i.e., those countries that are in the initial stages of their industrial cycles. The Fund may also invest up to 5% of its total assets in lower-quality debt securities, i.e., junk bonds. AIM V.I. International Y Y Long-term growth of capital. Invests Invesco Aim Advisors, Growth Fund, Series II primarily in a diversified portfolio Inc. adviser, advisory Shares of international equity securities, entities affiliated whose issuers are considered to have with Invesco Aim strong earnings momentum. The fund may Advisors, Inc., invest up to 20% of its total assets subadvisers. in security issuers located in developing countries and in securities exchangeable for or convertible into equity securities of foreign companies.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Mid Cap Core Equity N Y Long-term growth of capital. Invests Invesco Aim Advisors, Fund, Series II Shares normally at least 80% of its net Inc. adviser, advisory assets, plus the amount of any entities affiliated borrowings for investment purposes, in with Invesco Aim equity securities, including Advisors, Inc., convertible securities, of medium subadvisers. sized companies. The fund may invest up to 20% of its net assets in equity securities of companies in other market capitalization ranges or in investment grade debt securities. The fund may also invest up to 25% of its total assets in foreign securities. AllianceBernstein VPS N Y Total return consistent with AllianceBernstein L.P. Balanced Shares Portfolio reasonable risk, through a combination (Class B) of income and longer- term growth of capital. Invests primarily in U.S. government and agency obligations, bonds, fixed-income and equity securities of non-U.S. issuers (including short-and long-term debt securities and preferred stocks to the extent the Advisor deems best adapted to the current economic and market out look), and common stocks. AllianceBernstein VPS Global Y Y Long-term growth of capital. The Fund AllianceBernstein L.P. Technology Portfolio (Class invests at least 80% of its net assets B) in securities of companies that use technology extensively in the development of new or improved products or processes. Invests in a global portfolio of securities of U.S. and foreign companies selected for their growth potential. AllianceBernstein VPS Growth Y Y Long-term growth of capital. Invests AllianceBernstein L.P. and Income Portfolio (Class primarily in the equity securities of B) domestic companies that the Advisor deems to be undervalued. AllianceBernstein VPS Y Y Long-term growth of capital. Invests AllianceBernstein L.P. International Value primarily in a diversified portfolio Portfolio (Class B) of equity securities of established companies selected from more than 40 industries and from more than 40 developed and emerging market countries. American Century VP N Y Long-term total return. To protect American Century Inflation Protection, Class against U.S. inflation. Investment Management, II Inc.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER American Century VP Mid Cap Y Y Long-term capital growth with income American Century Value, Class II as a secondary objective. Long-term Investment Management, capital growth with income as Inc. secondary objective. Invests primarily in stocks of companies that management believes are undervalued at the time of purchase. The fund will invest at least 80% of its assets in securities of companies whose market capitalization at the time of purchase is within the capitalization range of the Russell 3000 Index, excluding the largest 100 such companies. American Century VP Y Y Long-term capital growth. Analytical American Century Ultra(R), Class II research tools and techniques are used Investment Management, to identify the stocks of larger-sized Inc. companies that appear to have the best opportunity of sustaining long-term above average growth. American Century VP Value, Y Y Long-term capital growth, with income American Century Class II as a secondary objective. Invests Investment Management, primarily in stocks of companies that Inc. management believes to be undervalued at the time of purchase. Columbia High Yield Fund, Y Y Total return, consisting of a high Columbia Management Variable Series, Class B level of income and capital Advisors, LLC, appreciation. Under normal advisor; MacKay circumstances, the Fund invests at Shields LLC, least 80% of net assets in domestic subadviser. and foreign corporate below investment grade debt securities. These securities generally will be, at the time of purchase, rated BB or below by Standard & Poor's Corporation (S&P) or Fitch, rated "Ba" or below by Moody's, or unrated but determined by the Advisor to be of comparable quality. The Fund invests primarily in domestic corporate below investment grade securities (including private placements), U.S. dollar-denominated foreign corporate below investment grade securities (including private placements), zero-coupon bonds and U.S. Government obligations. The Fund may invest up to 20% of net assets in equity securities that may include convertible securities. The Fund is not managed to a specific duration.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Columbia Marsico Growth Y Y Long-term growth of capital. Under Columbia Management Fund, Variable Series, Class normal circumstances, the Fund invests Advisors, LLC, A primarily in equity securities of adviser; Marsico large-capitalization companies that Capital Management, have market capitalizations of $5 LLC, sub-adviser. billion or more at the time of purchase. The Fund generally holds a core position of between 35 and 50 common stocks. It may hold up to 25% of total assets in foreign securities, including in emerging market securities. Columbia Marsico Y Y Long-term growth of capital. Under Columbia Management International Opportunities normal circumstances, the Fund invests Advisors, LLC, Fund, Variable Series, Class at least 65% of total assets in common adviser; Marsico B stocks of foreign companies. The Fund Capital Management, may invest in companies of any size LLC, sub-adviser. throughout the world that are selected for their long-term growth potential. The Fund normally invests in issuers from at least three different countries not including the United States. The Fund may invest in common stocks of companies operating in or economically tied to emerging markets countries. Some issuers or securities in the Fund's portfolio may be based in or economically tied to the United States. Columbia Small Cap Value Y Y Long-term capital appreciation. Under Columbia Management Fund, Variable Series, Class normal circumstances, the Fund invests Advisors, LLC B at least 80% of net assets in equity securities of companies that have market capitalizations in the range of companies in the Russell 2000 Index at the time of purchase that the Advisor believes are undervalued and have the potential for long-term growth. The Fund may invest up to 20% of total assets in foreign securities. The Fund may also invest in real estate investment trusts.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Credit Suisse Trust - Y Y Total Return. Invests in Credit Suisse Asset Commodity Return Strategy commodity-linked derivative Management, LLC Portfolio instruments backed and fixed- income securities. The portfolio invests in commodity-linked derivative instruments, such as commodity-linked notes, swap agreements, commodity options, futures and options on futures that provide exposure to the investment returns of the commodities markets without investing directly in physical commodities. The portfolio invests all of its assets in commodity-linked derivative instruments, such as structured notes and swaps, and fixed-income securities, subject to applicable IRS limits. The portfolio may also gain exposure to commodity markets by investing in the Credit Suisse Cayman Commodity Fund II, a wholly owned subsidiary of the Portfolio formed in the Cayman Island. Dreyfus Investment N Y Investment results greater than the The Dreyfus Portfolios MidCap Stock total return performance of publicly Corporation Portfolio, Service Shares traded common stocks of medium-sized domestic companies in the aggregate, as represented by the Standard & Poor's Midcap 400 Index. The portfolio normally invests at least 80% of its assets in stocks of mid-size companies. The portfolio invests in growth and value stocks, which are chosen through a disciplined investment process that combines computer modeling techniques, fundamental analysis and risk management. Consistency of returns compared to the S&P 400 is a primary goal of the investment process. The portfolio's stock investments may include common stocks, preferred stocks, convertible securities and depository receipts, including those issued in initial public offerings or shortly thereafter.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Dreyfus Variable Investment N Y Long-term capital growth consistent The Dreyfus Fund Appreciation Portfolio, with the preservation of capital. Its Corporation; Fayez Service Shares secondary goal is current income. To Sarofim & Co., pursue these goals, the portfolio sub-adviser. normally invests at least 80% of its assets in common stocks. The portfolio focuses on "blue chip" companies with total market capitalizations of more than $5 billion at the time of purchase, including multinational companies. These established companies have demonstrated sustained patterns of profitability, strong balance sheets, an expanding global presence and the potential to achieve predictable, above-average earnings growth. Dreyfus Variable Investment Y Y Capital growth. To pursue this goal, The Dreyfus Fund International Equity the portfolio primarily invests in Corporation Portfolio, Service Shares growth stocks of foreign companies. Normally, the portfolio invests at least 80% of its assets in stocks, including common stocks, preferred stocks and convertible securities, including those purchased in initial public offering. Dreyfus Variable Investment Y Y Long-term capital growth. To pursue The Dreyfus Fund International Value this goal, the portfolio normally Corporation Portfolio, Service Shares invests at least 80% of its assets in stocks. The portfolio ordinarily invests most of its assets in securities of foreign companies which Dreyfus considers to be value companies. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities, including those purchased in initial public offerings or shortly thereafter. The portfolio may invest in companies of any size. The portfolio may also invest in companies located in emerging markets.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Eaton Vance VT Floating-Rate Y Y High level of current income. The Fund Eaton Vance Management Income Fund invests primarily in senior floating rate loans ("Senior Loans"). Senior Loans typically are of below investment grade quality and have below investment grade credit ratings, which ratings are associated with securities having high risk, speculative characteristics. The Fund invests at least 80% of its net assets in income producing floating rate loans and other floating rate debt securities. The Fund may also purchase investment grade fixed income debt securities and money market instruments. The Fund may invest up to 25% of its total assets in foreign securities and may engage in certain hedging transactions. The Fund may purchase derivative instruments, such as futures contracts and options thereon, interest rate and credit default swaps, credit linked notes and currency hedging derivatives. Fidelity(R) VIP Y Y Long-term capital appreciation. Fidelity Management & Contrafund(R) Portfolio Normally invests primarily in common Research Company Service Class 2 stocks. Invests in securities of (FMR), investment companies whose value it believes is manager; FMR U.K. and not fully recognized by the public. FMR Far East, Invests in either "growth" stocks or sub-advisers. "value" stocks or both. The fund invests in domestic and foreign issuers. Fidelity(R) VIP Growth N Y Achieve capital appreciation. Normally Fidelity Management & Portfolio Service Class 2 invests primarily in common stocks. Research Company Invests in companies that it believes (FMR), investment have above-average growth potential manager; FMR U.K., FMR (stocks of these companies are often Far East, called "growth" stocks). The Fund sub-advisers. invests in domestic and foreign issuers. Fidelity(R) VIP Investment Y Y High level of current income Fidelity Management & Grade Bond Portfolio Service consistent with the preservation of Research Company Class 2 capital. Normally invests at least 80% (FMR), investment of assets in investment-grade debt manager; FMR U.K., FMR securities (those of medium and high Far East, quality) of all types and repurchase sub-advisers. agreements for those securities. Fidelity(R) VIP Mid Cap Y Y Long-term growth of capital. Normally Fidelity Management & Portfolio Service Class 2 invests primarily in common stocks. Research Company Normally invests at least 80% of (FMR), investment assets in securities of companies with manager; FMR U.K., FMR medium market capitalizations. May Far East, invest in companies with smaller or sub-advisers. larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Fidelity(R) VIP Overseas Y Y Long-term growth of capital. Normally Fidelity Management & Portfolio Service Class 2 invests primarily in common stocks of Research Company foreign securities. Normally invests (FMR), investment at least 80% of assets in non-U.S. manager; FMR U.K., FMR securities. Far East, Fidelity International Investment Advisors (FIIA) and FIIA U.K., sub-advisers. FTVIPT Franklin Income Y Y Maximize income while maintaining Franklin Advisers, Securities Fund - Class 2 prospects for capital appreciation. Inc. The Fund normally invests in both equity and debt securities. The Fund seeks income by investing in corporate, foreign, and U.S. Treasury bonds as well as stocks with dividend yields the manager believes are attractive. FTVIPT Franklin Rising N Y Long-term capital appreciation, with Franklin Advisory Dividends Securities preservation of capital as an Services, LLC Fund - Class 2 important consideration. The Fund normally invests at least 80% of its net assets in investments of companies that have paid rising dividends, and normally invests predominantly in equity securities. FTVIPT Franklin Small-Mid N Y Long-term capital growth. The Fund Franklin Advisers, Cap Growth Securities normally invests at least 80% of its Inc. Fund - Class 2 net assets in investments of small capitalization and mid capitalization companies and normally invests predominantly in equity securities. FTVIPT Mutual Shares N Y Capital appreciation, with income as a Franklin Mutual Securities Fund - Class 2 secondary goal. The Fund normally Advisers, LLC invests primarily in equity securities of companies that the manager believes are undervalued. The Fund also invests, to a lesser extent in risk arbitrage securities and distressed companies. FTVIPT Templeton Global Y Y High current income consistent with Franklin Advisers, Income Securities Fund - preservation of capital, with capital Inc. Class 2 appreciation as a secondary consideration. The Fund normally invests mainly in debt securities of governments and their political subdivisions and agencies, supranational organizations and companies located anywhere in the world, including emerging markets.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER FTVIPT Templeton Growth Y Y Long-term capital growth. The Fund Templeton Global Securities Fund - Class 2 normally invests primarily in equity Advisors Limited, securities of companies located adviser; Templeton anywhere in the world, including those Asset Management Ltd., in the U.S. and in emerging markets. subadviser. Goldman Sachs VIT Mid Cap Y Y Long-term capital appreciation. The Goldman Sachs Asset Value Fund - Institutional Fund invests, under normal Management, L.P. Shares circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase) ("Net Assets") in a diversified portfolio of equity investments in mid-cap issuers with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constituting the Russell Midcap(R) Value Index at the time of investment. If the market capitalization of a company held by the Fund moves outside this range, the Fund may, but is not required to, sell the securities. The capitalization range of the Russell Midcap(R) Value Index is currently between $1.1 billion and $21 billion. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its Net Assets in foreign securities, including securities of issuers in countries with emerging markets or economies ("emerging countries") and securities quoted in foreign currencies. The Fund may invest in the aggregate up to 20% of its Net Assets in companies with public stock market capitalizations outside the range of companies constituting the Russell Midcap(R) Value Index at the time of investment and in fixed-income securities, such as government, corporate and bank debt obligations.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Goldman Sachs VIT Structured Y Y Long-term growth of capital and Goldman Sachs Asset U.S. Equity dividend income. The Fund invests, Management, L.P. Fund - Institutional Shares under normal circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at the time of purchase) ("Net Assets") in a diversified portfolio of equity investments in U.S. issuers, including foreign companies that are traded in the United States. However, it is currently anticipated that, under normal circumstances, the Fund will invest at least 95% of its Net Assets in such equity investments. The Fund's investments are selected using a variety of quantitative techniques, derived from fundamental research including but not limited to valuation, momentum, profitability and earnings quality, in seeking to maximize the Fund's expected returns. The Fund maintains risk, style, capitalization and industry characteristics similar to the S&P 500 Index. The S&P 500 Index is an index of large-cap stocks designed to reflect a broad representation of the U.S. economy. The Fund seeks to maximize expected return while maintaining these and other characteristics similar to the benchmark. The Fund is not required to limit its investments to securities in the S&P 500 Index. Janus Aspen Series Large Cap Y Y Long-term growth of capital in a Janus Capital Growth Portfolio: Service manner consistent with the Management LLC Shares preservation of capital. Invests under normal circumstances at least 80% of its net assets in common stocks of large-sized companies. Large-sized companies are those whose market capitalization falls within the range of companies in the Russell 1000(R) Index at the time of purchase. Legg Mason Partners Variable Y Y Long-term growth of capital. Under Legg Mason Partners Small Cap Growth Portfolio, normal circumstances, the fund invests Fund Advisor, LLC, Class I at least 80% of its net assets in adviser; ClearBridge equity securities of companies with Advisors, LLC, small market capitalizations and sub-adviser. related investments.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER MFS(R) New Discovery N Y Capital appreciation. Invests in MFS Investment Series - Service Class stocks of companies MFS believes to Management(R) have above average earnings growth potential compared to other companies (growth companies). Growth companies tend to have stock prices that are high relative to their earnings, dividends, book value, or other financial measures. The Fund generally focuses on companies with small capitalizations. MFS(R) Total Return Y Y Total return. Invests primarily in MFS Investment Series - Service Class equity and fixed income securities. Management(R) MFS invests between 40% and 75% of the fund's net assets in equity securities and at least 25% of the fund's total assets in fixed-income senior securities. MFS(R) Utilities Series - Y Y Total return. Normally invests at MFS Investment Service Class least 80% of the fund's net assets in Management(R) securities of issuers in the utilities industry. The Fund's assets may be invested in companies of any size. Oppenheimer Capital Y Y Capital appreciation by investing in OppenheimerFunds, Inc. Appreciation Fund/VA, securities of well-known, established Service Shares companies. Oppenheimer Global Y Y Long-term capital appreciation. OppenheimerFunds, Inc. Securities Fund/VA, Service Invests mainly in common stocks of Shares U.S. and foreign issuers that are "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. Oppenheimer Main Street Y Y Capital appreciation. Invests mainly OppenheimerFunds, Inc. Small Cap Fund/VA, Service in common stocks of Shares small-capitalization U.S. companies that the fund's investment manager believes have favorable business trends or prospects. Oppenheimer Strategic Bond Y Y High level of current income OppenheimerFunds, Inc. Fund/VA, Service Shares principally derived from interest on debt securities. Invests mainly in three market sectors: debt securities of foreign governments and companies, U.S. government securities and lower-rated high yield securities of U.S. and foreign companies.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER PIMCO VIT All Asset Y Y Maximum real return consistent with Pacific Investment Portfolio, Advisor Share preservation of real capital and Management Company LLC Class prudent investment management period. The Portfolio seeks to achieve its investment objective by investing under normal circumstances substantially all of its assets in Institutional Class shares of the PIMCO Funds, an affiliated open-end investment company, except the All Asset and All Asset All Authority Funds ("Underlying Funds"). Though it is anticipated that the Portfolio will not currently invest in the European StocksPLUS(R) TR Strategy, Far East (ex-Japan) StocksPLUS(R) TR Strategy, Japanese StocksPLUS(R) TR Strategy, StocksPLUS(R) Municipal-Backed and StocksPLUS(R) TR Short Strategy Funds, the Portfolio may invest in these Funds in the future, without shareholder approval, at the discretion of the Portfolio's asset allocation sub-adviser. Putnam VT Health Sciences N Y Capital appreciation. The fund pursues Putnam Investment Fund - Class IB Shares its goal by investing mainly in common Management, LLC stocks of companies in the health sciences industries, with a focus on growth stocks. Under normal circumstances, the fund invests at least 80% of its net assets in securities of (a) companies that derive at least 50% of their assets, revenues or profits from the pharmaceutical, health care services, applied research and development and medical equipment and supplies industries, or (b) companies Putnam Management thinks have the potential for growth as a result of their particular products, technology, patents or other market advantages in the health sciences industries. Putnam VT International N Y Capital appreciation. The fund pursues Putnam Investment Equity Fund - Class IB its goal by investing mainly in common Management, LLC Shares stocks of companies outside the United States that Putnam Management believes have favorable investment potential. Under normal circumstances, the fund invests at least 80% of its net assets in equity investments. Putnam VT Small Cap Value N Y Capital appreciation. The fund pursues Putnam Investment Fund - Class IB Shares its goal by investing mainly in common Management, LLC stocks of U.S. companies, with a focus on value stocks. Under normal circumstances, the fund invests at least 80% of its net assets in small companies of a size similar to those in the Russell 2000 Value Index.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Putnam VT Vista Fund - Class N Y Capital appreciation. The fund pursues Putnam Investment IB Shares its goal by investing mainly in common Management, LLC stocks of U.S. companies, with a focus on growth stocks. RVST RiverSource Partners Y Y Long-term capital growth. The Fund's RiverSource Variable assets are primarily invested in Investments, LLC, Portfolio - Fundamental equity securities of U.S. companies. adviser; Davis Value Fund Under normal market conditions, the Selected Advisers, (previously RiverSource Fund's assets will be invested L.P., subadviser. Variable Portfolio - primarily in companies with market Fundamental Value Fund) capitalizations of at least $5 billion at the time of the Fund's investment. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Partners Y Y Long-term growth of capital. Invests RiverSource Variable Portfolio - Select primarily in equity securities of mid Investments, LLC, Value Fund cap companies as well as companies adviser; Systematic (previously RiverSource with larger and smaller market Financial Management, Variable Portfolio - Select capitalizations. The Fund considers L.P. and WEDGE Capital Value Fund) mid-cap companies to be either those Management L.L.P., with a market capitalization of up to sub-advisers. $15 billion or those whose market capitalization falls within range of the Russell Midcap(R) Value Index. RVST RiverSource Partners Y Y Long-term capital appreciation. Under RiverSource Variable Portfolio - Small normal market conditions, at least 80% Investments, LLC, Cap Value Fund of the Fund's net assets will be adviser; River Road (previously RiverSource invested in small cap companies with Asset Management, LLC, Variable Portfolio - Small market capitalization, at the time of Donald Smith & Co., Cap Value Fund) investment, of up to $2.5 billion or Inc., Franklin that fall within the range of the Portfolio Associates Russell 2000(R) Value Index. The Fund LLC, Barrow, Hanley, may invest up to 25% of its net assets Mewhinney & Strauss, in foreign investments. Inc. and Denver Investment Advisors LLC, subadvisers. RVST RiverSource Variable Y Y Maximum current income consistent with RiverSource Portfolio - Cash Management liquidity and stability of principal. Investments, LLC Fund Invests primarily in money market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Y Y High level of current income while RiverSource Portfolio - Diversified Bond attempting to conserve the value of Investments, LLC Fund the investment for the longest period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage-and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets. RVST RiverSource Variable Y Y High level of current income and, as a RiverSource Portfolio - Diversified secondary goal, steady growth of Investments, LLC Equity Income Fund capital. Under normal market conditions, the Fund invests at least 80% of its net assets in dividend-paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Y Y Total return that exceeds the rate of RiverSource Portfolio - Global Inflation inflation over the long-term. Investments, LLC Protected Securities Fund Non-diversified mutual fund that, under normal market conditions, invests at least 80% of its net assets in inflation-protected debt securities. These securities include inflation-indexed bonds of varying maturities issued by U.S. and foreign governments, their agencies or instrumentalities, and corporations. RVST RiverSource Variable Y Y Long-term capital growth. Invests RiverSource Portfolio - Growth Fund primarily in common stocks and Investments, LLC securities convertible into common stocks that appear to offer growth opportunities. These growth opportunities could result from new management, market developments, or technological superiority. The Fund may invest up to 25% of its net assets in foreign investments.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Y Y High current income, with capital RiverSource Portfolio - High Yield Bond growth as a secondary objective. Under Investments, LLC Fund normal market conditions, the Fund invests at least 80% of its net assets in high-yield debt instruments (commonly referred to as "junk") including corporate debt securities as well as bank loans rated below investment grade by a nationally recognized statistical rating organization, or if unrated, determined to be of comparable quality. Up to 25% of the Fund may be invested in high yield debt instruments of foreign issuers. RVST RiverSource Variable Y Y High total return through current RiverSource Portfolio - Income income and capital appreciation. Under Investments, LLC Opportunities Fund normal market conditions, the Fund invests primarily in income-producing debt securities with an emphasis on the higher rated segment of the high-yield (junk bond) market. These income-producing debt securities include corporate debt securities as well as bank loans. The Fund will purchase only securities rated B or above, or unrated securities believed to be of the same quality. If a security falls below a B rating, the Fund may continue to hold the security. Up to 25% of the Fund may be in foreign investments. RVST RiverSource Variable Y Y Capital appreciation. Under normal RiverSource Portfolio - Large Cap Equity market conditions, the Fund invests at Investments, LLC Fund least 80% of its net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable N Y Growth of capital. Under normal market RiverSource Portfolio - Mid Cap Growth conditions, the Fund invests at least Investments, LLC Fund 80% of its net assets at the time of purchase in equity securities of mid capitalization companies. The investment manager defines mid-cap companies as those whose market capitalization (number of shares outstanding multiplied by the share price) falls within the range of the Russell Midcap(R) Growth Index.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Y Y Long-term growth of capital. Under RiverSource Portfolio - Mid Cap Value normal circumstances, the Fund invests Investments, LLC Fund at least 80% of its net assets (including the amount of any borrowings for investment purposes) in equity securities of medium-sized companies. Medium-sized companies are those whose market capitalizations at the time of purchase fall within the range of the Russell Midcap(R) Value Index. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Y Y Long-term capital appreciation. The RiverSource Portfolio - S&P 500 Index Fund seeks to provide investment Investments, LLC Fund results that correspond to the total return (the combination of appreciation and income) of large-capitalization stocks of U.S. companies. The Fund invests in common stocks included in the Standard & Poor's 500 Composite Stock Price Index (S&P 500). The S&P 500 is made up primarily of large-capitalization companies that represent a broad spectrum of the U.S. economy. RVST RiverSource Variable Y Y High level of current income and RiverSource Portfolio - Short Duration safety of principal consistent with Investments, LLC U.S. Government Fund investment in U.S. government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. RVST Threadneedle Variable Y Y Long-term capital growth. The Fund's RiverSource Portfolio - Emerging Markets assets are primarily invested in Investments, LLC, Fund (previously RiverSource equity securities of emerging market adviser; Threadneedle Variable Portfolio - companies. Under normal market International Limited, Emerging Markets Fund) conditions, at least 80% of the Fund's an indirect wholly- net assets will be invested in owned subsidiary of securities of companies that are Ameriprise Financial, located in emerging market countries, sub-adviser. or that earn 50% or more of their total revenues from goods and services produced in emerging market countries or from sales made in emerging market countries. RVST Threadneedle Variable Y Y Capital appreciation. Invests RiverSource Portfolio - International primarily in equity securities of Investments, LLC, Opportunity Fund foreign issuers that are believed to adviser; Threadneedle (previously RiverSource offer strong growth potential. The International Limited, Variable Portfolio - Fund may invest in developed and in an indirect wholly- International Opportunity emerging markets. owned subsidiary of Fund) Ameriprise Financial, sub-adviser.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Van Kampen Life Investment Y Y Capital growth and income through Van Kampen Asset Trust Comstock Portfolio, investments in equity securities, Management Class II Shares including common stocks, preferred stocks and securities convertible into common and preferred stocks. The Portfolio emphasizes value style of investing seeking well-established, undervalued companies believed by the Portfolio's investment adviser to posses the potential for capital growth and income. Van Kampen UIF Global Real Y Y Current income and capital Morgan Stanley Estate Portfolio, Class II appreciation. Invests primarily in Investment Management Shares equity securities of companies in the Inc., doing business real estate industry located as Van Kampen, throughout the world, including real adviser; Morgan estate operating companies, real Stanley Investment estate investment trusts and similar Management Limited and entities established outside the U.S. Morgan Stanley (foreign real estate companies). Investment Management Company, sub-advisers. Van Kampen UIF Mid Cap Y Y Long-term capital growth. Invests Morgan Stanley Growth Portfolio, Class II primarily in growth-oriented equity Investment Management Shares securities of U.S. mid cap companies Inc., doing business and foreign companies, including as Van Kampen. emerging market securities. Van Kampen UIF U.S. Real N Y Above-average current income and Morgan Stanley Estate Portfolio, Class II long-term capital appreciation by Investment Management Shares investing primarily in equity Inc., doing business securities of companies in the U.S. as Van Kampen. real estate industry, including real estate investment trusts. Non-diversified Portfolio that invests primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts.
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AVAILABLE AVAILABLE UNDER UNDER CONTRACTS CONTRACTS PURCHASED PURCHASED ON OR AFTER PRIOR TO INVESTING IN MAY 1, 2007 MAY 1, 2007 INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Wanger International Small Y Y Long-term growth of capital. Invests Columbia Wanger Asset Cap primarily in stocks of companies based Management, L.P. outside the U.S. with market capitalizations of less than $5 billion at time of initial purchase. Effective June 1, 2008, the Effective June 1, 2008: Fund will change its name to Long-term growth of capital. Under Wanger International. normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion. Wanger U.S. Smaller Y Y Long-term growth of capital. Invests Columbia Wanger Asset Companies primarily in stocks of small- and Management, L.P. medium-size U.S. companies with market capitalizations of less than $5 billion at time of initial purchase. Effective June 1, 2008, the Effective June 1, 2008: Fund will change its name to Long-term growth of capital. Under Wanger USA. normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion.
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 33 THE GUARANTEE PERIOD ACCOUNTS (GPAS) The GPAs may not be available in some states. Currently, unless an asset allocation program is in effect, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The required minimum investment in each GPA is $1,000. These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the guarantee period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion (future rates). We will determine future rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable guarantee periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We will not apply an MVA to contract value you transfer or withdraw out of the GPAs within 30 days before the end of the guarantee period. During this 30 day window you may choose to start a new guarantee period of the same length, transfer the contract value to a GPA of another length, transfer the contract value to any of the subaccounts or withdraw the contract value (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your guarantee period, our current practice is to automatically transfer the contract value into the shortest GPA term offered in your state. We guarantee the contract value allocated to the GPAs, including interest credited, if you do not make any transfers or withdrawals from the GPAs prior to 30 days before the end of the Guarantee Period (30 day rule). At all other times, and unless one of the exceptions to the 30 day rule described below applies, we will apply an MVA if you withdraw or transfer contract value from a GPA including withdrawals under the Guarantor Withdrawal Benefit rider, or you elect an annuity payout plan while you have contract value invested in a GPA. We will refer to these transactions as "early withdrawals." The application of an MVA may result in either a gain or loss of principal. - -------------------------------------------------------------------------------- 34 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The 30-day rule does not apply and no MVA will apply to: - - transfers from a one-year GPA occurring under an automated dollar-cost averaging program or Interest Sweep Strategy; - - automatic rebalancing under any Portfolio Navigator model portfolio we offer which contains one or more GPAs. However, an MVA will apply if you transfer to a new Portfolio Navigator model portfolio; - - amounts applied to an annuity payout plan while a Portfolio Navigator model portfolio containing one or more GPAs is in effect; - - reallocation of your contract value according to an updated Portfolio Navigator model portfolio; - - amounts withdrawn for fees and charges; or - - amounts we pay as death claims. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your guarantee period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the guarantee period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A. THE FIXED ACCOUNT (APPLIES TO CONTRACTS ISSUED ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR STATE) The fixed account is our general account. Amounts allocated to the fixed account become part of our general account. The fixed account includes the one-year fixed account and the DCA fixed account. We credit interest on amounts you allocate to the fixed account at rates we determine from time to time in our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns we earn on our general account investments, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed minimum interest rate on amounts invested in the fixed account may vary by state but will not be lower than state law allows. We back the principal and interest guarantees relating to the fixed account. These guarantees are based on the continued claims-paying ability of RiverSource Life. The fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the fixed account, however, disclosures regarding the fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ONE-YEAR FIXED ACCOUNT Unless an asset allocation program we offer is in effect, you may allocate purchase payments or transfer contract value to the one-year fixed account.(1) The value of the one-year fixed account increases as we credit interest to the one-year fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. We credit the one-year fixed account with the current guaranteed annual rate that is in effect on the date we receive your purchase payment or you transfer contract value to the one-year fixed account. The interest rate we apply to each purchase payment or transfer to the one-year fixed account is guaranteed for one year. There are restrictions on the amount you can allocate to the one-year fixed account as well as on transfers from this account (see "Buying Your Contract" and "Making the Most of Your Contract -- Transfer policies"). (1) For Contract Option C, the one-year fixed account may not be available, or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. DCA FIXED ACCOUNT You may allocate purchase payments to the DCA fixed account. You may not transfer contract value to the DCA fixed account. You may allocate your entire initial purchase payment to the DCA fixed account for a term of six or twelve months. We reserve the right to offer shorter or longer terms for the DCA fixed account. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 35 In accordance with your investment instructions, we transfer a pro rata amount from the DCA fixed account to your investment allocations monthly so that, at the end of the DCA fixed account term, the balance of the DCA fixed account is zero. The value of the DCA fixed account increases when we credit interest to the DCA fixed account, and decreases when we make monthly transfers from the DCA fixed account to your investment allocations. We credit interest only on the declining balance of the DCA fixed account; we do not credit interest on amounts that have been transferred from the DCA fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. Generally, we will credit the DCA fixed account with interest at the same annual effective rate we apply to one-year fixed account on the date we receive your purchase payment, regardless of the length of the term you select. We reserve the right to declare different annual effective rates: - - for the DCA fixed account and the one-year fixed account; - - for the DCA fixed accounts with terms of differing length; - - for amounts in the DCA fixed account you instruct us to transfer to the one-year fixed account if available under your contract; - - for amounts in the DCA fixed account you instruct us to transfer to the GPAs; - - for amounts in the DCA fixed account you instruct us to transfer to the subaccounts. The interest rates in effect for the DCA fixed account when we receive your purchase payment are guaranteed for the length of the term. When you allocate an additional purchase payment to an existing DCA fixed account term, the interest rates applicable to that purchase payment will be the rates in effect for the DCA fixed account of the same term on the date we receive your purchase payment. For DCA fixed accounts with an initial term (or, in the case of an additional purchase payment, a remaining term) of less than twelve months, the net effective interest rates we credit to the DCA fixed account balance will be less than the declared annual effective rates. Alternatively, you may allocate your initial purchase payment to any combination of the following which equals one hundred percent of the amount you invest: - - the DCA fixed account for a six month term; - - the DCA fixed account for a twelve month term; - - the Portfolio Navigator model portfolio in effect; - - if no Portfolio Navigator model portfolio is in effect, to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If you make a purchase payment while a DCA fixed account term is in progress, you may allocate your purchase payment among the following: - - to the DCA fixed account term(s) then in effect. Amounts you allocate to an existing DCA fixed account term will be transferred out of the DCA fixed account over the remainder of the term. For example, if you allocate a new purchase payment to an existing DCA fixed account term of six months when only two months remains in the six month term, the amount you allocate will be transferred out of the DCA fixed account over the remaining two months of the term; - - to the Portfolio Navigator model portfolio then in effect; - - if no Portfolio Navigator model portfolio is in effect, then to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If no DCA fixed account term is in progress when you make an additional purchase payment, you may allocate it according to the rules above for the allocation of your initial purchase payment. If you participate in a model portfolio, and you change to a different model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account to your newly-elected model portfolio. If your contract permits, and you discontinue your participation in a model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account for the remainder of the term in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). You may discontinue any DCA fixed account before the end of its term by giving us notice. If you do so, we will transfer the remaining balance of the DCA fixed account whose term you are ending to the model portfolio in effect, or if no model portfolio is in effect, in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the - -------------------------------------------------------------------------------- 36 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). Dollar-cost averaging from the DCA fixed account does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. For a discussion of how dollar-cost averaging works, see "Making the Most of Your Contract -- Automated Dollar-Cost Averaging." BUYING YOUR CONTRACT Your investment professional will help you complete and submit an application and send it along with your initial purchase payment to our corporate office. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. You may buy Contract Option L or Contract Option C. Contract Option L has a four-year withdrawal charge schedule and optional living benefit riders. Contract Option C eliminates the per purchase payment withdrawal charge schedule in exchange for a higher mortality and expense risk fee; additionally, optional living benefit riders are not available under Contract Option C. Both contracts have the same underlying funds. As the owner, you have all rights and may receive all benefits under the contract. You may select a qualified or nonqualified annuity. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 85 or younger. (The age limit may be younger for qualified annuities in some states.) When you apply, you may select (if available in your state): - - contract Option L or Option C; - - GPAs, the one-year fixed account (if included), the DCA fixed account and/or subaccounts in which you want to invest; - - how you want to make purchase payments; - - a beneficiary; - - the optional Portfolio Navigator asset allocation program(1); and - - one of the following Death Benefits: - ROP Death Benefit - MAV Death Benefit - 5% Accumulation Death Benefit(2) - Enhanced Death Benefit(2) In addition, under Contract Option L(3) you may also select (if available in your state): EITHER OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM): - - Accumulation Protector Benefit rider - - SecureSource rider Under both Contract Option L and Contract Option C, you may also select (if available in your state): EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS: - - Benefit Protector Death Benefit rider(4) - - Benefit Protector Plus Death Benefit rider(4) (1) There is no additional charge for this feature. (2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not available with Benefit Protector and Benefit Protector Plus Death Benefit riders. (3) Living benefit riders were available on Contract Option C prior to May 1, 2007. (4) Not available with the 5% Accumulation Death Benefit or Enhanced Death Benefit riders. This contract provides for allocations of purchase payments to the GPAs, the one-year fixed account, the DCA fixed account and/or to the subaccounts in even 1% increments subject to the required $1,000 required minimum investment for the GPAs. For Contract Option L, the amount of any purchase payment allocated to the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish an automated dollar-cost averaging arrangement with respect to the purchase payment according to procedures currently in effect. We reserve the right to further limit purchase payment allocations to the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. For Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 37 If your application is complete, we will process it and apply your purchase payment to the GPAs, the one-year fixed account, the DCA fixed account and subaccounts you selected within two business days after we receive it at our corporate office. If we accept your application, we will send you a contract. If your application is not complete, you must give us the information to complete it within five business days. If we cannot accept your application within five business days, we will decline it and return your payment unless you specifically ask us to keep the payment and apply it once your application is complete. We will credit additional purchase payments you make to your accounts on the valuation date we receive them. If we receive an additional purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our corporate office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a Systematic Investment Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts begin on the retirement date. When we process your application, we will establish the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. Your selected date can align with your actual retirement from a job, or it can be a different date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 90th(1) birthday or the tenth contract anniversary, if purchased after age 80(1), or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the retirement date generally must be: - - for IRAs by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 90th(1) birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. (1) Applies to contracts purchased on or after May 1, 2006, in most states. For all other contracts, the retirement date must be no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75. Ask your investment professional which retirement date applies to you. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) If you select the SecureSource - Joint Life rider, please consider carefully whether or not you wish to change the beneficiary of your annuity contract. The rider will terminate if the surviving covered spouse can not utilize the spousal continuation provision of the contract when the death benefit is payable. - -------------------------------------------------------------------------------- 38 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM INITIAL PURCHASE PAYMENT $10,000 MINIMUM ADDITIONAL PURCHASE PAYMENTS $50 for SIPs $100 for all other payment types MAXIMUM TOTAL PURCHASE PAYMENTS*: $1,000,000 * This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the Code's limits on annual contributions also apply. We also reserve the right to restrict cumulative additional purchase payments for contracts with the SecureSource rider, the Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal Benefit. Additional purchase payments are restricted during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values and satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers, withdrawals or death benefits until instructions are received from the appropriate governmental authority or court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary. We prorate this charge among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. Some states also limit any contract charge allocated to the fixed account. We will waive this charge when your contract value is $50,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct the charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the fixed account. We cannot increase these fees. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 39 The contract (either Option L or Option C) and the death benefit guarantee you select determines the mortality and expense risk fee you pay:
CONTRACT OPTION L CONTRACT OPTION C ROP Death Benefit 1.55% 1.65% MAV Death Benefit 1.75 1.85 5% Accumulation Death Benefit 1.90 2.00 Enhanced Death Benefit 1.95 2.05
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the annuity payout period even if the annuity payout plan does not involve a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Contract Option C has no purchase payment withdrawal charge schedule but carries a higher mortality and expense risk fee than contract Option L. If you select contract Option L and you withdraw all or part of your contract value before annuity payouts begin, we may deduct a withdrawal charge. As described below, a withdrawal charge schedule applies to each purchase payment you make. The withdrawal schedule charge lasts for four years (see "Expense Summary"). You may withdraw an amount during any contract year without a withdrawal charge. We call this amount the Total Free Amount (TFA). The TFA varies depending on whether your Contract Option L includes the SecureSource rider, the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider: CONTRACT OPTION L WITHOUT SECURESOURCE RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER OR THE GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greater of: - - 10% of the contract value on the prior contract anniversary(1); or - - current contract earnings. CONTRACT OPTION L WITH SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime Payment. CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the Remaining Benefit Payment. (1) We consider your initial purchase payment to be the prior contract anniversary's contract value during the first contract year. - -------------------------------------------------------------------------------- 40 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as described below. A withdrawal charge will apply if the amount you withdraw includes any of your prior purchase payments that are still within their withdrawal charge schedule. To determine whether your withdrawal includes any of your prior purchase payments that are still within their withdrawal charge schedule, we withdraw amounts from your contract in the following order: 1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA. 2. We withdraw purchase payments not previously withdrawn, in the order you made them: the oldest purchase payment first, the next purchase payment second, etc. until all purchase payments have been withdrawn. By applying this "first-in, first-out" rule, we do not assess a withdrawal charge on purchase payments that we received prior to the number of years stated in the withdrawal charge schedule you select when you purchase the contract. We only assess a withdrawal charge on purchase payments that are still within the withdrawal charge schedule you selected. EXAMPLE: Each time you make a purchase payment under the contract Option L, a withdrawal charge schedule attaches to that purchase payment. The withdrawal charge percentage for each purchase payment declines according to the withdrawal charge schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 4-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY" ABOVE.) For example, if you select contract Option L, during the first two years after a purchase payment is made, the withdrawal charge percentage attached to that payment is 8%. The withdrawal charge percentage for that payment during the fourth year after it is made is 6%. At the beginning of the fifth year after that purchase payment is made, and thereafter, there is no longer a withdrawal charge as to that payment. We determine your withdrawal charge by multiplying each of your payments withdrawn by the applicable withdrawal charge percentage (see "Expense Summary"), and then adding the total withdrawal charges. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. A partial withdrawal that includes contract value taken from the Guarantee Period Accounts may also be subject to a Market Value Adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay you the amount you request. Note that the withdrawal charge is assessed against the original amount of your purchase payments that are subject to a withdrawal charge, even if your contract has lost value. This means that purchase payments withdrawn may be greater than the amount of contract value you withdraw. For an example, see Appendix B. WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION L We do not assess withdrawal charges for: - - withdrawals of any contract earnings; - - withdrawals of amounts totaling up to 10% of the contract value on the prior contract anniversary to the extent it exceeds contract earnings; - - if you elected the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider, the greater of your contract's Remaining Benefit Payment or Remaining Annual Lifetime Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - if you elected the Guarantor Withdrawal Benefit rider, your contract's Remaining Benefit Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required amount calculated under your specific contract currently in force; and - - contracts settled using an annuity payout plan (EXCEPTION: As described below, if you select annuity payout Plan E, and choose later to withdraw the value of your remaining annuity payments, we will assess a withdrawal charge. This exception also applies to contract Option C.) - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 41 - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal under this annuity payout plan we impose a withdrawal charge whether you have Contract Option L or Contract Option C. This charge will vary based on your contract option and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in a table in the "Expense Summary." (See "The Annuity Payout Period -- Annuity Payout Plans.") POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. OPTIONAL LIVING BENEFIT CHARGES -- CURRENTLY OFFERED UNDER CONTRACT OPTION L(1) ACCUMULATION PROTECTOR BENEFIT RIDER FEE We charge an annual fee of 0.55% of the greater of your contract value or the minimum contract accumulation value on your contract anniversary for this optional benefit only if you select it. We deduct the fee from the contract value on the contract anniversary. We prorate this fee among the GPAs, the one-year fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Accumulation Protector Benefit rider, you may not cancel it and the fee will continue to be deducted until the end of the waiting period. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently, the Accumulation Protector Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Accumulation Protector Benefit rider charge will not exceed a maximum of 1.75%. We will not change the Accumulation Protector Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge; (b) you choose the spousal continuation step up after we have exercised our right to increase the rider charge; (c) you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. We reserve the right to restart the waiting period whenever you elect to change your model portfolio to one that causes the rider charge to increase. The fee does not apply after annuity payouts begin. (1) Effective May 1, 2007, optional living benefits are not available on Contract Option C. - -------------------------------------------------------------------------------- 42 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS SECURESOURCE RIDER FEE We charge an annual fee based on the greater of the contract anniversary value or the total Remaining Benefit Amount (RBA) for this optional feature only if you select it as follows: - - SecureSource - Single Life rider, 0.65%; - - SecureSource - Joint Life rider, 0.85%. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the SecureSource rider, you may not cancel it and the fee will continue to be deducted until the contract or rider is terminated, or the contract value reduces to zero. If the contract or rider is terminated for any reason, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the RBA reduces to zero but the contract value has not been depleted, you will continue to be charged. Currently the SecureSource rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The SecureSource -- Single Life rider charge will not exceed a maximum charge of 1.50%. The SecureSource -- Joint Life rider charge will not exceed a maximum charge of 1.75%. We will not change the SecureSource rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to exercise the annual elective step up before the end of the waiting period, the SecureSource rider charge will not change until the end of the waiting period. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective annual step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the elective spousal continuation step up after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE We charge an annual fee of 0.65% of the greater of the contract anniversary value or the total Remaining Benefit Amount (RBA) for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the RBA or the Annual Lifetime Payment (ALP) goes to zero but the contract value has not been depleted, you will continue to be charged. Currently the Guarantor Withdrawal Benefit for Life rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Guarantor Withdrawal Benefit for Life rider charge will not exceed a maximum charge of 1.50%. We will not change the Guarantor Withdrawal Benefit for Life rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to exercise the annual elective step up before the end of the waiting period, the Guarantor Withdrawal Benefit for Life rider charge will not change until the end of the waiting period, when it will change to the charge that was in effect on the valuation date we received your last written request to exercise the elective annual step up; (b) you choose elective spousal continuation step up after we have exercised our rights to increase the rider charge; - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 43 (c) you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. OPTIONAL LIVING BENEFIT CHARGES -- PREVIOUSLY OFFERED UNDER CONTRACT OPTION L AND CONTRACT OPTION C GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1) THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B UNLESS OTHERWISE NOTED. We charge an annual fee of 0.55% of contract value for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the Remaining Benefit Amount (RBA) goes to zero but the contract value has not been depleted, you will continue to be charged. Currently the Guarantor Withdrawal Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Guarantor Withdrawal Benefit rider charge will not exceed a maximum charge of 1.50%. We will not change the Guarantor Withdrawal Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to step up before the third contract anniversary, the Guarantor Withdrawal Benefit rider charge will not change until the third contract anniversary, when it will change to the charge that was in effect on the valuation date we received your last written request to exercise the elective step up; (b) you choose the elective spousal continuation step up under Rider A after we have exercised our right to increase the rider charge; (c) you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. (1) See disclosure in Appendix K. INCOME ASSURER BENEFIT RIDER FEE We charge an annual fee for this optional feature only if you select it. We determine the fee by multiplying the guaranteed income benefit base by the charge of the Income Assurer Benefit rider you select. There are three Income Assurer Benefit rider - -------------------------------------------------------------------------------- 44 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS options available under your contract (see "Optional Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed income benefit base calculation. The charge for each Income Assurer Benefit rider(1) is as follows:
MAXIMUM CURRENT Income Assurer Benefit - MAV 1.50% 0.30%(1) Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1) Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. We deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate this fee among the GPAs, the one-year fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently the Income Assurer Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate charge for each model but not to exceed the maximum charges shown above. We cannot change the Income Assurer Benefit rider charge after the rider effective date, unless you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge and/or charge a separate charge for each model. If you choose to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge, you will pay the charge that is in effect on the valuation date we receive your written request to change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. For an example of how each Income Assurer Benefit fee is calculated, see Appendix L. OPTIONAL DEATH BENEFIT CHARGES -- CURRENTLY OFFERED BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. VALUING YOUR INVESTMENT We value your accounts as follows: GPAS We value the amounts you allocated to the GPAs directly in dollars. The value of a GPA equals: - - the sum of your purchase payments and transfer amounts allocated to the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after any applicable MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 45 - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. THE FIXED ACCOUNT THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT IF AVAILABLE UNDER YOUR CONTRACT, AND THE DCA FIXED ACCOUNT. We value the amounts you allocate to the fixed account directly in dollars. The value of the fixed account equals: - - the sum of your purchase payments allocated to the one-year fixed account (if included) and the DCA fixed account, and transfer amounts to the one-year fixed account (if included); - - plus interest credited; - - minus the sum of amounts withdrawn (including any applicable withdrawal charges for Contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: To calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. - -------------------------------------------------------------------------------- 46 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and the deduction of a prorated portion of: - - the contract administrative charge; and - - the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or one-year GPA to one or more subaccounts. Automated transfers are not available for GPA terms of two or more years. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from the one-year fixed account or one-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn on the one-year fixed account or one-year GPA will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 47 HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. Dollar-cost averaging as described in this section is not available when a Portfolio Navigator model portfolio is in effect. However, subject to certain restrictions, dollar-cost averaging is available through the DCA fixed account. See the "DCA Fixed Account" and "Portfolio Navigator Asset Allocation Program" sections in this prospectus for details. ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. Different rules apply to asset rebalancing under a Portfolio Navigator model portfolio (see "Portfolio Navigator Asset Allocation Program" below and "Appendix I -- Asset Allocation Program for Contracts Purchased Before May 1, 2006"). As long as you are not participating in a Portfolio Navigator model portfolio, asset rebalancing is available for use with the DCA fixed account (see "DCA Fixed Account") only if your subaccount allocation for asset rebalancing is exactly the same as your subaccount allocation for transfers from the DCA fixed account. If you change your subaccount allocations under the asset rebalancing program or the DCA fixed account, we will automatically change the subaccount allocations so they match. If you do not wish to have the subaccount allocation be the same for the asset rebalancing program and the DCA fixed account, you must terminate the asset rebalancing program or the DCA fixed account, as you may choose. PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM The Portfolio Navigator Asset Allocation Program (PN program) described in this section replaces the previously offered asset allocation program described in Appendix I for owners of all contracts purchased on or after May 1, 2006 and for contract owners who choose to move from the previously offered asset allocation program to the PN program or who add the PN program on or after May 1, 2006. The PN program is available for nonqualified annuities and for qualified annuities. The PN program allows you to allocate your contract value to a PN program model portfolio that consists of subaccounts, each of which invests in an underlying fund with a particular investment objective, and may include certain GPAs and/or the one-year fixed account (if available under the PN program) that represent various asset classes (allocation options). The PN program also allows you to periodically update your model portfolio or transfer to a new model portfolio. You are required to participate in the PN program if your contract purchased on or after May 1, 2006 includes an optional Accumulation Protector Benefit rider, SecureSource rider, Guarantor Withdrawal Benefit for Life rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit - -------------------------------------------------------------------------------- 48 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS rider. If your contract does not include one of these riders, you also may elect to participate in the PN program at no additional charge. You should review any PN program information, including the terms of the PN program, carefully. Your investment professional can provide you with additional information and can answer questions you may have on the PN program. SERVICE PROVIDERS TO THE PN PROGRAM. RiverSource Investments, an affiliate of ours, serves as non-discretionary investment adviser for the PN program solely in connection with the development of the model portfolios and periodic updates of the model portfolios. In this regard, RiverSource Investments enters into an investment advisory agreement with each contract owner participating in the PN program. In its role as investment adviser to the PN program, RiverSource Investments relies upon the recommendations of a third party service provider. In developing and updating the model portfolios, RiverSource Investments reviews the recommendations, and the third party's rationale for the recommendations, with the third party service provider. RiverSource Investments also conducts periodic due diligence and provides ongoing oversight with respect to the process utilized by the third party service provider. For more information on RiverSource Investment's role as investment adviser for the PN program, please see the Portfolio Navigator Asset Allocation Program Investment Adviser Disclosure Document, which is based on Part II of RiverSource Investment's Form ADV, the SEC investment adviser registration form. The Disclosure Document is delivered to contract owners at or before the time they enroll in the PN program. Currently, the PN program model portfolios are designed and periodically updated for RiverSource Investments by Morningstar Associates, LLC, a registered investment adviser and wholly owned subsidiary of Morningstar, Inc. RiverSource Investments may replace Morningstar Associates and may hire additional firms to assist with the development and periodic updates of the model portfolios in the future. Also, RiverSource Investments may elect to develop and periodically update the model portfolios without the assistance of a third party service provider. The criteria used in developing and updating the model portfolios do not guarantee or predict future performance. Neither Morningstar Associates nor RiverSource Investments, in connection with their respective roles, provides any individualized investment advice to contract owners regarding the application of a particular model portfolio to his or her circumstances. Contract owners are solely responsible for determining whether any model portfolio is appropriate. We identify to Morningstar Associates the universe of allocation options that can be included in the model portfolios and, in limited circumstances, underlying funds of such allocation options (the universe of allocation options). The universe of allocation options may not include all allocation options available under your contract. We may modify from time to time such universe of allocation options. These modifications may reflect instructions from, or respond to actions taken by, any party making an allocation option available to us. For example, we may modify the universe of allocation options in response to the liquidation, merger or other closure of a fund. Once we identify this universe of allocation options to Morningstar Associates, neither RiverSource Investments, nor any of its affiliates, including us, dictates to Morningstar Associates the number of allocation options that should be included in a model portfolio, the percentage that any allocation option represents in a model portfolio, or whether a particular allocation option may be included in a model portfolio. However, as described below under "Potential conflict of interest", there are certain conflicts of interest associated with RiverSource Investments and its affiliates' influence over the development and updating of the model portfolios. POTENTIAL CONFLICT OF INTEREST. In identifying the universe of allocation options, we and our affiliates, including RiverSource Investments, are subject to competing interests that may influence the allocation options we propose. These competing interests involve compensation that RiverSource Investments or its affiliates may receive as the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options as well as compensation we or an affiliate of ours may receive for providing services in connection with the RiverSource Variable Series Trust funds and such allocation options or their underlying funds. These competing interests also involve compensation we or an affiliate of ours may receive if certain funds that RiverSource Investments does not advise are included in model portfolios. The inclusion of funds that pay compensation to RiverSource Investments or an affiliate may have a positive or negative impact on performance. As an affiliate of RiverSource Investments, the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options, we may have an incentive to identify the RiverSource Variable Series Trust funds and such allocation options for consideration as part of a model portfolio over unaffiliated funds. In addition, RiverSource Investments, in its capacity as investment adviser to the RiverSource Variable Series Trust funds, monitors the performance of the RiverSource Variable Series Trust funds. In this role, RiverSource Investments may, from time to time, recommend certain changes to the board of directors of the RiverSource Variable Series Trust funds. These changes may include but not be limited to a change in portfolio management or fund strategy or the closure or merger of a RiverSource Variable Series Trust fund. RiverSource Investments also may believe that certain RiverSource Variable Series Trust funds may benefit from additional assets or could be harmed by redemptions. All of these factors may impact RiverSource Investment's view regarding the composition and allocation of a model portfolio. RiverSource Investments' role as investment adviser to the PN program in connection with the development and updating of the model portfolios, and our identification of the universe of allocation options to Morningstar Associates for consideration, may - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 49 influence the allocation of assets to or away from allocation options that are affiliated with, or managed or advised by RiverSource Investments or its affiliates. RiverSource Investments, we or another affiliate of ours may receive higher compensation from certain unaffiliated funds that RiverSource Investments does not advise or manage. (See "Expense Summary -- Annual Operating Expenses of the Funds" and "The Variable Account and the Funds -- The Funds.") Therefore, we may have an incentive to identify these unaffiliated funds to Morningstar Associates for inclusion in the model portfolios. In addition, we or an affiliate of ours may receive higher compensation from certain GPAs or the one-year fixed account than from other allocation options. We therefore may have an incentive to identify these allocation options to Morningstar Associates for inclusion in the model portfolios. Some officers and employees of RiverSource Investments are also officers or employees of us or our affiliates which may be involved in, and/or benefit from, your participation in the PN program. These officers and employees may have an incentive to make recommendations, or take actions, that benefit one or more of the entities they represent, rather than participants in the PN program. PARTICIPATING IN THE PN PROGRAM. If you choose or are required to participate in the PN program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool to help define your investing style which is based on factors such as your investment goals, your tolerance for risk and how long you intend to invest. Your responses to the investor questionnaire can help you determine which model portfolio most closely matches your investing style. While the scoring of the investor questionnaire is objective, there is no guarantee that your responses to the investor questionnaire accurately reflect your tolerance for risk. Similarly, there is no guarantee that the asset mix reflected in the model portfolio you select after completing the investor questionnaire is appropriate to your ability to withstand investment risk. Neither RiverSource Life nor RiverSource Investments is responsible for your decision to participate in the PN program, your selection of a specific model portfolio or your decision to change to an updated or different model portfolio. Currently, there are five PN model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. Each model portfolio specifies allocation percentages to each of the subaccounts, any GPAs and/or the one-year fixed account that make up that model portfolio. By participating in the PN program, you instruct us to invest your contract value in the subaccounts, any GPAs and/or the one-year fixed account (if included) according to the allocation percentages stated for the specific model portfolio you have selected. By participating in the PN program, you also instruct us to automatically rebalance your contract value quarterly in order to maintain alignment with these allocation percentages. Special rules apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); - - no MVA will apply if you reallocate your contract value according to an updated model portfolio; and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio. (See "Guarantee Period Accounts -- Market Value Adjustment.") If you initially allocate qualifying purchase payments to the DCA fixed account, when available (see "DCA Fixed Account"), and you are participating in the PN program, we will make monthly transfers in accordance with your instructions from the DCA fixed account into the model portfolio you have chosen. Each model portfolio is evaluated periodically by Morningstar Associates, which may then provide updated recommendations to RiverSource Investments. As a result, the model portfolios may be updated from time to time (typically annually) with new allocation options and allocation percentages. When these reassessments are completed and changes to the model portfolios occur, you will receive a reassessment letter. This reassessment letter will notify you that the model portfolio has been reassessed and that, unless you instruct us not to do so, your contract value, less amounts allocated to the DCA fixed account, is scheduled to be reallocated according to the updated model portfolio. The reassessment letter will specify the scheduled reallocation date and will be sent to you at least 30 days prior to this date. Based on the written authorization you provided when you enrolled in the PN program, if you do not notify us otherwise, you will be deemed to have instructed us to reallocate your contract value, less amounts allocated to the DCA fixed account, according to the updated model portfolio. If you do not want your contract value, less amounts allocated to the DCA fixed account, to be reallocated according to the updated model portfolio, you must provide written or other authorized notification as specified in the reassessment letter. In addition to this periodic reassessment and reallocation of the model portfolios, you may also request a change to your model portfolio up to twice per contract year by written request on an authorized form or by another method agreed to by us. Such changes include changing to a different model portfolio at any time or requesting to reallocate according to the updated version of your existing model portfolio other than according to the reassessment process described above. If your contract includes an optional Accumulation Protector Benefit rider, SecureSource rider, Guarantor Withdrawal Benefit for Life rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider and you make such a change (other than a scheduled periodic - -------------------------------------------------------------------------------- 50 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS reallocation), we may charge you a higher fee for your rider. If your contract includes the SecureSource rider, we reserve the right to limit the number of model portfolio changes if required to comply with the written instructions of a Fund (see "Market Timing"). If your contract includes the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider, we reserve the right to limit the number of model portfolios from which you can select, subject to state restrictions. We reserve the right to change the terms and conditions of the PN program upon written notice to you. This includes but is not limited to the right to: - - limit your choice of models based on the amount of your initial purchase payment we accept or when you take a withdrawal; - - cancel required participation in the program after 30 days written notice; - - substitute a fund of funds for your current model portfolio if permitted under applicable securities law; and - - discontinue the PN program. We will give you 30 days' written notice of any such change. In addition, RiverSource Investments has the right to terminate its investment advisory agreement with you upon 30 days' written notice. If RiverSource Investments terminates its investment advisory agreement with you and other participants in the PN program, we would either have to find a replacement investment adviser or terminate the PN program unless otherwise permitted by applicable law, regulations or positions of the SEC staff. The investment advisory agreement will terminate automatically in the event that we are notified of a death which results in a death benefit becoming payable under the contract. In this case, your investment advisory relationship with RiverSource Investments and the notification of future reassessments will cease, but prior instructions provided by you in connection with your participation in the PN program will continue (e.g., rebalancing instructions provided to insurer). RISKS. Asset allocation through the PN program does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. By spreading your contract value among various allocation options under the PN program, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will happen. Although each model portfolio is intended to optimize returns given various levels of risk tolerance, a model portfolio may not perform as intended. A model portfolio, the allocation options and market performance may differ in the future from historical performance and from the assumptions upon which the model portfolio is based, which could cause the model portfolio to be ineffective or less effective in reducing volatility. Investment performance of your contract value could be better or worse by participating in the PN program than if you had not participated. A model portfolio may perform better or worse than any single fund or allocation option or any other combination of funds or allocation options. The performance of a model portfolio depends on the performance of the component funds. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of the model portfolios can cause their component funds to incur transactional expenses to raise cash for money flowing out of the funds or to buy securities with money flowing into the funds. Moreover, a large outflow of money from the funds may increase the expenses attributable to the assets remaining in the funds. These expenses can adversely affect the performance of the relevant funds and of the model portfolios. In addition, when a particular fund needs to buy or sell securities due to quarterly rebalancing or periodic updating of a model portfolio, it may hold a large cash position. A large cash position could detract from the achievement of the fund's investment objective in a period of rising market prices; conversely, a large cash position would reduce the fund's magnitude of loss in the event of falling market prices and provide the fund with liquidity to make additional investments or to meet redemptions. (See also the description of competing interests in the section titled "Service Providers to the PN Program" above.) For additional information regarding the risks of investing in a particular fund, see that fund's prospectus. PN PROGRAM UNDER THE ACCUMULATION PROTECTOR BENEFIT RIDER, SECURESOURCE RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER If you purchase the optional Accumulation Protector Benefit rider, the optional SecureSource rider, the optional Guarantor Withdrawal Benefit for Life rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider, you are required to participate in the PN program under the terms of each rider. - - ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation Protector Benefit rider. As long as the Accumulation Protector Benefit rider is in effect, your contract value must be invested in one of the model portfolios. The Accumulation Protector Benefit rider automatically ends at the end of the waiting period as does the requirement that you participate in the PN program. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 51 - - SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: In those states where the SecureSource rider is not available, you may purchase the Guarantor Withdrawal Benefit for Life rider if available in your state; see disclosure in Appendix K. The SecureSource rider and the Guarantor Withdrawal Benefit for Life rider require that your contract value be invested in one of the model portfolios for the life of the rider. Subject to state restrictions, we reserve the right to limit the number of model portfolios from which you can select. Because you cannot terminate the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE SECURESOURCE RIDER OR THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. - - GUARANTOR WITHDRAWAL BENEFIT RIDER: In those states where the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider is not available, you may purchase the Guarantor Withdrawal Benefit rider; see disclosure in Appendix L. Because the Guarantor Withdrawal Benefit rider requires that your contract value be invested in one of the model portfolios for the life of the contract, and you cannot terminate the Guarantor Withdrawal Benefit rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. - - INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit rider during a 30-day period after the first rider anniversary and at any time after the expiration of the waiting period. At all other times, if you do not want to participate in any of the model portfolios, you must terminate you contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. As long as the Income Assurer Benefit rider is in effect, your contract value must be invested in one of the model portfolios. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) DURING THE PERIOD OF TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT. OPTIONAL PN PROGRAM If you do not select the optional Accumulation Protector Benefit rider, the optional SecureSource rider, the optional Guarantor Withdrawal Benefit for Life rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider with your contract, you may elect to participate in the PN program. You may elect the PN program at any time. You may cancel your participation in the PN program at any time by giving us written notice or by any other method authorized by us. Upon cancellation, automated rebalancing associated with the PN program will end. You may ask us in writing to allocate the variable subaccount portion of your policy value according to the percentage that you then choose (see "Asset Rebalancing"). You can elect to participate in the PN program again at any time. You will also cancel the PN program if you initiate transfers other than transfers to one of the current model portfolios or transfers from the DCA fixed account (see "DCA Fixed Account"). Partial withdrawals do not cancel the PN program. Your participation in the PN program will terminate on the date you make a full withdrawal from your contract, on your retirement date or when your contract terminates for any reason. TRANSFERRING AMONG ACCOUNTS The transfer rights discussed in this section do not apply while a Portfolio Navigator model portfolio is in effect. You may transfer contract value from any one subaccount, GPAs, the one-year fixed account, or the DCA fixed account, to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. You may not transfer contract value to the DCA fixed account. The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. - -------------------------------------------------------------------------------- 52 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account (if included) at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from the one-year fixed account (if included) to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to an MVA. The amount of contract value transferred to the one-year fixed account cannot result in the value of the one-year fixed account being greater than 30% of the contract value. For Contract Option L, transfers out of the one-year fixed account are limited to 30% of one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. For Contract Option C, transfers out of the one-year fixed account may not be available or may be significantly limited. See your contract for the actual terms of the one-year fixed account you purchased. For both Contract Option L and Contract Option C, we reserve the right to further limit transfers to or from the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the guarantee period will receive an MVA, which may result in a gain or loss of contract value, unless an exception applies (see "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)"). - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - You may not transfer contract values from the subaccounts, the GPAs, or the one-year fixed account into the DCA fixed account. However, you may transfer contract values from the DCA fixed account to any of the investment options available under your contract, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPA, as described above. (See "DCA Fixed Account.") - - Once annuity payouts begin, you may not make transfers to or from the GPAs or the fixed account, but you may make transfers once per contract year among the subaccounts. During the annuity payout period, we reserve the right to limit the number of subaccounts in which you may invest. When annuity payments begin, you must transfer all contract value out of your GPAs and the DCA fixed account. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 53 IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under an automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund, may require us to reject your transfer request. For example, while we disregard transfers permitted under any asset allocation, dollar-cost averaging and asset rebalancing programs that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - -------------------------------------------------------------------------------- 54 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our corporate office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers or among your subaccounts, the one-year fixed account or GPAs or automated partial withdrawals from the GPAs, one-year fixed account, DCA fixed account or the subaccounts. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - If a Portfolio Navigator model portfolio is in effect, you are not allowed to set up automated transfers except in connection with a DCA Fixed Account (see "The Fixed Account -- DCA Fixed Account" and "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly $250 quarterly, semiannually or annually 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 55 Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our corporate office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our corporate office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay administrative charges, withdrawal charges, or any applicable optional rider charges (see "Charges") and IRS taxes and penalties (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.") Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced. If you have elected the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider and your partial withdrawals in any contract year exceed the permitted withdrawal amount under the terms of the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider, your benefits under the rider may be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will automatically withdraw from all your subaccounts, GPAs, the DCA fixed account, and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless requested otherwise.(1) After executing a partial withdrawal, the value in the one-year fixed account and each GPA and subaccount must be either zero or at least $50. (1) If you elected a SecureSource rider, you do not have the option to request from which account to withdraw. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. - -------------------------------------------------------------------------------- 56 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our corporate office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have an Income Assurer Benefit and/or Benefit Protector Plus, the riders will terminate upon transfer of ownership of the annuity contract. The Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders will continue upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are four death benefit options under your contract. You must select one of the following death benefits: - - ROP Death Benefit; - - MAV Death Benefit; - - 5% Accumulation Death Benefit; - - Enhanced Death Benefit. If it is available in your state and if both you and the annuitant are 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP Death Benefit will apply. Once you elect a death benefit, you cannot change it. We show the death benefit that applies in your contract. The death benefit you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under each option, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you chose when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 57 HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS: ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV = PW X DB DEATH BENEFITS) ------------ CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA. DB = the death benefit on the date of (but prior to) the partial withdrawal CV = contract value on the date of (but prior to) the partial withdrawal MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus adjusted partial withdrawals. Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by adjusted partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. 5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs, one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts and the DCA fixed account at issue increased by 5%; - - plus any subsequent amounts allocated to the subaccounts and the DCA fixed account; - - minus adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. Thereafter, we continue to add subsequent amounts allocated to the subaccounts or the DCA fixed account and subtract adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. 5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED = PWT X VAF PARTIAL WITHDRAWALS --------------- SV
PWT = the amount transferred from the subaccounts or DCA fixed account or the amount of the partial withdrawal (including any applicable withdrawal charge or MVA) from the subaccounts or DCA fixed account. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts and DCA fixed account on the date of (but prior to) the transfer of partial withdrawal.
The amount of purchase payment withdrawn from or transferred from any subaccount or fixed account (if applicable) or GPA account is calculated as (a) times (b) where: (a) is the amount of purchase payment in the account or subaccount on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount transferred or withdrawn from the account or subaccount to the value in the account or subaccount on the date of (but prior to) the current withdrawal or transfer. For contracts issued in New Jersey, the cap on the Variable Account Floor is 200% of the sum of the purchase payments allocated to the subaccounts and the DCA fixed account that have not been withdrawn or transferred out of the subaccounts or DCA fixed account. NOTE: The 5% variable account floor is calculated differently and is not the same value as the Income Assurer Benefit 5% variable account floor. RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT The ROP Death Benefit is the basic death benefit to the contract that will pay your beneficiaries no less than your purchase payments, adjusted for withdrawals. If you or the annuitant die before annuity payouts begin and while this contract is in force, the death benefit will be the greater of these two values: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. The ROP Death Benefit will apply unless you select one of the alternative death benefits described immediately below. IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE - -------------------------------------------------------------------------------- 58 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS BENEFIT VALUES MAY BE LIMITED AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION. MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT The MAV Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the MAV on the date of death. 5% ACCUMULATION DEATH BENEFIT The 5% Accumulation Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the 5% variable account floor. ENHANCED DEATH BENEFIT The Enhanced Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the MAV on the date of death; or 4. the 5% variable account floor. For an example of how each death benefit is calculated, see Appendix C. IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. We will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The SecureSource - Joint Life rider, if selected, will continue only if the spouse electing the spousal continuation provision of the contract is a covered spouse and continues the contract as the new owner. The Accumulation Protector Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits.") If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the IRS; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 59 spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The SecureSource - Joint Life rider, if selected, will continue only if the spouse electing the spousal continuation provision of the contract is a covered spouse and continues the contract as the new owner. The Accumulation Protector Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. Additionally, the optional SecureSource rider, if selected, will terminate. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS OPTIONAL LIVING BENEFITS -- CURRENTLY OFFERED UNDER CONTRACT OPTION L(1) ACCUMULATION PROTECTOR BENEFIT RIDER The Accumulation Protector Benefit rider is an optional benefit that you may select for an additional charge. The Accumulation Protector Benefit rider may provide a guaranteed contract value at the end of the specified waiting period on the benefit date, but not until then, under the following circumstances:
ON THE BENEFIT DATE, IF: THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER BENEFIT IS: The Minimum Contract Accumulation Value The contract value is increased on the benefit date to (defined below) as determined under the equal the Minimum Contract Accumulation Value as Accumulation Protector Benefit rider is determined under the Accumulation Protector Benefit rider greater than your contract value, on the benefit date. The contract value is equal to or greater than Zero; in this case, the Accumulation Protector Benefit the Minimum Contract Accumulation Value as rider ends without value and no benefit is payable. determined under the Accumulation Protector Benefit rider,
(1) Effective May 1, 2007, optional living benefits are not available under Contract Option C. If the contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time during the waiting period and before the benefit date, the contract and all riders, including the Accumulation Protector Benefit rider will terminate without value and no benefits will be paid. EXCEPTION: If you are still living on the benefit date, we will pay you an amount equal to the Minimum Contract Accumulation Value as determined under the Accumulation Protector Benefit rider on the valuation date your contract value reached zero. If this rider is available in your state, you may elect the Accumulation Protector Benefit at the time you purchase your contract and the rider effective date will be the contract issue date. The Accumulation Protector Benefit rider may not be terminated once you have elected it, except as described in the "Terminating the Rider" section below. An additional charge for the Accumulation Protector Benefit rider will be assessed annually during the waiting period. The rider ends when the waiting period expires and no further benefit will be payable and no further fees for the rider will be deducted. The Accumulation Protector Benefit rider may not be purchased with the optional SecureSource, the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit riders. When the rider ends, you may be able to purchase another optional rider we then offer by written request received within 30 days of that contract anniversary date. The Accumulation Protector Benefit rider may not be available in all states. - -------------------------------------------------------------------------------- 60 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS You should consider whether an Accumulation Protector Benefit rider is appropriate for you because: - - you must participate in the Portfolio Navigator program if you purchase a contract on or after May 1, 2006 with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). If you selected this rider before May 1, 2006, you must participate in the asset allocation program (see "Appendix I: Asset Allocation Program for Contracts Purchased Prior to May 1, 2006"), however, you may elect to participate in the Portfolio Navigator program. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts and GPAs (if included) and one-year fixed account (if included) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, one-year fixed account (if included) and GPAs that are available under the contract to contract owners who do not elect this rider; - - you may not make additional purchase payments to your contract during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider; - - if you purchase this annuity as a qualified annuity, for example, an IRA, you may need to take partial withdrawals from your contract to satisfy the minimum distribution requirements of the Code (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Partial withdrawals, including those you take to satisfy RMDs, will reduce any potential benefit that the Accumulation Protector Benefit rider provides. You should consult your tax advisor if you have any questions about the use of this rider in your tax situation; - - if you think you may withdraw all of your contract value before you have held your contract with this benefit rider attached for 10 years, or you are considering selecting an annuity payout option within 10 years of the effective date of your contract, you should consider whether this optional benefit is right for you. You must hold the contract a minimum of 10 years from the effective date of the Accumulation Protector Benefit rider, which is the length of the waiting period under the Accumulation Protector Benefit rider, in order to receive the benefit, if any, provided by the Accumulation Protector Benefit rider. In some cases, as described below, you may need to hold the contract longer than 10 years in order to qualify for any benefit the Accumulation Protector Benefit rider may provide; - - the 10 year waiting period under the Accumulation Protector Benefit rider will restart if you exercise the elective step up Option (described below) or your surviving spouse exercises the spousal continuation elective step up (described below); and - - the 10 year waiting period under the Accumulation Protector Benefit rider may be restarted if you elect to change model portfolios to one that causes the Accumulation Protector Benefit rider charge to increase (see "Charges"). Be sure to discuss with your investment professional whether a Accumulation Protector Benefit rider is appropriate for your situation. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE ACCUMULATION PROTECTOR BENEFIT: BENEFIT DATE: This is the first valuation date immediately following the expiration of the waiting period. MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the Accumulation Protector Benefit rider. The contract value will be increased to equal the MCAV on the benefit date if the contract value on the benefit date is less than the MCAV on the benefit date. ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial withdrawal from the contract is equal to the amount derived from multiplying (a) and (b) where: (a) is 1 minus the ratio of the contract value on the date of (but immediately after) the partial withdrawal to the contract value on the date of (but immediately prior to) the partial withdrawal; and (b) is the MCAV on the date of (but immediately prior to) the partial withdrawal. WAITING PERIOD: The waiting period for the rider is 10 years. We reserve the right to restart the waiting period on the latest contract anniversary if you change your asset allocation model after we have exercised our rights to increase the rider charge for new contract owners, or if you change your asset allocation model after we have exercised our rights to charge a separate charge for each model. Your initial MCAV is equal to your initial purchase payment. It is increased by the amount of any subsequent purchase payments received within the first 180 days that the rider is effective. It is reduced by adjustments for any partial withdrawals made during the waiting period. AUTOMATIC STEP UP On each contract anniversary after the effective date of the rider, the MCAV will be set to the greater of: 1. 80% of the contract value on the contract anniversary; or 2. the MCAV immediately prior to the automatic step up. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 61 The automatic step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The automatic step up of the MCAV does not restart the waiting period or increase the charge (although the total fee for the rider may increase). ELECTIVE STEP UP OPTION Within thirty days following each contract anniversary after the rider effective date, but prior to the benefit date, you may notify us in writing that you wish to exercise the annual elective step up option. You may exercise this elective step up option only once per contract year during this 30 day period. If your contract value on the valuation date we receive your written request to step up is greater than the MCAV on that date, your MCAV will increase to 100% of that contract value. When you exercise the annual elective step up, we may be charging more for the Accumulation Protector Benefit rider at that time for new contract owners. If your MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit(SM) rider, you will pay the charge that is in effect on the valuation date we receive your written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. Failure to exercise this elective step up in subsequent years will not reinstate any prior waiting period. Rather, the waiting period under the rider will always commence from the most recent anniversary for which the elective step up option was exercised. The elective step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The elective step up option is not available to non-spouse beneficiaries that continue the contract during the waiting period. SPOUSAL CONTINUATION If a spouse chooses to continue the contract under the spousal continuation provision, the rider will continue as part of the contract. Once, within the thirty days following the date of spousal continuation, the spouse may choose to exercise an elective step up. The spousal continuation elective step up is in addition to the annual elective step up. If the contract value on the valuation date we receive the written request to exercise this option is greater than the MCAV on that date, we will increase the MCAV to that contract value. If the MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, the spouse will pay the charge that is in effect on the valuation date we receive their written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. TERMINATING THE RIDER The rider will terminate under the following conditions: The rider will terminate before the benefit date without paying a benefit on the date: - you take a full withdrawal; or - annuitization begins; or - the contract terminates as a result of the death benefit being paid. The rider will terminate on the benefit date. For an example, see Appendix D. SECURESOURCE RIDERS There are two optional SecureSource riders available under your contract: - - SecureSource - Single Life; or - - SecureSource - Joint Life. The information in this section applies to both SecureSource riders, unless otherwise noted. The SecureSource - Single Life rider covers one person. The SecureSource - Joint Life Rider covers two spouses jointly who are named at contract issue. You may elect only the SecureSource - Single Life rider or the SecureSource - Joint Life rider, not both, and you may not switch riders later. You must elect the rider when you purchase your contract. The rider effective date will be the contract issue date. The SecureSource rider is an optional benefit that you may select for an additional annual charge if(1): - - you purchase your contract on or after May 1, 2007; and - - SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract is issued; or - -------------------------------------------------------------------------------- 62 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - JOINT LIFE: you and your spouse are 80 or younger on the date the contract is issued. (1) The SecureSource rider is not available under an inherited qualified annuity. The SecureSource rider guarantees (unless the rider is terminated. See "Rider Termination" heading below.) that regardless of the investment performance of your contract you will be able to withdraw up to a certain amount each year from the contract before the annuity payouts begin until: - - SINGLE LIFE: you have recovered at minimum all of your purchase payments or, if later, until death (see "At Death" heading below) -- even if the contract value is zero. - - JOINT LIFE: you have recovered at minimum all of your purchase payments or, if later, until the death of the last surviving covered spouse (see "Joint Life only: Covered Spouses" and "At Death" headings below), even if the contract value is zero. Your contract provides for annuity payouts to begin on the retirement date (see "Buying Your Contract -- The Retirement Date"). Before the retirement date, you have the right to withdraw some or all of your contract value, less applicable administrative, withdrawal and rider charges imposed under the contract at the time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals"). Because your contract value will fluctuate depending on the performance of the underlying funds in which the subaccounts invest, the contract itself does not guarantee that you will be able to take a certain withdrawal amount each year before the annuity payouts begin, nor does it guarantee the length of time over which such withdrawals can be made before the annuity payouts begin. The SecureSource rider may be appropriate for you if you intend to make periodic withdrawals from your annuity contract and wish to ensure that market performance will not adversely affect your ability to withdraw your principal over time. Under the terms of the SecureSource rider, the calculation of the amount which can be withdrawn in each contract year varies depending on several factors, including but not limited to the waiting period (see "Waiting period" heading below) and whether or not the lifetime withdrawal benefit has become effective: (1) The basic withdrawal benefit gives you the right to take limited withdrawals in each contract year and guarantees that over time the withdrawals will total an amount equal to, at minimum, your purchase payments (unless the rider is terminated. See "Rider Termination" heading below). Key terms associated with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)" and "Remaining Benefit Amount (RBA)." See these headings below for more information. (2) The lifetime withdrawal benefit gives you the right, under certain limited circumstances defined in the rider, to take limited withdrawals until the later of: - - SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero (unless the rider is terminated. See "Rider Termination" heading below); - - JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero (unless the rider is terminated. See "Rider Termination" heading below). Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only: Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for more information. Only the basic withdrawal benefit will be in effect prior to the date that the lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit becomes effective automatically on the rider anniversary date after the: - - SINGLE LIFE: covered person reaches age 65, or the rider effective date if the covered person is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" heading below); - - JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date if the younger covered spouse is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below). Provided annuity payouts have not begun, the SecureSource rider guarantees that you may take the following withdrawal amounts each contract year: - - Before the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RBP at the beginning of the contract year; - - After the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RALP or the RBP at the beginning of the contract year, but the rider does not guarantee withdrawal of the sum of both the RALP and the RBP in a contract year. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 63 If you withdraw less than the allowed withdrawal amount in a contract year, the unused portion cannot be carried over to the next contract year. As long as your withdrawals in each contract year do not exceed the annual withdrawal amount allowed under the rider: - - SINGLE LIFE: and there has not been a contract ownership change or spousal continuation of the contract, the guaranteed amounts available for withdrawal will not decrease; - - JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease. If you withdraw more than the allowed withdrawal amount in a contract year, we call this an "excess withdrawal" under the rider. Excess withdrawals trigger an adjustment of a benefit's guaranteed amount, which may cause it to be reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and "ALP Excess Withdrawal Processing" headings below). Please note that basic withdrawal benefit and lifetime withdrawal benefit each has its own definition of the allowed annual withdrawal amount. Therefore a withdrawal may be considered an excess withdrawal for purposes of the lifetime withdrawal benefit only, the basic withdrawal benefit only, or both. If your withdrawals exceed the greater of the RBP or the RALP, withdrawal charges under the terms of the contract may apply (see "Charges -- Withdrawal Charges"). The amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Making the Most of Your Contract -- Withdrawals"). The rider's guaranteed amounts can be increased at the specified intervals if your contract value has increased. An annual step up feature is available at each contract anniversary, subject to certain conditions, and may be applied automatically to your contract or may require you to elect the step up (see "Annual Step Up" heading below). If you exercise the annual step up election, the spousal continuation step up election (see "Spousal Continuation Step Up" heading below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). If you take withdrawals during the waiting period, any prior steps ups applied will be reversed and step ups will not be available until the end of the waiting period. You may take withdrawals after the waiting period without reversal of prior step ups. You should consider whether a SecureSource rider is appropriate for you because: - - LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is subject to certain limitations, including but not limited to: (a) SINGLE LIFE: Once the contract value equals zero, payments are made for as long as the oldest owner or annuitant is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the first death of any owner or annuitant except as otherwise provided below (see "At Death" heading below). Therefore, if there are multiple contract owners or the annuitant is not an owner, the rider may terminate or the lifetime withdrawal benefit may be reduced. This possibility may present itself when: (i) There are multiple contract owners -- when one of the contract owners dies the benefit terminates even though other contract owners are still living (except if the contract is continued under the spousal continuation provision of the contact); or (ii) The owner and the annuitant are not the same persons -- if the annuitant dies before the owner, the benefit terminates even though the owner is still living. This could happen, for example, when the owner is younger than the annuitant. This risk increases as the age difference between owner and annuitant increases. JOINT LIFE: Once the contract value equals zero, payments are made for as long as either covered spouse is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the death of the last surviving covered spouse (see "At Death" heading below). (b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA, GBP and/or RBP values are greater than zero. If the both the ALP and the contract value are zero, the lifetime withdrawal benefit will terminate. (c) When the lifetime withdrawal benefit is first established, the initial ALP is based on (i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below), unless there has been a spousal continuation or ownership change; or (ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below). Any withdrawal you take before the ALP is established reduces the RBA and therefore may result in a lower amount of lifetime withdrawals you are allowed to take. - -------------------------------------------------------------------------------- 64 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS (d) Withdrawals can reduce both the contract value and the RBA to zero prior to the establishment of the ALP. If this happens, the contract and the rider will terminate. - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect the rider. (See "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program.") You may make two elective model portfolio changes per contract year; we reserve the right to limit elective model portfolio changes if required to comply with the written instructions of a fund (see "Market Timing"). You can allocate your contract value to any available model portfolio during the following times: (1) prior to your first withdrawal and (2) following a benefit reset as described below but prior to any subsequent withdrawal. During these accumulation phases, you may request to change your model portfolio to any available model portfolio. Immediately following a withdrawal your contract value will be reallocated to the target model portfolio as shown in your contract if your current model portfolio is more aggressive than the target model portfolio. This automatic reallocation is not included in the total number of allowed model changes per contract year and will not cause your rider fee to increase. The target model portfolio is currently the Moderate model. We reserve the right to change the target model portfolio to a model portfolio that is more aggressive than the current target model portfolio after 30 days written notice. After you have taken a withdrawal and prior to any benefit reset as described below, you are in a withdrawal phase. During withdrawal phases you may request to change your model portfolio to the target model portfolio or any model portfolio that is more conservative than the target model portfolio without a benefit reset as described below. If you are in a withdrawal phase and you choose to allocate your contract value to a model portfolio that is more aggressive than the target model portfolio, your rider benefit will be reset as follows: (a) the total GBA will be reset to the lesser of its current value or the contract value; and (b) the total RBA will be reset to the lesser of its current value or the contract value; and (c) the ALP, if established, will be reset to the lesser of its current value or 6% of the contract value; and (d) the GBP will be recalculated as described below, based on the reset GBA and RBA; and (e) the RBP will be recalculated as the reset GBP less all prior withdrawals made during the current contract year, but not be less than zero; and (f) the RALP will be recalculated as the reset ALP less all prior withdrawals made during the current contract year, but not be less than zero. You may request to change your model portfolio by written request on an authorized form or by another method agreed to by us. - - LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect only the SecureSource - Single Life rider or the SecureSource - Joint Life rider. If you elect the SecureSource rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled (except as provided under "Rider Termination" heading below) and the fee will continue to be deducted until the contract or rider is terminated or the contract value reduces to zero (described below). Dissolution of marriage does not terminate the SecureSource - Joint Life rider and will not reduce the fee we charge for this rider. The benefit under the SecureSource - Joint Life rider continues for the covered spouse who is the owner of the contract (or annuitant in the case of nonnatural ownership). The rider will terminate at the death of the contract owner (or annuitant in the case of nonnatural ownership) because the original spouse will be unable to elect the spousal continuation provision of the contract (see "Joint Life only: Covered Spouses" below). - - JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES: Since the joint life benefit will terminate unless the surviving covered spouse continues the contract under the spousal continuation provision of the contract upon the owner's death, only ownership arrangements that permit such continuation are allowed at rider issue. In general, the covered spouses should be joint owners, or one covered spouse should be the owner and the other covered spouse should be named as the sole primary beneficiary. For non-natural ownership arrangements that allow for spousal continuation one covered spouse should be the annuitant and the other covered spouse should be the sole primary beneficiary. For revocable trust ownerships, the grantor of the trust must be the annuitant and the beneficiary must either be the annuitant's spouse or a trust that names the annuitant's spouse as the sole primary beneficiary. You are responsible for establishing ownership arrangements that will allow for spousal continuation. If you select the SecureSource - Joint Life rider, please consider carefully whether or not you wish to change the beneficiary of your annuity contract. The rider will terminate if the surviving covered spouse can not utilize the spousal continuation provision of the contract when the death benefit is payable. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 65 - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw from the contract in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than the RBP or RALP under this rider. Any amount you withdraw under the contract's TFA provision that exceeds the RBP or RALP is subject to the excess withdrawal processing described below for the GBA, RBA and ALP. You should consult your tax advisor before you select this optional rider if you have any questions about the use of the rider in your tax situation because: - - TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income tax law, withdrawals under nonqualified annuities, including withdrawals taken from the contract under the terms of the rider, are treated less favorably than amounts received as annuity payments under the contract (see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income. You should consult your tax advisor before you select this optional rider if you have any questions about the use of the rider in your tax situation. - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD that exceeds the guaranteed amount of withdrawal available under the rider and such withdrawals may reduce future benefits guaranteed under the rider. While the rider permits certain excess withdrawals to be made for the purpose of satisfying RMD requirements for your contract alone without reducing future benefits guaranteed under the rider, there can be no guarantee that changes in the federal income tax law after the effective date of the rider will not require a larger RMD to be taken, in which case, future guaranteed withdrawals under the rider could be reduced. See Appendix F for additional information. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, a SecureSource rider may be of limited value to you. KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW: WITHDRAWAL: The amount by which your contract value is reduced as a result of any withdrawal request. It may differ from the amount of your request due to any withdrawal charge and any market value adjustment. WAITING PERIOD: The period of time starting on the rider effective date during which the annual step up is not available if you take withdrawals. The current waiting period is three years. GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not payable as a death benefit. It is an interim value used to calculate the amount available for withdrawals each year under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of the individual GBAs associated with each purchase payment. THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBA that is associated with that RBA will also be set to zero. - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBA remains unchanged. If there have been multiple purchase payments, both the total GBA and each payment's GBA remain unchanged. (b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. - -------------------------------------------------------------------------------- 66 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS GBA EXCESS WITHDRAWAL PROCESSING The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that is guaranteed by the rider as future withdrawals. At any point in time, the RBA equals the amount of GBA that remains available for withdrawals for the remainder of the contract's life, and total RBA is the sum of the individual RBAs associated with each purchase payment. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the RBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own RBA initially set equal to that payment's GBA (the amount of the purchase payment). - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the RBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the total RBA is reduced by the amount of the withdrawal. If there have been multiple purchase payments, each payment's RBA is reduced in proportion to its RBP. (b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. RBA EXCESS WITHDRAWAL PROCESSING The total RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the total RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, both the total RBA and each payment's RBA will be reset. The total RBA will be reset according to the excess withdrawal processing described above. Each payment's RBA will be reset in the following manner: 1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in proportion to its individual RBP at the time of the withdrawal; and 2. The withdrawal amount above the total RBP and any amount determined by the excess withdrawal processing are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for withdrawal in each contract year after the waiting period, until the RBA is reduced to zero, under the basic withdrawal benefit. At any point in time, each purchase payment has its own GBP, which is equal to the lesser of that payment's RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual GBPs. During the waiting period, the guaranteed annual withdrawal amount may be less than the GBP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual withdrawal amount during the waiting period is equal to the value of the RBP at the beginning of the contract year. THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBP is established as 7% of the GBA value. - - At each contract anniversary -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value. - - When you make additional purchase payments -- each additional purchase payment has its own GBP equal to 7% of the purchase payment amount. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBP associated with that RBA will also be reset to zero. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 67 - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA and the RBA associated with each purchase payment will be reset to the amount of that purchase payment. Each payment's GBP will be reset to 7% of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBP remains unchanged. (b) is greater than the total RBP -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value, based on the RBA and GBA after the withdrawal. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the remainder of the contract year under the basic withdrawal benefit. At any point in time, the total RBP is the sum of the RBPs for each purchase payment. During the waiting period, when the guaranteed amount may be less than the GBP, the value of the RBP at the beginning of the contract year will be that amount that is actually guaranteed each contract year. THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At the beginning of each contract year during the waiting period and prior to any withdrawal -- the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. - - At the beginning of any other contract year -- the RBP for each purchase payment is set equal to that purchase payment's GBP. - - When you make additional purchase payments -- each additional purchase payment has its own RBP equal to that payment's GBP. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At spousal continuation -- (see "Spousal Option to Continue the Contract" heading below). - - When an individual RBA is reduced to zero -- the RBP associated with that RBA will also be reset to zero. - - When you make any withdrawal -- the total RBP is reset to equal the total RBP immediately prior to the withdrawal less the amount of the withdrawal, but not less than zero. If there have been multiple purchase payments, each payment's RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for future withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in the excess withdrawal processing, the applicable RBP will not yet reflect the amount of the current withdrawal. SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine when the ALP is established, and the duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person is the oldest contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust or corporation, the covered person is the oldest annuitant. A spousal continuation or a change of contract ownership may reduce the amount of the lifetime withdrawal benefit and may change the covered person. JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally married spouse as defined under federal law, as named on the application and as shown in the contract for as long as the marriage is valid and in effect. If the contract owner is a nonnatural person (e.g., a trust), the covered spouses are the annuitant and the legally married spouse of the annuitant. The covered spouses lives are used to determine when the ALP is established, and the duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading below). The covered spouses are established on the rider effective date and cannot be changed. ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): - - SINGLE LIFE: The covered person's age after which time the lifetime benefit can be established. Currently, the lifetime benefit can be established on the later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65. - - JOINT LIFE: The age of the younger covered spouse at which time the lifetime benefit is established. ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime withdrawal benefit is at any time the amount available for withdrawals in each contract year after the waiting period until the later of: - - SINGLE LIFE: death; or - - JOINT LIFE: death of the last surviving covered spouse; or - - the RBA is reduced to zero. - -------------------------------------------------------------------------------- 68 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the ALP is zero. During the waiting period, the guaranteed annual lifetime withdrawal amount may be less than the ALP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual lifetime withdrawal amount during the waiting period is equal to the value of the RALP at the beginning of the contract year. THE ALP IS DETERMINED AT THE FOLLOWING TIMES: - - SINGLE LIFE: The later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65 -- the ALP is established as 6% of the total RBA. - - JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of the following dates: (a) the rider effective date if the younger covered spouse has already reached age 65. (b) the rider anniversary on/following the date the younger covered spouse reaches age 65. (c) upon the first death of a covered spouse, then (1) the date we receive written request when the death benefit is not payable and the surviving covered spouse has already reached age 65; or (2) the date spousal continuation is effective when the death benefit is payable and the surviving covered spouse has already reached age 65; or (3) the rider anniversary on/following the date the surviving covered spouse reaches age 65. (d) Following dissolution of marriage of the covered spouses, (1) the date we receive written request if the remaining covered spouse who is the owner (or annuitant in the case of nonnatural ownership) has already reached age 65; or (2) the rider anniversary on/following the date the remaining covered spouse who is the owner (or annuitant in the case of nonnatural ownership) reaches age 65. - - When you make additional purchase payments -- each additional purchase payment increases the ALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - SINGLE LIFE: At spousal continuation or contract ownership change -- (see "Spousal Option to Continue the Contract" and "Contract Ownership Change" headings below). - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the ALP will be reset to equal total purchase payments multiplied by 6%. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the RALP -- the ALP remains unchanged. (b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE ALP. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. ALP EXCESS WITHDRAWAL PROCESSING The ALP is reset to the lesser of the ALP immediately prior to the withdrawal, or 6% of the contract value immediately following the withdrawal. REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal for the remainder of the contract year under the lifetime withdrawal benefit. During the waiting period, when the guaranteed annual withdrawal amount may be less than the ALP, the value of the RALP at the beginning of the contract year will be the amount that is actually guaranteed each contract year. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the RALP is zero. THE RALP IS DETERMINED AT THE FOLLOWING TIMES: - - The RALP is established at the same time as the ALP, and: (a) During the waiting period and prior to any withdrawals -- the RALP is established equal to 6% of purchase payments. (b) At any other time -- the RALP is established equal to the ALP less all prior withdrawals made in the contract year but not less than zero. - - At the beginning of each contract year during the waiting period and prior to any withdrawals -- the RALP is set equal to the total purchase payments, multiplied by 6%. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 69 - - At the beginning of any other contract year -- the RALP is set equal to ALP. - - When you make additional purchase payments -- each additional purchase payment increases the RALP by 6% of the purchase payment amount. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make any withdrawal -- the RALP equals the RALP immediately prior to the withdrawal less the amount of the withdrawal but not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available for future withdrawals. When determining if a withdrawal will result in excess withdrawal processing, the applicable RALP will not yet reflect the amount of the current withdrawal. REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract and the RMD calculated separately for your contract is greater than the RBP or the RALP on the most recent contract anniversary, the portion of the RMD that exceeds the RBP or RALP on the most recent rider anniversary will not be subject to excess withdrawal processing provided that the following conditions are met: - - The RMD is for your contract alone; - - The RMD is based on your recalculated life expectancy taken from the Uniform Lifetime Table under the Code; and - - The RMD amount is otherwise based on the requirements of section 401(a)(9), related Code provisions and regulations thereunder that were in effect on the effective date of the rider. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. Withdrawal amounts greater than the RBP or RALP on the contract anniversary date that do not meet these conditions will result in excess withdrawal processing as described above. See Appendix F for additional information. STEP UP DATE: The date any step up becomes effective, and depends on the type of step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment period or increase the allowable payment. The annual step up may be available as described below, subject to the following rules: - - The annual step up is effective on the step up date. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the waiting period, any previously applied step ups will be reversed and the annual step up will not be available until the end of the waiting period. - - On any rider anniversary where the RBA or, if established, the ALP would increase and the application of the step up would not increase the rider charge, the annual step up will be automatically applied to your contract, and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary as long as either the contract value is greater than the total RBA or 6% of the contract value is greater than the ALP, if established, on the step-up date. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - The ALP and RALP are not eligible for step ups until they are established. Prior to being established, the ALP and RALP values are both zero. - - Please note it is possible for the ALP to step up even if the RBA or GBA do not step up, and it is also possible for the RBA and GBA to step up even if the ALP does not step up. The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as follows: - - The total RBA will be reset to the greater of the total RBA immediately prior to the step up date or the contract value on the step up date. - - The total GBA will be reset to the greater of the total GBA immediately prior to the step up date or the contract value on the step up date. - - The total GBP will be reset using the calculation as described above based on the increased GBA and RBA. - -------------------------------------------------------------------------------- 70 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - The total RBP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset to the increased GBP less all prior withdrawals made in the current contract year, but not less than zero. - - The ALP will be reset to the greater of the ALP immediately prior to the step up date or 6% of the contract value on the step up date. - - The RALP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RALP will not be affected by the step up. (b) At any other time, the RALP will be reset to the increased ALP less all prior withdrawals made in the current contract year, but not less than zero. SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH: SINGLE LIFE: If a surviving spouse elects to continue the contract and continues the contract as the new owner under the spousal continuation provision of the contract, the SecureSource - Single Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled and any waiting period limitations on withdrawals and step-ups terminate; if the covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP and RALP values are affected as follows: - - The GBA, RBA and GBP values remain unchanged. - - The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the date of continuation -- the ALP will be established on the contract anniversary following the date the covered person reaches age 65 as the lesser of the RBA or the contract anniversary value, multiplied by 6%. The RALP will be established on the same date equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the date of continuation -- the ALP will be established on the date of continuation as the lesser of the RBA or the contract value, multiplied by 6%. The RALP will be established on the same date in an amount equal to the ALP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the date of continuation -- the ALP and RALP will be automatically reset to zero for the period of time beginning with the date of continuation and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%, and the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the date of continuation -- the ALP will be automatically reset to the lesser of the current ALP or 6% of the contract value on the date of continuation. The RALP will be reset to the ALP less all prior withdrawals made in the current contract year, but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the spousal continuation. JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal continuation provision of the contract as the new owner, the SecureSource - Joint Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled and any waiting period limitations on withdrawals and step-ups terminate. The surviving covered spouse can name a new beneficiary, however, a new covered spouse cannot be added to the rider. SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values following a withdrawal no longer apply to your contract. For withdrawals, the withdrawal will be made from the variable subaccounts, guarantee period accounts (where available), the one-year fixed account (if applicable) and the DCA fixed account in the same proportion as your interest in each bears to the contract value. You cannot specify from which accounts the withdrawal is to be made. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 71 IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the total RBA remains greater than zero, you will be paid in the following scenarios: 1) The ALP has not yet been established and the contract value is reduced to zero as a result of fees or charges or a withdrawal that is less than or equal to the RBP. In this scenario, you can choose to: (a) receive the remaining schedule of GBPs until the RBA equals zero; or (b) SINGLE LIFE: wait until the rider anniversary on/following the date the covered person reaches age 65, and then receive the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero; or (c) JOINT LIFE: wait until the rider anniversary on/following the date the younger covered spouse reaches age 65, and then receive the ALP annually until the latter of (i) the death of the last surviving covered spouse, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 2) The ALP has been established and the contract value reduces to zero as a result of fees or charges, or a withdrawal that is less than or equal to both the RBP and the RALP. In this scenario, you can choose to receive: (a) the remaining schedule of GBPs until the RBA equals zero; or (b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero; or. (c) JOINT LIFE: the ALP annually until the latter of (i) the death of the last surviving covered spouse, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 3) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP. In this scenario, the remaining schedule of GBPs will be paid until the RBA equals zero. 4) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RBP but less than or equal to the RALP. In this scenario, the ALP will be paid annually until the death of the: - - SINGLE LIFE: covered person; - - JOINT LIFE: last surviving covered spouse. Under any of these scenarios: - - The annualized amounts will be paid to you in the frequency you elect. You may elect a frequency offered by us at the time payments begin. Available payment frequencies will be no less frequent than annually; - - We will no longer accept additional purchase payments; - - You will no longer be charged for the rider; - - Any attached death benefit riders will terminate; and - - SINGLE LIFE: The death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. - - JOINT LIFE: If the owner had been receiving the ALP, upon the first death the ALP will continue to be paid annually until the later of: 1) the death of the last surviving covered spouse or 2) the RBA is reduced to zero. In all other situations the death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. The SecureSource rider and the contract will terminate under either of the following two scenarios: - - If the contract value falls to zero as a result of a withdrawal that is greater than both the RALP and the RBP. This is full withdrawal of the contract value. - - If the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP, and the total RBA is reduced to zero. AT DEATH: SINGLE LIFE: If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may: 1) elect to take the death benefit under the terms of the contract, 2) take the fixed payout option available under this rider, or 3) continue the contract under the spousal continuation provision of the contract above. If the contract value equals zero and the death benefit becomes payable, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person dies and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - -------------------------------------------------------------------------------- 72 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - If the covered person is still alive and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the later of the death of the covered person or the RBA equals zero. - - If the covered person is still alive and the RBA equals zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the death of the covered person. - - If the covered person dies and the RBA equals zero, the benefit terminates. No further payments will be made. JOINT LIFE: If the death benefit becomes payable at the death of a covered spouse, the surviving covered spouse must utilize the spousal continuation provision of the contract and continue the contract as the new owner to continue the joint benefit. If spousal continuation is not available under the terms of the contract, the rider terminates. The lifetime benefit of this rider ends at the death of the last surviving covered spouse. If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may: 1) elect to take the death benefit under the terms of the contract, 2) take the fixed payout option available under this rider, or 3) continue the contract under the spousal continuation provision of the contract above. If the contract value equals zero at the first death of a covered spouse, the ALP will continue to be paid annually until the later of: 1) the death of the last surviving spouse or 2) the RBA is reduced to zero. If the contract value equals zero at the death of the last surviving covered spouse, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the RBA equals zero, the benefit terminates. No further payments will be made. CONTRACT OWNERSHIP CHANGE: SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the GBA, RBA, GBP, RBP values will remain unchanged. If the covered person changes due to the ownership change, the ALP and RALP will be reset as follows: - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be established on the contract anniversary following the date the covered person reaches age 65. The ALP will be set equal to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the anniversary date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the anniversary date occurs at any other time, the RALP will be set to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be established on the ownership change date. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be set to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be set to the ALP less all prior withdrawals made in the current contract year but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be reset to zero for the period of time beginning with the ownership change date and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the time period ends during the waiting period and prior to any withdrawals, the RALP will be reset to equal the lesser of the ALP or total purchase payments multiplied by 6%. If the time period ends at any other time, the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be reset on the ownership change date. The ALP will be reset to the lesser of the current ALP or 6% of the contract value. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be reset to the ALP less all prior withdrawals made in the current contract year but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the ownership change. JOINT LIFE: Ownership changes are only allowed between the covered spouses or their revocable trust(s). No other ownership changes are allowed as long as the rider is in force. GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the SecureSource(SM) rider. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 73 Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity payout option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This option may not be available if the contract is issued to qualify under section 403 or 408 of the Code, as amended. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. RIDER TERMINATION The SecureSource rider cannot be terminated either by you or us except as follows: 1. SINGLE LIFE: After the death benefit is payable the rider will terminate if: (a) any one other than your spouse continues the contract, or (b) your spouse does not use the spousal continuation provision of the contract to the continue the contract. 2. JOINT LIFE: After the death benefit is payable the rider will terminate if: (a) any one other than a covered spouse continues the contract, or (b) a covered spouse does not use the spousal continuation provision of the contract to the continue the contract. 3. Annuity payouts under an annuity payout plan will terminate the rider. 4. Termination of the contract for any reason will terminate the rider. OPTIONAL LIVING BENEFITS -- PREVIOUSLY OFFERED UNDER CONTRACT OPTION L AND CONTRACT OPTION C If you bought a contract before May 1, 2007 with an optional living benefit, please use the following table to review the disclosure that applies to the optional living benefit rider you purchased. If you are uncertain as to which optional living benefit rider you purchased, ask your investment professional, or contact us at the telephone number or address shown on the first page of this prospectus.
IF YOU PURCHASED AND YOU SELECTED ONE OF THE DISCLOSURE FOR THIS BENEFIT MAY BE A CONTRACT(1)... FOLLOWING OPTIONAL LIVING BENEFITS... FOUND IN THE FOLLOWING APPENDIX: Before April 29, 2005 Guarantor Withdrawal Benefit ("Rider Appendix L B") April 29, 2005 - April 30, Guarantor Withdrawal Benefit ("Rider Appendix L 2006 A") May 1, 2006 - April 30, Guarantor Withdrawal Benefit for Life Appendix K 2007 Before May 1, 2007 Income Assurer Benefit Appendix M
(1) These dates are approximate and will vary by state; your actual contract and any riders are the controlling documents. If you are uncertain which rider you have, please contact your investment professional or us. OPTIONAL DEATH BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by - -------------------------------------------------------------------------------- 74 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit, plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. For an example, see Appendix G. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are 70 or older at the rider effective date. It does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is available only for purchases through a transfer, exchange, or rollover. You may not select this rider if you select the Benefit Protector Rider, 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 75 Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") plus:
CONTRACT IF YOU AND THE ANNUITANT ARE UNDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) CONTRACT IF YOU OR THE ANNUITANT ARE AGE 70 YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% X (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). For an example, see Appendix H. THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below, except under annuity payout Plan E. You also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). You may reallocate this contract value to the subaccounts to provide variable annuity payouts. If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin (see "Making the Most of Your Contract -- Transfer policies"). ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payout, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. - -------------------------------------------------------------------------------- 76 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. Some of the annuity payout plans may not be available if you have selected the Income Assurer Benefit rider. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we made only one monthly payout, we will not make any more payouts. - - PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN (under the Income Assurer Benefit rider: you may select life annuity with ten or 20 years certain): We make monthly payouts for a guaranteed payout period of five, ten, 15 or 20 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND (not available under the Income Assurer Benefit rider): We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly annuity payouts during the lifetime of the annuitant and joint annuitant. When either the annuitant or joint annuitant dies, we will continue to make monthly payouts during the lifetime of the survivor. If the survivor dies before we have made payouts for 20 years, we continue to make payouts to the named beneficiary for the remainder of the 20-year period which begins when the first annuity payout is made. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect (under the Income Assurer Benefit rider, you may elect a payout period of 20 years only). We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the payout period, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. (Exception: If you have an Income Assurer Benefit rider and elect this annuity payout plan based on the Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. The discount rate we use in the calculation will vary between 6.55% and 8.15% depending on the applicable contract option and the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes."). - - GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an alternative to the above annuity payout plans. This option may not be available if the contract is a qualified annuity. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. Under this option, the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the total RBA at the time you begin this fixed payout option (see "Optional Benefits -- SecureSource Riders", "Appendix J: Guarantor Withdrawal Benefit for Life Rider" or "Appendix K: Guarantor Withdrawal Benefit Rider"). These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at the time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary. ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 77 regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a nonresident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. - -------------------------------------------------------------------------------- 78 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 79 If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or foil surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a nonresident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401 (a) plans only); or to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's - -------------------------------------------------------------------------------- 80 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or are not the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource Variable Portfolio - Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 81 ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves as the principal underwriter and general distributor of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. SALES OF THE CONTRACT - - Only securities broker-dealers ("selling firms") registered with the SEC and members of the FINRA may sell the contract. - - The contracts are continuously offered to the public through authorized selling firms. We and RiverSource Distributors have a sales agreement with the selling firm to offer the contracts to the public. We agree to pay the selling firm (or an affiliated insurance agency) for contracts its investment professionals sell. The selling firm may be required to return sales commissions under certain circumstances including but not limited to when contracts are returned under the free look period. PAYMENTS WE MAKE TO SELLING FIRMS - - We may use compensation plans which vary by selling firm. For example, some of these plans pay selling firms a commission of up to 4.0% each time a purchase payment is made for contract Option L and 1% for contract Option C. We may also pay ongoing trail commissions of up to 1.25% of the contract value. We do not pay or withhold payment of trail commissions based on which investment options you select. - - We may pay selling firms a temporary additional sales commission of up to 1% of purchase payments for both contract options offered for a period of time we select. For example, we may offer to pay a temporary additional sales commission to get selling firms to market a new or enhanced contract or to increase sales during the period. - - In addition to commissions, we may, in order to promote sales of the contracts, and as permitted by applicable laws and regulation, pay or provide selling firms with other promotional incentives in cash, credit or other compensation. We generally (but may not) offer these promotional incentives to all selling firms. The terms of such arrangements differ between selling firms. These promotional incentives may include but are not limited to: - sponsorship of marketing, educational, due diligence and compliance meetings and conferences we or the selling firm may conduct for investment professionals, including subsidy of travel, meal, lodging, entertainment and other expenses related to these meetings; - marketing support related to sales of the contract including for example, the creation of marketing materials, advertising and newsletters; - providing service to contract owners; and - funding other events sponsored by a selling firm that may encourage the selling firm's investment professionals to sell the contract. These promotional incentives or reimbursements may be calculated as a percentage of the selling firm's aggregate, net or anticipated sales and/or total assets attributable to sales of the contract, and/or may be a fixed dollar amount. As noted below this additional compensation may cause the selling firm and its investment professionals to favor the contracts. SOURCES OF PAYMENTS TO SELLING FIRMS We pay the commissions and other compensation described above from our assets. Our assets may include: - - revenues we receive from fees and expenses that you will pay when buying, owning and making a withdrawal from the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- The Funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The Funds"); and - - revenues we receive from other contracts we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part or all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including withdrawal charges; and, - - fees and expenses charged by the underlying subaccount funds in which you invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. - -------------------------------------------------------------------------------- 82 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS POTENTIAL CONFLICTS OF INTEREST Compensation payment arrangements with selling firms can potentially: - - give selling firms a heightened financial incentive to sell the contract offered in this prospectus over another investment with lower compensation to the selling firm. - - cause selling firms to encourage their investment professionals to sell you the contract offered in this prospectus instead of selling you other alternative investments that may result in lower compensation to the selling firm. - - cause selling firms to grant us access to its investment professionals to promote sales of the contract offered in this prospectus, while denying that access to other firms offering similar contracts or other alternative investments which may pay lower compensation to the selling firm. PAYMENTS TO INVESTMENT PROFESSIONALS - - The selling firm pays its investment professionals. The selling firm decides the compensation and benefits it will pay its investment professionals. - - To inform yourself of any potential conflicts of interest, ask the investment professional before you buy, how the selling firm and its investment professionals are being compensated and the amount of the compensation that each will receive if you buy the contract. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 83 statements and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- 84 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE # Appendix A: Example -- Market Value Adjustment (MVA) p. 86 Guarantee Period Accounts (GPAs) p. 34 Appendix B: Example -- Withdrawal Charges for Charges -- Withdrawal Charges Contract Option L p. 88 p. 40 Appendix C: Example -- Death Benefits p. 93 Benefits in Case of Death p. 57 Appendix D: Example -- Accumulation Protector Benefit Optional Benefits -- Accumulation Protector Benefit Rider p. 96 Rider p. 60 Appendix E: Example -- SecureSource Riders p. 98 Optional Benefits -- SecureSource Riders p. 62 Appendix F: SecureSource Riders -- Additional RMD Optional Benefits -- SecureSource Riders Disclosure p. 102 p. 62 Appendix G: Example -- Benefit Protector Death Optional Benefits -- Benefit Protector Death Benefit Benefit Rider p. 104 Rider p. 74 Appendix H: Example -- Benefit Protector Plus Death Optional Benefits -- Benefit Protector Plus Death Benefit Rider p. 106 Benefit Rider p. 75 Appendix I: Asset Allocation Program for Contracts Purchased Before May 1, 2006 p. 108 Appendix J: Guarantor Withdrawal Benefit for Life N/A Rider Disclosure p. 109 Appendix K: Guarantor Withdrawal Benefit Rider N/A Disclosure p. 121 Appendix L: Example -- Income Assurer Benefit Riders N/A Disclosure p. 129 Appendix M: Condensed Financial Information Condensed Financial Information (Unaudited) (Unaudited) p. 138 p. 13
The purpose of these appendices is first to illustrate the operation of various contract features and riders; second, to provide additional disclosure regarding various contract features and riders; and lastly, to provide condensed financial history (unaudited) of the subaccounts. In order to demonstrate the contract features and riders, an example may show hypothetical contract values. These contract values do not represent past or future performance. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts, GPAs, DCA fixed account, and one-year fixed account and the fees and charges that apply to your contract. The examples of death benefits and optional riders in appendices C through E and J through L include a partial withdrawal to illustrate the effect of a partial withdrawal on the particular benefit. These examples are intended to show how the optional riders operate, and do not take into account whether the rider is part of a qualified contract. Qualified contracts are subject to required minimum distributions at certain ages which may require you to take partial withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you are considering the addition of certain death benefits and/or optional riders to a qualified contract, you should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 85 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA) As the examples below demonstrate, the application of an MVA may result in either a gain or a loss of principal. We refer to all of the transactions described below as "early withdrawals." ASSUMPTIONS: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; and - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your guarantee period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate and, so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES -- MVA Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your guarantee period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and your purchase payment is in its fourth year from receipt at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you - -------------------------------------------------------------------------------- 86 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS requested after we apply the MVA (and any applicable withdrawal charge under contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 87 APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L For purposes of calculating any withdrawal charge, including the examples illustrated below, we treat amounts withdrawn from your contract value in the following order: 1. First, in each contract year, we withdraw amounts totaling: - up to 10% of your prior anniversary's contract value or your contract's remaining benefit payment if you elected the Guarantor(SM) Withdrawal Benefit rider and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. - up to 10% of your prior anniversary's contract value or the greater of your contract's remaining benefit payment or remaining annual lifetime payment if you elected the SecureSource rider or the Guarantor Withdrawal Benefit for Life rider, and the greater of your RALP and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. 2. Next, we withdraw contract earnings, if any, that are greater than the amount described in number one above. We do not assess a withdrawal charge on contract earnings. 3. Next we withdraw purchase payments received prior to the withdrawal charge period shown in your contract. We do not assess a withdrawal charge on these purchase payments. 4. Finally, if necessary, we withdraw purchase payments received that are still within the withdrawal charge period you selected and shown in your contract. We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do assess a withdrawal charge on these payments. After withdrawing earnings in numbers one and two above, we next withdraw enough additional contract value (ACV) to meet your requested withdrawal amount. If the amount described in number one above was greater than contract earnings prior to the withdrawal, the excess (XSF) will be excluded from the purchase payments being withdrawn that were received most recently when calculating the withdrawal charge. We determine the amount of purchase payments being withdrawn (PPW) in numbers three and four above as: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) If the additional contract value withdrawn is less than XSF, then PPW will equal ACV. We determine current contract earnings (CE) by looking at the entire contract value (CV), not the earnings of any particular subaccount, GPA, the one-year fixed account or the DCA fixed account. If the contract value is less than purchase payments received and not previously withdrawn (PPNPW) then contract earnings are zero. The examples below show how the withdrawal charge for a full and partial withdrawal is calculated for Contract Option L with a four-year withdrawal charge schedule. Each example illustrates the amount of the withdrawal charge for both a contract that experiences gains and a contract that experiences losses, given the same set of assumptions. - -------------------------------------------------------------------------------- 88 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS FULL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule with the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You withdraw the contract for its total value during the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS: Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00 STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contact (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Now we can determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 60,000.00 40,000.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 50,000.00 40,000.00 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 50,000.00 40,000.00 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 50,000.00 50,000.00
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 89
CONTRACT WITH GAIN CONTRACT WITH LOSS STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: $50,000.00 $50,000.00 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 3,000.00 2,748.00 STEP 7. The dollar amount you will receive as a result of your full withdrawal is determined as: Contract value withdrawn: 60,000.00 40,000.00 WITHDRAWAL CHARGE: (3,000.00) (2,748.00) Contract charge (assessed upon full withdrawal): (40.00) (40.00) ---------- ---------- NET FULL WITHDRAWAL PROCEEDS: $56,960.00 $37,212.00
- -------------------------------------------------------------------------------- 90 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS PARTIAL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule with the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You request a net partial withdrawal of $15,000.00 during the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for the net partial withdrawal proceeds to match the amount requested. We start with an estimate of the amount of contract value to withdraw and calculate the resulting withdrawal charge and net partial withdrawal proceeds as illustrated below. We then adjust our estimate and repeat until we determine the amount of contract value to withdraw that generates the desired net partial withdrawal proceeds. WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS FOLLOWS: - -------------------------------------------------------------------------------- STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): $60,000.00 $40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contact (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 15,319.15 15,897.93 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 5,319.15 15,897.93 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 5,319.15 15,897.93 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 5,319.15 19,165.51
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 91 STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: $ 5,319.15 $19,165.51 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 319.15 897.93 STEP 7. The dollar amount you will receive as a result of your partial withdrawal is determined as: Contract value withdrawn: 15,319.15 15,897.93 WITHDRAWAL CHARGE: (319.15) (897.93) ---------- ---------- NET PARTIAL WITHDRAWAL PROCEEDS: $15,000.00 $15,000.00
- -------------------------------------------------------------------------------- 92 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX C: EXAMPLE -- DEATH BENEFITS EXAMPLE -- ROP DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $20,000. You select contract Option L; and - - On the first contract anniversary you make an additional purchase payment of $5,000; and - - During the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal, including withdrawal charge; and - - During the third contract year the contract value grows to $23,000. WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS: 1. Contract value at death: $23,000.00 ---------- 2. Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45 EXAMPLE -- MAV DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000. You select contract Option L; and - - On the first contract anniversary the contract value grows to $26,000; and - - During the second contract year the contract value falls to $22,000, at which point you take a $1,500 (including withdrawal charge) partial withdrawal, leaving a contract value of $20,500. WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $20,500.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- 3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH: Greatest of your contract anniversary values: $26,000.00 plus purchase payments made since the prior anniversary: +0.00 minus the death benefit adjusted partial withdrawals, calculated as: $1,500 X $26,000 ---------------- = -1,772.73 $22,000 ---------- for a death benefit of: $24,227.27 ----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE MAV: $24,227.27 - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 93 EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - On the first contract anniversary, the GPA value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - During the second contract year the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a death benefit of: $23,456.79 ---------- 3. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: $21,000.00 1.05 X $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 ---------- 5% variable account floor (value of the GPAs, one-year fixed account and the $24,642.11 variable account floor):
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- 94 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE -- ENHANCED DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - On the first contract anniversary, the GPAs value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - During the second contract year, the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP Death Benefit of: $23,456.79 ---------- 3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV Death Benefit of: $23,456.79 ---------- 4. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: $21,000.00 1.05 x $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 ---------- 5% variable account floor (value of the GPAs and the variable account floor): $24,642.11 ----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 95 APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER AUTOMATIC STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) in the second, third and seventh contract anniversaries. These increases occur because of the automatic step up feature of the rider. The automatic step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - - you take partial withdrawals from the contract on the fifth and eighth contract anniversaries in the amounts of $2,000 and $5,000, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and - - you do not exercise the elective step up option available under the rider; and - - you do not change asset allocation models. Based on these assumptions, the waiting period expires at the end of the 10th contract year. The rider then ends. On the benefit date the hypothetical assumed contract value is $108,118 and the MCAV is $136,513, so the contract value would be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT ADJUSTED ASSUMED ASSUMED DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 0 0 0 12.0% 140,000 125,000 2 0 0 0 15.0% 161,000 128,800(2) 3 0 0 0 3.0% 165,830 132,664(2) 4 0 0 0 -8.0% 152,564 132,664 5 0 2,000 2,046 -15.0% 127,679 130,618 6 0 0 0 20.0% 153,215 130,618 7 0 0 0 15.0% 176,197 140,958(2) 8 0 5,000 4,444 -10.0% 153,577 136,513 9 0 0 0 -20.0% 122,862 136,513 10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date. (2) These values indicate where the automatic step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. - -------------------------------------------------------------------------------- 96 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS ELECTIVE STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) on the first, second, third and seventh contract anniversaries. These increases occur only if you exercise the elective step up Option within 30 days following the contract anniversary. The contract value on the date we receive your written request to step up must be greater than the MCAV on that date. The elective step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - - you take partial withdrawals from the contract on the fifth, eighth and thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and - - the elective step up is exercised on the first, second, third and seventh contract anniversaries; and - - you do not change asset allocation models. Based on these assumptions, the 10 year waiting period restarts each time you exercise the elective step up option (on the first, second, third and seventh contract anniversaries in this example). The waiting period expires at the end of the 10th contract year following the last exercise of the elective step up option. When the waiting period expires, the rider ends. On the benefit date the hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 10(2) 0 0 0 12.0% 140,000 140,000(3) 2 10(2) 0 0 0 15.0% 161,000 161,000(3) 3 10(2) 0 0 0 3.0% 165,830 165,830(3) 4 9 0 0 0 -8.0% 152,564 165,830 5 8 0 2,000 2,558 -15.0% 127,679 163,272 6 7 0 0 0 20.0% 153,215 163,272 7 10(2) 0 0 0 15.0% 176,197 176,197(3) 8 9 0 5,000 5,556 -10.0% 153,577 170,642 9 8 0 0 0 -20.0% 122,862 170,642 10 7 0 0 0 -12.0% 108,118 170,642 11 6 0 0 0 3.0% 111,362 170,642 12 5 0 0 0 4.0% 115,817 170,642 13 4 0 7,500 10,524 5.0% 114,107 160,117 14 3 0 0 0 6.0% 120,954 160,117 15 2 0 0 0 -5.0% 114,906 160,117 16 1 0 0 0 -11.0% 102,266 160,117 17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB benefit date. (2) The waiting period restarts when the elective step up is exercised. (3) These values indicate when the elective step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Exercising the elective step up provision may result in an increase in the charge that you pay for this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 97 APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract. - - You are the sole owner and also the annuitant. You are age 60. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - - You elect the Moderate model portfolio at issue. On the 1st contract anniversary, you elect to change to the Moderately Aggressive model portfolio. The target model portfolio under the contract is the Moderate model portfolio.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 2 0 0 81,000 90,000 90,000 6,300 6,300 5 0 0 75,000 90,000 90,000 6,300 6,300 5.5 0 5,400 70,000 90,000 84,600 6,300 900 6 0 0 69,000 90,000 84,600 6,300 6,300 6.5 0 6,300 62,000 90,000 78,300 6,300 0 7 0 0 64,000 90,000 78,300 6,300 6,300 7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 8 0 0 55,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 2 N/A N/A 5 5,400(2) 5,400(2) 5.5 5,400 0 6 5,400 5,400 6.5 3,720(3) 0 7 3,840 3,840 7.5 3,060(4) 0 8 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation, contract ownership change, or model portfolio changes), you can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your death or the RBA is reduced to zero. (1) Allocation to the Moderately Aggressive model portfolio during a withdrawal phase will reset the benefit. The GBA is reset to the lesser of the prior GBA or the contract value. The RBA is reset to the lesser of the prior RBA or the contract value. The ALP (if established) is reset to the lesser of the prior ALP or 6% of the contract value. Any future withdrawals will reallocate your contract value to the Moderate model portfolio if you are invested more aggressively than the Moderate model portfolio. (2) The ALP and RALP are established on the contract anniversary date following the date the Covered Person reaches age 65 as 6% of the RBA. (3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the basic withdrawal benefit and the $3,840 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 98 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract. - - You are the sole owner and also the annuitant. You are age 65. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - - Your death occurs after 6 1/2 contract years and your spouse continues the contract and rider. Your spouse is over age 65 and is the new Covered Person.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 6.5 0 0 110,000 125,000 125,000 8,750 8,750 7 0 0 105,000 125,000 125,000 8,750 8,750 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500 6.5 6,600(5) 6,600(5) 7 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, contract ownership change, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $6,600 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The Annual Step-up has not been applied to the RBP or RALP because any withdrawal after step up during the Waiting Period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the Waiting Period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the Waiting Period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or 6% of the contract value and the RALP is reset to the ALP. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 99 EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract. - - You are age 59 and your spouse is age 60. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - - You elect the Moderate model portfolio at issue. On the 1st contract anniversary, you elect to change to the Moderately Aggressive model portfolio. The target model portfolio under the contract is the Moderate model portfolio. - - Your death occurs after 9 1/2 contract years and your spouse continues the contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 2 0 0 81,000 90,000 90,000 6,300 6,300 6 0 0 75,000 90,000 90,000 6,300 6,300 6.5 0 5,400 70,000 90,000 84,600 6,300 900 7 0 0 69,000 90,000 84,600 6,300 6,300 7.5 0 6,300 62,000 90,000 78,300 6,300 0 8 0 0 64,000 90,000 78,300 6,300 6,300 8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 9 0 0 55,000 55,000 55,000 3,850 3,850 9.5 0 0 54,000 55,000 55,000 3,850 3,850 10 0 0 52,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 2 N/A N/A 6 5,400(2) 5,400(2) 6.5 5,400 0 7 5,400 5,400 7.5 3,720(3) 0 8 3,840 3,840 8.5 3,060(4) 0 9 3,300 3,300 9.5 3,300 3,300 10 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The ALP and RALP are established on the contract anniversary date following the date the younger Covered Spouse reaches age 65 as 6% of the RBA. (2) Allocation to the Moderately Aggressive model portfolio during a withdrawal phase will reset the benefit. The GBA is reset to the lesser of the prior GBA or the contract value. The RBA is reset to the lesser of the prior RBA or the contract value. The ALP is reset to the lesser of the prior ALP or 6% of the contract value. Any future withdrawals will reallocate your contract value to the Moderate model portfolio if you are invested more aggressively than the Moderate model portfolio. (3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the basic withdrawal benefit and the $3,840 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 100 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and make no additional payments to the contract - - You are age 71 and your spouse is age 70. - - Automatic Annual Step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied Annual Step-ups are indicated in BOLD. - - Your death occurs after 6 1/2 contract years and your spouse continues the contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL ASSUMED BASIC WITHDRAWAL BENEFIT CONTRACT PURCHASE PARTIAL CONTRACT ---------------------------------------- DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 6.5 0 0 110,000 125,000 125,000 8,750 8,750 7 0 0 105,000 125,000 125,000 8,750 8,750 LIFETIME WITHDRAWAL BENEFIT CONTRACT ---------------------------- DURATION ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500 6.5 7,500 7,500 7 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $7,500 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The Annual Step-up has not been applied to the RBP or RALP because any withdrawal after step up during the Waiting Period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the Waiting Period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the Waiting Period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 101 APPENDIX F: SECURESOURCE RIDERS -- ADDITIONAL RMD DISCLOSURE This appendix describes our current administrative practice for determining the amount of withdrawals in any contract year which an owner may take under the SecureSource rider to satisfy the RMD rules under 401(a)(9) of the Code without application of the excess withdrawal processing described in the rider. We reserve the right to modify this administrative practice at any time upon 30 days' written notice to you. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If on the date we calculated your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA), it is greater than the RBP from the beginning of the current contract year, - Basic Additional Benefit Amount (BABA) will be set equal to that portion of your ALERMDA that exceeds the RBP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. - Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the BABA. These withdrawals will not be considered excess withdrawals with regard to the GBA and RBA as long as they do not exceed the remaining BABA. - Once the BABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the GBA and RBA and will subject them all to the excess withdrawal processing described in the SecureSource rider. (2) If on the date we calculated your ALERMDA, it is greater than the RALP from the beginning of the current Contract Year, - A Lifetime Additional Benefit Amount (LABA) will be set equal to that portion of your ALERMDA that exceeds the RALP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RALP for that contract year. - Once the RALP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the LABA. These withdrawals will not be considered excess withdrawals with regard to the ALP as long as they do not exceed the remaining LABA. - Once the LABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the ALP and will subject the ALP to the excess withdrawal processing described by the SecureSource rider. (3) If the ALP is established on a policy anniversary where your current ALERMDA is greater than the new RALP, - An initial LABA will be set equal to that portion of your ALERMDA that exceeds the new RALP. - This new LABA will be immediately reduced by the amount that total withdrawals in the current calendar year exceed the new RALP, but shall not be reduced to less than zero. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the SecureSource rider is attached as of the date we make the determination; and (3) based on your recalculated life expectancy taken from the Uniform Lifetime Table under the Code; and (4) is otherwise based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable on the effective date of this prospectus, to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a SIMPLE IRA (Section 408(p)); 4. a Simplified Employee Pension plan (Section 408(k)); 5. a tax-sheltered annuity rollover (Section 403(b)); 6. custodial and investment plans (Section 401(a)) In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your SecureSource rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your available RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP as described under the excess withdrawal provision of the rider. - -------------------------------------------------------------------------------- 102 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g., ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. Please consult your tax advisor about the impact of these rules prior to purchasing the SecureSource rider. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 103 APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 During the second contract year the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit on equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $58,667 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000
- -------------------------------------------------------------------------------- 104 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 105 APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR PLUS ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit on equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV Death Benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV Death Benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 -------- Total death benefit of: $64,167 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000
- -------------------------------------------------------------------------------- 106 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 107 APPENDIX I: ASSET ALLOCATION PROGRAM FOR CONTRACTS PURCHASED BEFORE MAY 1, 2006 ASSET ALLOCATION PROGRAM For contracts purchased before May 1, 2006, we offered an asset allocation program called Portfolio Navigator. You could elect to participate in the asset allocation program, and there is no additional charge. If you purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider, you are required to participate in the asset allocation program under the terms of the rider. This asset allocation program allows you to allocate your contract value to a model portfolio that consists of subaccounts and may include certain GPAs (if available under the asset allocation program), which represent various asset classes. By spreading your contract value among these various asset classes, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will occur. Asset allocation does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. If you choose or are required to participate in the asset allocation program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool that can help you determine which model portfolio is suited to your needs based on factors such as your investment goals, your tolerance for risk, and how long you intend to invest. Currently, there are five model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. You are allowed to request a change to another model portfolio twice per contract year. Each model portfolio specifies allocation percentages to each of the subaccounts and any GPAs that make up that model portfolio. By participating in the asset allocation program, you authorize us to invest your contract value in the subaccounts and any GPAs according to the allocation percentages stated for the specific model portfolio you have selected. You also authorize us to automatically rebalance your contract value quarterly beginning three months after the effective date of your contract in order to maintain alignment with the allocation percentages specified in the model portfolio. Special rules will apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio (see "Guarantee Period Accounts -- Market Value Adjustment"). Under the asset allocation program, the subaccounts and/or any GPAs that make up the model portfolio you selected and the allocation percentages to those subaccounts and/or any GPAs will not change unless we adjust the composition of the model portfolio to reflect the liquidation, substitution or merger of an underlying fund, a change of investment objective by an underlying fund or when an underlying fund stops selling its shares to the variable account. We reserve the right to change the terms and conditions of the asset allocation program upon written notice to you. If permitted under applicable securities law, we reserve the right to: - - reallocate your current model portfolio to an updated version of your current model portfolio; or - - substitute a fund of funds for your current model portfolio. We also reserve the right to discontinue the asset allocation program. We will give you 30 days' written notice of any such change. If you elected to participate in the asset allocation program, you may discontinue your participation in the program at any time by giving us written notice. Upon cancellation, automated rebalancing associated with the asset allocation program will end. You can elect to participate in the asset allocation program again at any time. - -------------------------------------------------------------------------------- 108 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you may select for an additional annual charge if(1): - - you purchase your contract on or after May 1, 2006; - - the rider is available in your state; and - - you and the annuitant are 80 or younger on the date the contract is issued. (1) The Guarantor Withdrawal Benefit for Life rider is not available under an inherited qualified annuity. You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase your contract. The rider effective date will be the contract issue date. The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able to withdraw up to a certain amount each year from the contract, regardless of the investment performance of your contract before the annuity payments begin, until you have recovered at minimum all of your purchase payments. And, under certain limited circumstances defined in the rider, you have the right to take a specified amount of partial withdrawals in each contract year until death (see "At Death" heading below) -- even if the contract value is zero. Your contract provides for annuity payouts to begin on the retirement date (see "Buying Your Contract -- The Retirement Date"). Before the retirement date, you have the right to withdraw some or all of your contract value, less applicable administrative, withdrawal and rider charges imposed under the contract at the time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals"). Because your contract value will fluctuate depending on the performance of the underlying funds in which the subaccounts invest, the contract itself does not guarantee that you will be able to take a certain withdrawal amount each year before the annuity payouts begin, nor does it guarantee the length of time over which such withdrawals can be made before the annuity payouts begin. The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if you intend to make periodic withdrawals from your annuity contract and wish to ensure that market performance will not adversely affect your ability to withdraw your principal over time. Under the terms of the Guarantor Withdrawal Benefit for Life rider, the calculation of the amount which can be withdrawn in each contract year varies depending on several factors, including but not limited to the waiting period (see "Waiting period" heading below) and whether or not the lifetime withdrawal benefit has become effective: (1) The basic withdrawal benefit gives you the right to take limited partial withdrawals in each contract year and guarantees that over time the withdrawals will total an amount equal to, at minimum, your purchase payments. Key terms associated with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP)," "Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See these headings below for more information. (2) The lifetime withdrawal benefit gives you the right, under certain limited circumstances defined in the rider, to take limited partial withdrawals until the later of death (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero. Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime Payment (ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and "Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for more information. Only the basic withdrawal benefit will be in effect prior to the date that the lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit becomes effective automatically on the rider anniversary date after the covered person reaches age 65, or the rider effective date if the covered person is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" heading below). Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for Life rider guarantees that you may take the following partial withdrawal amounts each contract year: - - After the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the GBP; - - During the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the value of the RBP at the beginning of the contract year; - - After the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal the ALP or the GBP, but the rider does not guarantee withdrawals of the sum of both the ALP and the GBP in a contract year; - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 109 - - During the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RALP or the RBP at the beginning of the contract year, but the rider does not guarantee withdrawals of the sum of both the RALP and the RBP in a contract year. If you withdraw less than the allowed partial withdrawal amount in a contract year, the unused portion cannot be carried over to the next contract year. As long as your partial withdrawals in each contract year do not exceed the annual partial withdrawal amount allowed under the rider, and there has not been a contract ownership change or spousal continuation of the contract, the guaranteed amounts available for partial withdrawals are protected (i.e., will not decrease). If you withdraw more than the allowed partial withdrawal amount in a contract year, we call this an "excess withdrawal" under the rider. Excess withdrawals trigger an adjustment of a benefit's guaranteed amount, which may cause it to be reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and "ALP Excess Withdrawal Processing" headings below). Please note that each of the two benefits has its own definition of the allowed annual withdrawal amount. Therefore a partial withdrawal may be considered an excess withdrawal for purposes of the lifetime withdrawal benefit only, the basic withdrawal benefit only, or both. If your withdrawals exceed the greater of the RBP or the RALP, withdrawal charges under the terms of the contract may apply (see "Charges -- Withdrawal Charges"). The amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Making the Most of Your Contract -- Withdrawals"). The rider's guaranteed amounts can be increased at the specified intervals if your contract value has increased. An annual step up feature is available at each contract anniversary, subject to certain conditions, and may be applied automatically to your contract or may require you to elect the step up (see "Annual Step Up" heading below). If you exercise the annual step up election, the spousal continuation step up election (see "Spousal Continuation Step Up" heading below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). If you take withdrawals during the waiting period, any prior steps ups applied will be reversed and step ups will not be available until the third rider anniversary. You may take withdrawals after the waiting period without reversal of prior step ups. You should consider whether the Guarantor Withdrawal Benefit for Life rider is appropriate for you because: - - LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is subject to certain limitations, including but not limited to: (a) Once the contract value equals zero, payments are made for as long as the oldest owner or annuitant is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the first death of any owner or annuitant except as otherwise provided below (see "At Death" heading below). Therefore, if there are multiple contract owners or the annuitant is not an owner, the rider may terminate or the lifetime withdrawal benefit may be reduced. This possibility may present itself when: (i) There are multiple contract owners -- when one of the contract owners dies the benefit terminates even though other contract owners are still living (except if the contract is continued under the spousal continuation provision of the contact); or (ii) The owner and the annuitant are not the same persons -- if the annuitant dies before the owner, the benefit terminates even though the owner is still living. This is could happen, for example, when the owner is younger than the annuitant. This risk increases as the age difference between owner and annuitant increases. (b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA, GBP and/or RBP values are greater than zero. If the both the ALP and the contract value are zero, the lifetime withdrawal benefit will terminate. (c) When the lifetime withdrawal benefit is first established, the initial ALP is based on the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below), unless there has been a spousal continuation or ownership change. Any withdrawal you take before the ALP is established reduces the RBA and therefore may result in a lower amount of lifetime withdrawals you are allowed to take. (d) Withdrawals can reduce both the contract value and the RBA to zero prior to the establishment of the ALP. If this happens, the contract and the Guarantor Withdrawal Benefit for Life rider will terminate. - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts, one-year fixed account and GPAs (if available) to those that - -------------------------------------------------------------------------------- 110 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program.") Subject to state restrictions, we reserve the right to limit the number of model portfolios from which you can select based on the dollar amount of purchase payments you make. - - LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the Guarantor Withdrawal Benefit for Life rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw from the contract in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than the RBP or RALP under this rider. Any amount you withdraw under the contract's TFA provision that exceeds the RBP or RALP is subject to the excess withdrawal processing described below for the GBA, RBA and ALP. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation: - - TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income tax law, withdrawals under nonqualified annuities, including partial withdrawals taken from the contract under the terms of this rider, are treated less favorably than amounts received as annuity payments under the contract (see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income. - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD that exceeds the specified amount of withdrawal available under the rider. Partial withdrawals in any contract year that exceed the guaranteed amount available for withdrawal may reduce future benefits guaranteed under the rider. While the rider permits certain excess withdrawals to be made for the purpose of satisfying RMD requirements for this contract alone without reducing future benefits guaranteed under the rider, there can be no guarantee that changes in the federal income tax law after the effective date of the rider will not require a larger RMD to be taken, in which case, future guaranteed withdrawals under the rider could be reduced. Additionally, RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If on the date we calculated your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA), it is greater than the RBP from the beginning of the current contract year, - Basic Additional Benefit Amount (BABA) will be set equal to that portion of your ALERMDA that exceeds the RBP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. - Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the BABA. These withdrawals will not be considered excess withdrawals with regard to the GBA and RBA as long as they do not exceed the remaining BABA. - Once the BABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the GBA and RBA and will subject them all to the excess withdrawal processing described in the Guarantor Withdrawal Benefit for Life rider. (2) If on the date we calculated your ALERMDA, it is greater than the RALP from the beginning of the current Contract Year, - A Lifetime Additional Benefit Amount (LABA) will be set equal to that portion of your ALERMDA that exceeds the RALP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RALP for that contract year. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 111 - Once the RALP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the LABA. These withdrawals will not be considered excess withdrawals with regard to the ALP as long as they do not exceed the remaining LABA. - Once the LABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the ALP and will subject the ALP to the excess withdrawal processing described by the Guarantor Withdrawal Benefit for Life rider. (3) If the ALP is established on a policy anniversary where your current ALERMDA is greater than the new RALP, - An initial LABA will be set equal to that portion of your ALERMDA that exceeds the new RALP. - This new LABA will be immediately reduced by the amount that total withdrawals in the current calendar year exceed the new RALP, but shall not be reduced to less than zero. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the Guarantor Withdrawal Benefit for Life rider is attached as of the date we make the determination; and (3) is otherwise based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable on the effective date of this prospectus, to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a Simplified Employee Pension plan (Section 408(k)); 4. a tax-sheltered annuity rollover (Section 403(b)). We reserve the right to discontinue our administrative practice described above and will give you 30 days' written notice of any such change. In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your available RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP as described under the excess withdrawal provision of the rider. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g., ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit for Life rider may be of limited value to you. For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below. KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE DESCRIBED BELOW: PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a surrender of the contract. The partial withdrawal amount is a gross amount and will include any withdrawal charge and any market value adjustment. WAITING PERIOD: The period of time starting on the rider effective date during which the annual step up is not available if you take withdrawals. The current waiting period is three years. GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for partial withdrawals over the life of the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not payable as a death benefit. Rather, the GBA is an interim value used to calculate the amount available for withdrawals each year under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of the individual GBAs associated with each purchase payment. THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - -------------------------------------------------------------------------------- 112 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - When an individual RBA is reduced to zero -- the GBA that is associated with that RBA will also be set to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBA remains unchanged. If there have been multiple purchase payments, both the total GBA and each payment's GBA remain unchanged. (b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. GBA EXCESS WITHDRAWAL PROCESSING The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that is guaranteed by this rider as future withdrawals. At any point in time, the RBA equals the amount of GBA that remains available for withdrawals for the remainder of the contract's life, and total RBA is the sum of the individual RBAs associated with each purchase payment. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the RBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own RBA initially set equal to that payment's GBA (the amount of the purchase payment). - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the RBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the total RBA is reduced by the amount of the withdrawal. If there have been multiple purchase payments, each payment's RBA is reduced in proportion to its RBP. (b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. RBA EXCESS WITHDRAWAL PROCESSING The total RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the total RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, both the total RBA and each payment's RBA will be reset. The total RBA will be reset according to the excess withdrawal processing described above. Each payment's RBA will be reset in the following manner: 1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in proportion to its individual RBP at the time of the withdrawal; and 2. The withdrawal amount above the total RBP and any amount determined by the excess withdrawal processing are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial withdrawals in each contract year after the waiting period, until the RBA is reduced to zero, under the basic withdrawal benefit. At any point in time, each purchase - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 113 payment has its own GBP, which is equal to the lesser of that payment's RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual GBPs. During the waiting period, the guaranteed annual withdrawal amount may be less than the GBP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual withdrawal amount during the waiting period is equal to the value of the RBP at the beginning of the contract year. THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBP is established as 7% of the GBA value. - - At each contract anniversary -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value. - - When you make additional purchase payments -- each additional purchase payment has its own GBP equal to 7% of the purchase payment amount. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBP associated with that RBA will also be reset to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA and the RBA associated with each purchase payment will be reset to the amount of that purchase payment. Each payment's GBP will be reset to 7% of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBP remains unchanged. (b) is greater than the total RBP -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value, based on the RBA and GBA after the withdrawal. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals for the remainder of the contract year under the basic withdrawal benefit. At any point in time, the total RBP is the sum of the RBPs for each purchase payment. During the waiting period, when the guaranteed amount maybe less than the GBP, the value of the RBP at the beginning of the contract year will be that amount that is actually guaranteed each contract year. THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At the beginning of each contract year during the waiting period and prior to any withdrawal -- the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. - - At the beginning of any other contract year -- the RBP for each purchase payment is set equal to that purchase payment's GBP. - - When you make additional purchase payments -- each additional purchase payment has its own RBP equal to that payment's GBP. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At spousal continuation -- (see "Spousal Option to Continue the Contract" heading below). - - When an individual RBA is reduced to zero -- the RBP associated with that RBA will also be reset to zero. - - When you make any partial withdrawal -- the total RBP is reset to equal the total RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. If there have been multiple purchase payments, each payment's RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in the excess withdrawal processing, the applicable RBP will not yet reflect the amount of the current withdrawal. COVERED PERSON: The person whose life is used to determine when the ALP is established, and the duration of the ALP payments. The Covered Person is the oldest contract owner or annuitant. The covered person may change during the contract's life if there is a spousal continuation or a change of contract ownership. If the covered person changes, we recompute the benefits guaranteed by the rider, based on the life of the new covered person, which may reduce the amount of the lifetime withdrawal benefit. - -------------------------------------------------------------------------------- 114 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after which time the lifetime benefit can be established. Currently, the lifetime benefit can be established on the later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65. ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the amount available for withdrawals in each contract year after the waiting period until the later of death (see "At Death" heading below), or the RBA is reduced to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the ALP is zero. During the waiting period, the guaranteed annual lifetime withdrawal amount may be less than the ALP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual lifetime withdrawal amount during the waiting period is equal to the value of the RALP at the beginning of the contract year. THE ALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65 -- the ALP is established as 6% of the total RBA. - - When you make additional purchase payments -- each additional purchase payment increases the ALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At contract ownership change -- (see "Spousal Option to Continue the Contract" and "Contract Ownership Change" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the ALP will be reset to equal total purchase payments multiplied by 6%. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the RALP -- the ALP remains unchanged. (b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE ALP. If the partial withdrawal is made during the waiting period, the excess withdrawal processing are applied AFTER any previously applied annual step ups have been reversed. ALP EXCESS WITHDRAWAL PROCESSING The ALP is reset to the lesser of the ALP immediately prior to the withdrawal, or 6% of the contract value immediately following the withdrawal. REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial withdrawals for the remainder of the contract year under the lifetime withdrawal benefit. During the waiting period, when the guaranteed annual withdrawal amount may be less than the ALP, the value of the RALP at the beginning of the contract year will be the amount that is actually guaranteed each contract year. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the RALP is zero. THE RALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date following the date the covered person reaches age 65, and: (a) During the waiting period and prior to any withdrawals -- the RALP is established equal to 6% of purchase payments. (b) At any other time -- the RALP is established equal to the ALP. - - At the beginning of each contract year during the waiting period and prior to any withdrawals -- the RALP is set equal to the total purchase payments, multiplied by 6%. - - At the beginning of any other contract year -- the RALP is set equal to ALP. - - When you make additional purchase payments -- each additional purchase payment increases the RALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make any partial withdrawal -- the RALP equals the RALP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in excess withdrawal processing, the applicable RALP will not yet reflect the amount of the current withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 115 STEP UP DATE: The date any step up becomes effective, and depends on the type of step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may extend the payment period or increase the allowable payment. The annual step up is subject to the following rules: - - The annual step up is available when the RBA or, if established, the ALP, would increase on the step up date. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the waiting period, any previously applied step ups will be reversed and the annual step up will not be available until the end of the waiting period. - - If the application of the step up does not increase the rider charge, the annual step up will be automatically applied to your contract, and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - The ALP and RALP are not eligible for step ups until they are established. Prior to being established, the ALP and RALP values are both zero. - - Please note it is possible for the ALP and RALP to step up even if the RBA or GBA do not step up, and it is also possible for the RBA and GBA to step up even if the ALP or RALP do not step up. The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as follows: - - The total RBA will be reset to the greater of the total RBA immediately prior to the step up date or the contract value on the step up date. - - The total GBA will be reset to the greater of the total GBA immediately prior to the step up date or the contract value on the step up date. - - The total GBP will be reset using the calculation as described above based on the increased GBA and RBA. - - The total RBP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made in the current contract year, but not less than zero. - - The ALP will be reset to the greater of the ALP immediately prior to the step up date or 6% of the contract value on the step up date. - - The RALP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RALP will not be affected by the step up. (b) At any other time, the RALP will be reset as the increased ALP less all prior withdrawals made in the current contract year, but not less than zero. SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to continue the contract, the Guarantor Withdrawal Benefit for Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled; the covered person will be re-determined and is the covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP values are affected as follows: - - The GBA, RBA, and GBP values remain unchanged. - - The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the date of continuation -- the ALP will be established on the contract anniversary following the date the covered person reaches age 65 as the lesser of the RBA or the contract anniversary value, multiplied by 6%. The RALP will be established on the same date equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the date of continuation -- the ALP will be established on the date of continuation as the lesser of the RBA or the contract value, multiplied by 6%. The - -------------------------------------------------------------------------------- 116 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS RALP will be established on the same date in an amount equal to the ALP less all prior partial withdrawals made in the current contract year, but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the date of continuation -- the ALP and RALP will be automatically reset to zero for the period of time beginning with the date of continuation and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%, and the RALP will be reset to equal the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the date of continuation -- the ALP will be automatically reset to the lesser of the current ALP or 6% of the contract value on the date of continuation. The RALP will be reset to the ALP less all prior withdrawals made in the current contract year, but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the spousal continuation. SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the contract, another elective step up option becomes available. To exercise the step up, the spouse or the spouse's investment professional must submit a request within 30 days of the date of continuation. The step up date is the date we receive the spouse's request to step up. If the request is received after the close of business, the step up date will be the next valuation day. The GBA, RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step up. The spousal continuation step up is subject to the following rules: - - If the spousal continuation step up option is exercised and we have increased the charge for the rider, the spouse will pay the charge that is in effect on the step up date. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the total RBA remains greater than zero, you will be paid in the following scenarios: 1) The ALP has not yet been established and the contract value is reduced to zero for any reason other than full withdrawal of the contract. In this scenario, you can choose to: (a) receive the remaining schedule of GBPs until the RBA equals zero; or (b) wait until the rider anniversary on/following the date the covered person reaches age 65, and then receive the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 2) The ALP has been established and the contract value reduces to zero as a result of fees or charges, or a withdrawal that is less than or equal to both the RBP and the RALP. In this scenario, you can choose to receive: (a) the remaining schedule of GBPs until the RBA equals zero; or (b) the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 3) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP. In this scenario, the remaining schedule of GBPs will be paid until the RBA equals zero. 4) The ALP has been established and the contract value falls to zero as a result of a partial withdrawal that is greater than the RBP but less than or equal to the RALP. In this scenario, the ALP will be paid annually until the death of the covered person. Under any of these scenarios: - - The annualized amounts will be paid to you in the frequency you elect. You may elect a frequency offered by us at the time payments begin. Available payment frequencies will be no less frequent than annually; - - We will no longer accept additional purchase payments; - - You will no longer be charged for the rider; - - Any attached death benefit riders will terminate; and - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 117 - - The death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. The Guarantor Withdrawal Benefit for Life rider and the contract will terminate under either of the following two scenarios: - - If the contract value falls to zero as a result of a withdrawal that is greater than both the RALP and the RBP. This is full withdrawal of the contract. - - If the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP, and the total RBA is reduced to zero. AT DEATH: If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may elect to take the death benefit as a lump sum under the terms of the contract (see "Benefits in Case of Death") or the annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option" heading below). If the contract value equals zero and the death benefit becomes payable, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person dies and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person is still alive and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the later of the death of the covered person or the RBA equals zero. - - If the covered person is still alive and the RBA equals zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the death of the covered person. - - If the covered person dies and the RBA equals zero, the benefit terminates. No further payments will be made. CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing Ownership"), the covered person will be redetermined and is the covered person referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP and RALP will be reset as follows: - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be established on the contract anniversary following the date the covered person reaches age 65. The ALP will be set equal to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the anniversary date occurs during the waiting period and prior to a withdrawal, the RALP will be set to the lesser of the ALP or total purchase payments multiplied by 6%. If the anniversary date occurs at any other time, the RALP will be set to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be established on the ownership change date. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be set equal to the ALP less all prior withdrawals made in the current contract year but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be reset to zero for the period of time beginning with the ownership change date and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the time period ends during the waiting period and prior to any withdrawals, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the time period ends at any other time, the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be reset on the ownership change date. The ALP will be reset to the lesser of the current ALP or 6% of the contract value. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be reset to the ALP less all prior withdrawals made in the current contract year but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the ownership change. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit for Life(SM) rider. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity payout option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). - -------------------------------------------------------------------------------- 118 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS This option may not be available if the contract is issued to qualify under Section 403 or 408 of the Code, as amended. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed under the mortality table we then use to determine current life annuity purchase rates under the contract to which this rider is attached. This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the future schedule of GBPs if necessary to comply with the Code. RIDER TERMINATION The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by you or us except as follows: 1. Annuity payouts under an annuity payout plan will terminate the rider. 2. Termination of the contract for any reason will terminate the rider. EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 60. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 7,000 92,000 100,000 93,000 7,000 0 1 0 0 91,000 100,000 93,000 7,000 7,000 1.5 0 7,000 83,000 100,000 86,000 7,000 0 2 0 0 81,000 100,000 86,000 7,000 7,000 5 0 0 75,000 100,000 86,000 7,000 7,000 5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 6 0 0 69,000 100,000 80,840 7,000 7,000 6.5 0 7,000 62,000 100,000 73,840 7,000 0 7 0 0 70,000 100,000 73,840 7,000 7,000 7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 8 0 0 55,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 1.5 N/A N/A 2 N/A N/A 5 5,160(1) 5,160(1) 5.5 5,160 0 6 5,160 5,160 6.5 3,720(2) 0 7 4,200 4,200 7.5 3,060(3) 0 8 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your death or the RBA is reduced to zero. (1) The ALP and RALP are established on the contract anniversary date following the date the covered person reaches age 65. (2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the basic withdrawal benefit and the $4,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 119 EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 65. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $7,500 each year until the later of your death or the RBA is reduced to zero. (1) The annual step-up has not been applied to the RBP or RALP because any withdrawal after step up during the waiting period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the waiting period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the waiting period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 120 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT RIDER GUARANTOR WITHDRAWAL BENEFIT RIDER We have offered two versions of the Guarantor Withdrawal Benefit that have been referred to in previous disclosure as Rider A and Rider B. The description of the Guarantor Withdrawal Benefit in this section applies to both Rider A and Rider B, unless noted otherwise. Rider B is no longer available for purchase. The Guarantor Withdrawal Benefit is an optional benefit that was offered for an additional annual charge if(1): RIDER A - - you purchase(d) your contract on or after April 30, 2005 in those states where the SecureSource rider and/or the Guarantor Withdrawal Benefit for Life rider are/were not available; - - you and the annuitant were 79 or younger on the date the contract was issued. RIDER B (NO LONGER AVAILABLE FOR PURCHASE) - - you purchased your contract prior to April 29, 2005; - - the rider was available in your state; and - - you and the annuitant were 79 or younger on the date the contract was issued. (1) The Guarantor Withdrawal Benefit is not available under an inherited qualified annuity. You must elect the Guarantor Withdrawal Benefit rider when you purchase your contract (original rider). The original rider you receive at contract issue offers an elective annual step-up and any withdrawal after a step up during the first three years is considered an excess withdrawal, as described below. The rider effective date of the original rider is the contract issue date. We will offer you the option of replacing the original rider with a new Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The enhanced rider offers an automatic annual step-up and a withdrawal after a step up during the first three years is not necessarily an excess withdrawal, as described below. The effective date of the enhanced rider will be the contract issue date except for the automatic step-up which will apply to contract anniversaries that occur after you accept the enhanced rider. The descriptions below apply to both the original and enhanced riders unless otherwise noted. The Guarantor Withdrawal Benefit initially provides a guaranteed minimum withdrawal benefit that gives you the right to take limited partial withdrawals in each contract year that over time will total an amount equal to your purchase payments. Certain withdrawals and step ups, as described below, can cause the initial guaranteed withdrawal benefit to change. The guarantee remains in effect if your partial withdrawals in a contract year do not exceed the allowed amount. As long as your withdrawals in each contract year do not exceed the allowed amount, you will not be assessed a withdrawal charge. Under the original rider, the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third contract anniversary, as described below). Under the enhanced rider, the allowed amount is equal to 7% of purchase payments for the first three years, and the GBP in all other years. If you withdraw an amount greater than the allowed amount in a contract year, we call this an "excess withdrawal" under the rider. If you make an excess withdrawal under the rider: - - withdrawal charges, if applicable, will apply only to the amount of the withdrawal that exceeds the allowed amount; - - the guaranteed benefit amount will be adjusted as described below; and - - the remaining benefit amount will be adjusted as described below. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Withdrawals"). Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. If you select the Guarantor Withdrawal Benefit rider, you may not select an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. If you exercise the annual step up election (see "Elective Step Up" and "Annual Step Up" below), the special spousal continuation step up election (see "Spousal Continuation and Special Spousal Continuation Step Up" below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 121 You should consider whether the Guarantor Withdrawal Benefit is appropriate for you because: - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the Portfolio Navigator program if you purchase a contract on or after May 1, 2006 with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). If you selected this Guarantor Withdrawal Benefit rider before May 1, 2006, you must participate in the asset allocation program (see "Appendix J: Asset Allocation Program for Contracts Purchased Before May 1, 2006"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider. - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than GBP under this rider. Any amount you withdraw in a contract year under the contract's TFA provision that exceeds the GBP is subject to the excess withdrawal processing for the GBA and RBA described below. - - RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the Guarantor Withdrawal Benefit rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. You should consult your tax advisor if you have any questions about the use of this rider in your tax situation: - - TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income; - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD. If you make a withdrawal in any contract year to satisfy an RMD, this may constitute an excess withdrawal, as defined below, and the excess withdrawal processing described below will apply. Under the terms of the enhanced rider, we allow you to satisfy the RMD based on the life expectancy RMD for your contract and the requirements of the Code and regulations in effect when you purchase your contract, without the withdrawal being treated as an excess withdrawal. It is our current administrative practice to make the same accommodation under the original rider, however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is greater than the RBP from the beginning of the current contract year, an Additional Benefit Amount (ABA) will be set equal to that portion of your ALERMDA that exceeds the RBP. (2) Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. (3) Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce any ABA. These withdrawals will not be considered excess withdrawals as long as they do not exceed the remaining ABA. (4) Once the ABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals and will initiate the excess withdrawal processing described in the Guarantor Withdrawal Benefit rider. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the Guarantor Withdrawal Benefit rider is attached as of the date we make the determination; and - -------------------------------------------------------------------------------- 122 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS (3) based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable, on the effective date of this prospectus to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a Simplified Employee Pension plan (Section 408(k)); 4. a tax-sheltered annuity rollover (Section 403(b)). We reserve the right to discontinue our administrative practice described above and will give you 30 days' written notice of any such change. In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your RBP amount and may result in the reduction of your GBA and RBA as described under the excess withdrawal provision of the rider. Please note that RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g. ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit rider may be of limited value to you. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION. GUARANTEED BENEFIT AMOUNT The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment adjusted for subsequent purchase payments, partial withdrawals in excess of the GBP, and step ups. The maximum GBA is $5,000,000. THE GBA IS DETERMINED AT THE FOLLOWING TIMES: - - At contract issue -- the GBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. The total GBA when an additional purchase payment is added is the sum of the individual GBAs immediately prior to the receipt of the additional purchase payment, plus the GBA associated with the additional purchase payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below); - - When you make a partial withdrawal: (a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the GBA remains unchanged. Note that if the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; (b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: (c) under the original rider in a contract year after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 123 GBA EXCESS WITHDRAWAL PROCEDURE The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT The remaining benefit amount (RBA) at any point is the total guaranteed amount available for future partial withdrawals. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES: - - At contract issue -- the RBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own RBA equal to the amount of the purchase payment. The total RBA when an additional purchase payment is added is the sum of the individual RBAs immediately prior to the receipt of the additional purchase payment, plus the RBA associated with the additional payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below); - - When you make a partial withdrawal: (a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the RBA becomes the RBA immediately prior to the partial withdrawal, less the partial withdrawal. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; (b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; (c) under the original rider after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups. RBA EXCESS WITHDRAWAL PROCEDURE The RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, any reduction of the RBA will be taken out of each payment's RBA in the following manner: The withdrawal amount up to the remaining benefit payment (defined below) is taken out of each RBA bucket in proportion to its remaining benefit payment at the time of the withdrawal; and the withdrawal amount above the remaining benefit payment and any amount determined by the excess withdrawal procedure are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT Under the original rider, the GBP is the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third anniversary. Under the enhanced rider, the GBP is the withdrawal amount that you are entitled to take each contract year after the third anniversary until the RBA is depleted. RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA. Under both the original and enhanced riders, if you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. RIDER B: Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. REMAINING BENEFIT PAYMENT Under the original rider, at the beginning of each contract year, the remaining benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA. - -------------------------------------------------------------------------------- 124 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Under the enhanced rider, at the beginning of each contract year, during the first three years and prior to any withdrawal, the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. At the beginning of any other contract year, each individual RBP is set equal to each individual GBP. Each additional purchase payment has its own RBP established equal to that payment's GBP. The total RBP is equal to the sum of the individual RBPs. Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY) You have the option to increase the RBA, the GBA, the GBP and the RBP beginning with the first contract anniversary. An annual elective step up option is available for 30 days after the contract anniversary. The elective step up option allows you to step up the remaining benefit amount and guaranteed benefit amount to the contract value on the valuation date we receive your written request to step up. The elective step up is subject to the following rules: - - if you do not take any withdrawals during the first three years, you may step up annually beginning with the first contract anniversary; - - if you take any withdrawals during the first three years, the annual elective step up will not be available until the third contract anniversary; - - if you step up but then take a withdrawal prior to the third contract anniversary, you will lose any prior step ups and the withdrawal will be considered an excess withdrawal subject to the GBA and RBA excess withdrawal processing discussed under the "Guaranteed Benefit Amount" and "Remaining Benefit Amount" headings above; and - - you may take withdrawals on or after the third contract anniversary without reversal of previous step ups. You may elect a step up only once each contract year within 30 days after the contract anniversary. Once a step up has been elected, another step up may not be elected until the next contract anniversary. RIDER A: You may only step up if your contract value on the valuation date we receive your written request to step up is greater than the RBA. The elective step up will be determined as follows: - - The effective date of the elective step up is the valuation date we receive your written request to step up. - - The RBA will be increased to an amount equal to the contract value on the valuation date we receive your written request to step up. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract value on the valuation date we receive your written request to step up. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up less any withdrawals made during that contract year. RIDER B: You may only step up if your contract anniversary value is greater than the RBA. The elective step up will be determined as follows: - - The effective date of the elective step up is the contract anniversary. - - The RBA will be increased to an amount equal to the contract anniversary value. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract anniversary value. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up. ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY) Beginning with the first contract anniversary after you accept the enhanced rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A step up does not create contract value, guarantee performance of any investment options, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP and RBP, and may extend the payment period or increase allowable payment. The annual step up is subject to the following rules: - - The annual step up is available when the RBA would increase on the step up date. The applicable step up date depends on whether the annual step up is applied on an automatic or elective basis. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 125 - - If the application of the step does not increase the rider charge, the annual step up will be automatically applied to your contract and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the first three years, any previously applied step ups will be reversed and the annual step up will not be available until the third contract anniversary; - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. The annual step up will be determined as follows: - - The RBA will be increased to an amount equal to the contract value on the step up date. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the annual step up; or (b) the contract value on the step up date. - - The GBP will be calculated as described earlier, but based on the increased GBA and RBA. - - The RBP will be reset as follows: (a) Prior to any withdrawals during the first three years, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made during the current contract year, but never less than zero. SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP If a surviving spouse elects to continue the contract, this rider also continues. The spousal continuation step up is in addition to the elective step up or the annual step up. When a spouse elects to continue the contract, any rider feature processing particular to the first three years of the contract as described in this prospectus no longer applies. The GBA, RBA and GBP values remain unchanged. The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. RIDER A: A surviving spouse may elect a spousal continuation step up by written request within 30 days following the spouse's election to continue the contract. This step up may be made even if withdrawals have been taken under the contract during the first three years. Under this step up, the RBA will be reset to the greater of the RBA or the contract value on the valuation date we receive the spouse's written request to step up; the GBA will be reset to the greater of the GBA or the contract value on the same valuation date. If a spousal continuation step up is elected and we have increased the charge for the rider for new contract owners, the spouse will pay the charge that is in effect on the valuation date we receive the written request to step up. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. RIDER B: A spousal continuation step up occurs automatically when the spouse elects to continue the contract. The rider charge will not change upon this automatic step up. Under this step up, the RBA will be reset to the greater of the RBA on the valuation date we receive the spouse's written request to continue the contract and the death benefit that would otherwise have been paid; the GBA will be reset to the greater of the GBA on the valuation date we receive the spouse's written request to continue the contract and the death benefit that would otherwise have been paid. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be - -------------------------------------------------------------------------------- 126 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS no less frequent than annually. If, at the death of the owner, total payments have been made for less than the RBA, the remaining payments will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. IF CONTRACT VALUE REDUCES TO ZERO If the contract value reduces to zero and the RBA remains greater than zero, the following will occur: - - you will be paid according to the annuity payout option described above; - - we will no longer accept additional purchase payments; - - you will no longer be charged for the rider; - - any attached death benefit riders will terminate; and - - the death benefit becomes the remaining payments under the annuity payout option described above. If the contract value falls to zero and the RBA is depleted, the Guarantor Withdrawal Benefit rider and the contract will terminate. EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B) ASSUMPTION: - - You purchase the contract with a payment of $100,000. The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000 The Guaranteed Benefit Payment (GBP) equals 7% of your GBA: 0.07 X $100,000 = $ 7,000 The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000 On the first contract anniversary the contract value grows to $110,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $110,000 The GBA equals 100% of your contract value: $110,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $110,000 = $ 7,700 During the fourth contract year you decide to take a partial withdrawal of $7,700. You took a partial withdrawal equal to your GBP, so your RBA equals the prior RBA less the amount of the partial withdrawal: $110,000 - $7,700 = $102,300 The GBA equals the GBA immediately prior to the partial withdrawal: $110,000 The GBP equals 7% of your GBA: 0.07 X $110,000 = $ 7,700 On the fourth contract anniversary you make an additional purchase payment of $50,000. The new RBA for the contract is equal to your prior RBA plus 100% of the additional purchase payment: $102,300 + $50,000 = $152,300 The new GBA for the contract is equal to your prior GBA plus 100% of the additional purchase payment: $110,000 + $50,000 = $160,000 The new GBP for the contract is equal to your prior GBP plus 7% of the additional purchase payment: $7,700 + $3,500 = $ 11,200 On the fifth contract anniversary your contract value grows to $200,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $200,000 The GBA equals 100% of your contract value: $200,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $200,000 = $ 14,000
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 127 During the seventh contract year your contract value grows to $230,000. You decide to take a partial withdrawal of $20,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 OR (2) your prior RBA less the amount of the partial withdrawal. $200,000 - $20,000 = $180,000 Reset RBA = lesser of (1) or (2) = $180,000 The GBA gets reset to the lesser of: (1) your prior GBA $200,000 OR (2) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 Reset GBA = lesser of (1) or (2) = $200,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $200,000 = $ 14,000 During the eighth contract year your contract value falls to $175,000. You decide to take a partial withdrawal of $25,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 OR (2) your prior RBA less the amount of the partial withdrawal. $180,000 - $25,000 = $155,000 Reset RBA = lesser of (1) or (2) = $150,000 The GBA gets reset to the lesser of: (1) your prior GBA; $200,000 OR (2) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 Reset GBA = lesser of (1) or (2) = $150,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $150,000 = $ 10,500
- -------------------------------------------------------------------------------- 128 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX L : EXAMPLE -- INCOME ASSURER BENEFIT RIDERS INCOME ASSURER BENEFIT RIDERS The following three optional Income Assurer Benefit riders were available under your contract if you purchased your contract prior to May 1, 2007. These riders are no longer available for purchase. - - Income Assurer Benefit - MAV; - - Income Assurer Benefit - 5% Accumulation Benefit Base; or - - Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. The Income Assurer Benefit riders are intended to provide you with a guaranteed minimum income regardless of the volatility inherent in the investments in the subaccounts. The riders benchmark the contract growth at each anniversary against several comparison values and set the guaranteed income benefit base (described below) equal to the largest value. The guaranteed income benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the rider. If the guaranteed income benefit base is greater than the contract value, the guaranteed income benefit base may provide a higher annuity payout level than is otherwise available. However, the riders use guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we may apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the riders may be less than the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the riders, you will receive the higher standard payout option. The guaranteed income benefit base does not create contract value or guarantee the performance of any investment option. The general information in this section applies to each Income Assurer Benefit rider. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT RIDERS IN THE SECTIONS BELOW: GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value that will be used to determine minimum annuity payouts when the rider is exercised. It is an amount we calculate, depending on the Income Assurer Benefit rider you choose, that establishes a benefit floor. When the benefit floor amount is greater than the contract value, there may be a higher annuitization payout than if you annuitized your contract without the Income Assurer Benefit. Your annuitization payout will never be less than that provided by your contract value. EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your contract under contract data and will include the RiverSource Variable Portfolio - Cash Management Fund and, if available under your contract, the GPAs and/or the one-year fixed account. Excluded investment options are not used in the calculation of this riders' variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. EXCLUDED PAYMENTS: These are purchase payments paid in the last five years before exercise of the benefit which we reserve the right to exclude from the calculation of the guaranteed income benefit base. PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the product of (a) times (b) where: (a) is the ratio of the amount of the partial withdrawal (including any withdrawal charges or MVA) to the contract value on the date of (but prior to) the partial withdrawal; and (b) is the benefit on the date of (but prior to) the partial withdrawal. PROTECTED INVESTMENT OPTIONS: All investment options available under this contract that are not defined as Excluded Investment options under contract data are known as protected investment options for purposes of this rider and are used in the calculation of the variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. WAITING PERIOD: This rider can only be exercised after the expiration of a 10-year waiting period. We reserve the right to restart the waiting period if you elect to change your model portfolio to one that causes the rider charge to increase. THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT: EXERCISING THE RIDER Rider exercise conditions are: - - you may only exercise the Income Assurer Benefit rider within 30 days after any contract anniversary following the expiration of the waiting period; - - the annuitant on the retirement date must be between 50 to 86 years old; and - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 129 - - you can only take an annuity payment in one of the following annuity payout plans: Plan A -- Life Annuity - No Refund; Plan B -- Life Annuity with Ten or Twenty Years Certain; Plan D -- Joint and Last Survivor Life Annuity - No Refund; Joint and Last Survivor Life Annuity with Twenty Years Certain; or Plan E -- Twenty Years Certain. After the expiration of the waiting period, the Income Assurer Benefit rider guarantees a minimum amount of fixed annuity lifetime income during annuitization or the option of variable annuity payouts with a guaranteed minimum initial payout or a combination of the two options. If your contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time, the contract and all its riders, including this rider, will terminate without value and no benefits will be paid on account of such termination. EXCEPTION: if you are still living, and the annuitant is between 50 and 86 years old, an amount equal to the guaranteed income benefit base will be paid to you under the annuity payout plan and frequency that you select, based upon the fixed or variable annuity payouts described above. The guaranteed income benefit base will be calculated and annuitization will occur at the following times. - - If the contract value falls to zero during the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur on the valuation date after the expiration of the waiting period, or when the annuitant attains age 50 if later. - - If the contract value falls to zero after the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur immediately, or when the annuitant attains age 50 if later. Fixed annuity payouts under this rider will occur at the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" with 100% Projection Scale G and a 2.0% interest rate for contracts purchased on or after May 1, 2006 and if available in your state.(1) These are the same rates used in Table B of the contract (see "The Annuity Payout Period -- Annuity Tables"). Your annuity payouts remain fixed for the lifetime of the annuity payout period. First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your variable annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your variable annuity payout will be unchanged from the previous variable annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous variable annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous variable annuity payout. (1) For all other contracts, the guaranteed annuity purchase rates are based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale G and a 2.0% interest rate. TERMINATING THE RIDER Rider termination conditions are: - - you may terminate the rider within 30 days following the first anniversary after the effective date of the rider; - - you may terminate the rider any time after the expiration of the waiting period; - - the rider will terminate on the date you make a full withdrawal from the contract, or annuitization begins, or on the date that a death benefit is payable; and - - the rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. *The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday, however, if you exercise the Income Assurer Benefit rider before this time, your benefits will continue according to the annuity payout plan you have selected. - -------------------------------------------------------------------------------- 130 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW: INCOME ASSURER BENEFIT - MAV The guaranteed income benefit base for the Income Assurer Benefit - MAV is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the maximum anniversary value. MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus proportionate adjustments for partial withdrawals. Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by proportionate adjustments for partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments; or 2. total purchase payments less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the MAV, less market value adjusted excluded payments. MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded purchase payment multiplied by the ratio of the current contract value over the estimated contract value on the anniversary prior to such purchase payment. The estimated contract value at such anniversary is calculated by assuming that payments, any credits, and partial withdrawals occurring in a contract year take place at the beginning of the year for that anniversary and every year after that to the current contract year. INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit - 5% Accumulation Benefit Base is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor. 5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded investment options plus the variable account floor. The Income Assurer Benefit 5% variable account floor is calculated differently and is not the same value as the death benefit 5% variable account floor. The variable account floor is zero from the effective date of this rider and until the first contract anniversary after the effective date of this rider. On the first contract anniversary after the effective date of this rider the variable account floor is: - - the total purchase payments made to the protected investment options minus adjusted partial withdrawals and transfers from the protected investment options; plus - - an amount equal to 5% of your initial purchase payment allocated to the protected investment options. On any day after the first contract anniversary following the effective date of this rider, when you allocate additional purchase payments to or withdraw or transfer amounts from the protected investment options, we adjust the variable account floor by adding the additional purchase payment and subtracting adjusted withdrawals and adjusted transfers. On each subsequent contract anniversary after the first anniversary of the effective date of this rider, prior to the earlier of your or the annuitant's 81st birthday, we increase the variable account floor by adding the amount ("roll-up amount") equal to 5% of the prior contract anniversary's variable account floor. The amount of purchase payment withdrawn from or transferred between the excluded investment options and the protected investment options is calculated as (a) times (b) where: (a) is the amount of purchase payment in the investment options being withdrawn or transferred on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount of the transfer or withdrawal to the value in the investment options being withdrawn or transferred on the date of (but prior to) the current withdrawal or transfer. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 131 The roll-up amount prior to the first anniversary is zero. Also, the roll-up amount on every anniversary after the earlier of your or the annuitant's 81st birthday is zero. Adjusted withdrawals and adjusted transfers for the variable account floor are equal to the amount of the withdrawal or transfer from the protected investment options as long as the sum of the withdrawals and transfers from the protected investment options in a contract year do not exceed the roll-up amount from the prior contract anniversary. If the current withdrawal or transfer from the protected investment options plus the sum of all prior withdrawals and transfers made from the protected investment options in the current policy year exceeds the roll-up amount from the prior contract anniversary we will calculate the adjusted withdrawal or adjusted transfer for the variable account floor as the result of (a) plus [(b) times (c)] where: (a) is the roll-up amount from the prior contract anniversary less the sum of any withdrawals and transfers made from the protected investment options in the current policy year but prior to the current withdrawal or transfer. However, (a) can not be less than zero; and (b) is the variable account floor on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a); and (c) is the ratio of [the amount of the current withdrawal (including any withdrawal charges or MVA) or transfer from the protected investment options less the value from (a)] to [the total in the protected investment options on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a)]. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments (described above); or 2. total purchase payments less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor, less 5% adjusted excluded payments. 5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment and any credit accumulated at 5% for the number of full contract years they have been in the contract. INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base is the greater of these four values: 1. the contract value; 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; 3. the MAV (described above); or 4. the 5% variable account floor (described above). IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF: 1. contract value less the market value adjusted excluded payments (described above); 2. total purchase payments less excluded payments, less proportionate adjustments for partial withdrawals; 3. the MAV, less market value adjusted excluded payments (described above); or 4. the 5% Variable Account Floor, less 5% adjusted excluded payments (described above). EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS The purpose of these examples is to illustrate the operation of the Income Assurer Benefit Riders. The examples compare payouts available under the contract's standard annuity payout provisions with annuity payouts available under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts (referred to in the riders as "protected investment options") and the fees and charges that apply to your contract. For each of the riders, we provide two annuity payout plan comparisons based on the hypothetical contract values we have assumed. The first comparison assumes that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The second comparison assumes that you select annuity payout Plan D, Joint and Last Survivor Annuity - No Refund. Remember that the riders require you to choose a Portfolio Navigator model portfolio. The riders are intended to offer protection against market volatility in the subaccounts (protected investment options). Some Portfolio Navigator model portfolios include - -------------------------------------------------------------------------------- 132 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS protected investment options and excluded investment options (RiverSource Variable Portfolio - Cash Management Fund, and if available under the contract, GPAs and the one-year fixed account). Excluded investment options are not included in calculating the 5% variable account floor under the Income Assurer Benefit - 5% Accumulation Benefit Base rider and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider. Because the examples which follow are based on hypothetical contract values, they do not factor in differences in Portfolio Navigator model portfolios. ASSUMPTIONS: - - You purchase the contract during the 2006 calendar year with a payment of $100,000; and - - you invest all contract value in the subaccounts (protected investment options); and - - you make no additional purchase payments, partial withdrawals or changes in model portfolio; and - - the annuitant is male and age 55 at contract issue; and - - the joint annuitant is female and age 55 at contract issue. EXAMPLE -- INCOME ASSURER BENEFIT - MAV Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
ASSUMED MAXIMUM GUARANTEED CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE(2) - ------------------------------------------------------------------------------------------ 1 $108,000 $100,000 $108,000 $108,000 2 125,000 none 125,000 125,000 3 132,000 none 132,000 132,000 4 150,000 none 150,000 150,000 5 85,000 none 150,000 150,000 6 121,000 none 150,000 150,000 7 139,000 none 150,000 150,000 8 153,000 none 153,000 153,000 9 140,000 none 153,000 153,000 10 174,000 none 174,000 174,000 11 141,000 none 174,000 174,000 12 148,000 none 174,000 174,000 13 208,000 none 208,000 208,000 14 198,000 none 208,000 208,000 15 203,000 none 208,000 208,000 - ------------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 133 PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - -------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 12 148,000 691.16 692.64 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 203,000 1,025.15 1,027.18 - -------------------------------------------------------------------------- IAB - MAV PROVISIONS ---------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - MAV PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------- ---------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 174,000 791.70 793.44 12 174,000 812.58 814.32 13 208,000 996.32 998.40 14 208,000 1,023.36 1,025.44 15 208,000 1,050.40 1,052.48 - --------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS ----------------------------------------------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2) - ------------------------------------------------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 $174,000 $629.88 11 141,000 521.70 516.06 174,000 643.80 12 148,000 559.44 553.52 174,000 657.72 13 208,000 807.04 796.64 208,000 807.04 14 198,000 786.06 778.14 208,000 825.76 15 203,000 826.21 818.09 208,000 846.56 - ------------------------------------------------------------------------------------------------------------------- IAB - MAV PROVISIONS --------------------- CONTRACT OLD TABLE(1) ANNIVERSARY PLAN D - LAST AT EXERCISE SURVIVOR NO REFUND(2) - ----------- --------------------- 10 $622.92 11 636.84 12 650.76 13 796.64 14 817.44 15 838.24 - -------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- 134 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME ASSUMED BENEFIT BASE - CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2) - --------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $105,000 $108,000 2 125,000 none 110,250 125,000 3 132,000 none 115,763 132,000 4 150,000 none 121,551 150,000 5 85,000 none 127,628 127,628 6 121,000 none 134,010 134,010 7 139,000 none 140,710 140,710 8 153,000 none 147,746 153,000 9 140,000 none 155,133 155,133 10 174,000 none 162,889 174,000 11 141,000 none 171,034 171,034 12 148,000 none 179,586 179,586 13 208,000 none 188,565 208,000 14 198,000 none 197,993 198,000 15 203,000 none 207,893 207,893 - ---------------------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - -------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 12 148,000 691.16 692.64 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 203,000 1,025.15 1,027.18 - -------------------------------------------------------------------------- IAB - 5% RF PROVISIONS ---------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - 5% RF PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------- ---------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 171,034 778.20 779.91 12 179,586 838.66 840.46 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 207,893 1,049.86 1,051.94 - --------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 135 PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS -------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ---------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 11 141,000 521.70 516.06 12 148,000 559.44 553.52 13 208,000 807.04 796.64 14 198,000 786.06 778.14 15 203,000 826.21 818.09 - ---------------------------------------------------------------------------- IAB - 5% RF PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - 5% RF PLAN D - LAST PLAN D - LAST AT EXERCISE BENEFIT BASE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ----------- ------------------------------------------------------------ 10 $174,000 $629.88 $622.92 11 171,034 632.83 625.98 12 179,586 678.83 671.65 13 208,000 807.04 796.64 14 198,000 786.06 778.14 15 207,893 846.12 837.81 - ----------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th, 13th or the 14th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME BENEFIT BASE - GREATER OF ASSUMED MAXIMUM MAV OR 5% CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2) - ----------------------------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $108,000 $105,000 $108,000 2 125,000 none 125,000 110,250 125,000 3 132,000 none 132,000 115,763 132,000 4 150,000 none 150,000 121,551 150,000 5 85,000 none 150,000 127,628 150,000 6 121,000 none 150,000 134,010 150,000 7 139,000 none 150,000 140,710 150,000 8 153,000 none 153,000 147,746 153,000 9 140,000 none 153,000 155,133 155,133 10 174,000 none 174,000 162,889 174,000 11 141,000 none 174,000 171,034 174,000 12 148,000 none 174,000 179,586 179,586 13 208,000 none 208,000 188,565 208,000 14 198,000 none 208,000 197,993 208,000 15 203,000 none 208,000 207,893 208,000 - -----------------------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- 136 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - -------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 12 148,000 691.16 692.64 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 203,000 1,025.15 1,027.18 - -------------------------------------------------------------------------- IAB - MAX PROVISIONS ---------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - MAX PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------- ---------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 174,000 791.70 793.44 12 179,586 838.66 840.46 13 208,000 996.32 998.40 14 208,000 1,023.36 1,025.44 15 208,000 1,050.40 1,052.48 - --------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS ----------------------------------------------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB MAX PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2) - ------------------------------------------------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 $174,000 $629.88 11 141,000 521.70 516.06 174,000 643.80 12 148,000 559.44 553.52 179,586 678.83 13 208,000 807.04 796.64 208,000 807.04 14 198,000 786.06 778.14 208,000 825.76 15 203,000 826.21 818.09 208,000 846.56 - ------------------------------------------------------------------------------------------------------------------- IAB - MAX PROVISIONS --------------------- CONTRACT OLD TABLE(1) ANNIVERSARY PLAN D - LAST AT EXERCISE SURVIVOR NO REFUND(2) - ----------- --------------------- 10 $622.92 11 636.84 12 671.65 13 796.64 14 817.44 15 838.24 - -------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 137 APPENDIX M: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (07/31/2002) Accumulation unit value at beginning of period $1.56 $1.41 $1.36 $1.24 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.56 $1.56 $1.41 $1.36 $1.24 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,554 2,791 3,249 1,479 220 70 -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (03/01/2002) Accumulation unit value at beginning of period $1.16 $1.12 $1.05 $1.00 $0.79 $1.00 -- -- Accumulation unit value at end of period $1.28 $1.16 $1.12 $1.05 $1.00 $0.79 -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,110 3,472 324 329 238 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.52 $1.42 $1.25 $0.94 $1.00 -- -- Accumulation unit value at end of period $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 -- -- Number of accumulation units outstanding at end of period (000 omitted) 133 147 153 163 29 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.03 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 9 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.04 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13,924 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.24 $1.14 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.33 $1.24 $1.14 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 808 912 1,051 427 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED SHARES PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.09 $1.07 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.19 $1.09 $1.07 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.50 $1.40 $1.38 $1.33 $0.94 $1.00 -- -- Accumulation unit value at end of period $1.76 $1.50 $1.40 $1.38 $1.33 $0.94 -- -- Number of accumulation units outstanding at end of period (000 omitted) 107 16 16 16 15 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.60 $1.39 $1.35 $1.24 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 154 167 189 109 52 8 -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.82 $1.37 $1.20 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.82 $1.37 $1.20 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 21,915 15,378 8,725 1,580 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.05 $1.05 $1.00 -- -- -- -- Accumulation unit value at end of period $1.13 $1.05 $1.05 $1.05 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 23,568 25,472 20,290 3,919 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.90 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 9 -- -- -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 138 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.01 $1.06 $1.06 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.01 $1.06 $1.06 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 8,361 23,813 6,935 1,154 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.31 $1.12 $1.09 $1.00 -- -- -- -- Accumulation unit value at end of period $1.22 $1.31 $1.12 $1.09 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 74 88 26 18 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA HIGH YIELD FUND, VARIABLE SERIES, CLASS B (04/28/2006) Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- -- -- -- Accumulation unit value at end of period $1.07 $1.07 -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,145 9,940 -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA MARSICO GROWTH FUND, VARIABLE SERIES, CLASS A (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.12 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 30,376 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES FUND, VARIABLE SERIES, CLASS B (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.13 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 17 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- COLUMBIA SMALL CAP VALUE FUND, VARIABLE SERIES, CLASS B (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.21 $1.17 $1.00 -- -- -- -- Accumulation unit value at end of period $1.36 $1.42 $1.21 $1.17 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 20,212 23 4 2 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.10 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 135 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.28 $1.21 $1.13 $1.00 -- -- -- -- Accumulation unit value at end of period $1.28 $1.28 $1.21 $1.13 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 19 22 15 13 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.20 $1.05 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.26 $1.20 $1.05 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1 1 1 1 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.09 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 18 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.51 $1.25 $1.14 $1.00 -- -- -- -- Accumulation unit value at end of period $1.54 $1.51 $1.25 $1.14 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 115 87 57 9 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.98 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 16,330 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.58 $1.38 $1.22 $0.97 $1.00 -- -- Accumulation unit value at end of period $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 -- -- Number of accumulation units outstanding at end of period (000 omitted) 43,300 45,089 16,531 3,067 152 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.04 $0.99 $0.96 $0.94 $0.73 $1.00 -- -- Accumulation unit value at end of period $1.29 $1.04 $0.99 $0.96 $0.94 $0.73 -- -- Number of accumulation units outstanding at end of period (000 omitted) 305 368 324 327 68 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.06 $1.03 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.08 $1.06 $1.03 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 40,253 12,953 8,188 1,336 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 139
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 $1.00 -- Accumulation unit value at end of period $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 -- Number of accumulation units outstanding at end of period (000 omitted) 11,091 7,570 3,100 1,208 722 290 13 -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.28 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.71 $1.49 $1.28 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,416 4,843 4,036 1,573 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 $1.00 Accumulation unit value at end of period $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 3,051 2,743 2,554 2,119 1,118 777 413 157 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.28 $1.11 $1.09 $1.00 -- -- -- -- Accumulation unit value at end of period $1.22 $1.28 $1.11 $1.09 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 160 63 38 14 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $0.57 $0.54 $0.52 $0.48 $0.35 $0.50 $0.60 $1.00 Accumulation unit value at end of period $0.63 $0.57 $0.54 $0.52 $0.48 $0.35 $0.50 $0.60 Number of accumulation units outstanding at end of period (000 omitted) 1,427 1,612 1,719 1,992 1,273 1,008 617 120 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $1.75 $1.50 $1.38 $1.25 $1.01 $1.17 $1.11 $1.00 Accumulation unit value at end of period $1.78 $1.75 $1.50 $1.38 $1.25 $1.01 $1.17 $1.11 Number of accumulation units outstanding at end of period (000 omitted) 2,787 9,197 2,844 3,112 870 324 24 6 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.11 $1.16 $1.00 -- -- -- -- Accumulation unit value at end of period $1.34 $1.23 $1.11 $1.16 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,814 23,082 7,734 1,493 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.44 $1.20 $1.12 $1.00 -- -- -- -- Accumulation unit value at end of period $1.45 $1.44 $1.20 $1.12 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 510 376 226 177 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000) Accumulation unit value at beginning of period $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 $1.00 Accumulation unit value at end of period $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 Number of accumulation units outstanding at end of period (000 omitted) 11,638 9,377 4,128 1,284 550 386 321 60 - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000) Accumulation unit value at beginning of period $1.02 $0.92 $0.87 $0.77 $0.61 $0.79 $0.91 $1.00 Accumulation unit value at end of period $0.98 $1.02 $0.92 $0.87 $0.77 $0.61 $0.79 $0.91 Number of accumulation units outstanding at end of period (000 omitted) 587 636 956 816 519 391 286 102 - --------------------------------------------------------------------------------------------------------------------------------- JANUS ASPEN SERIES LARGE CAP GROWTH PORTFOLIO: SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 36,050 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE SMALL CAP GROWTH PORTFOLIO, CLASS I (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.03 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.15 $1.04 $1.00 $0.96 $0.73 $1.00 -- -- Accumulation unit value at end of period $1.16 $1.15 $1.04 $1.00 $0.96 $0.73 -- -- Number of accumulation units outstanding at end of period (000 omitted) 141 155 155 138 107 1 -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.28 $1.16 $1.15 $1.06 $0.93 $1.00 -- -- Accumulation unit value at end of period $1.30 $1.28 $1.16 $1.15 $1.06 $0.93 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,039 1,095 1,130 1,184 348 7 -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $2.13 $1.65 $1.44 $1.13 $0.85 $1.00 -- -- Accumulation unit value at end of period $2.67 $2.13 $1.65 $1.44 $1.13 $0.85 -- -- Number of accumulation units outstanding at end of period (000 omitted) 103 85 72 63 37 9 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 140 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.41 $1.33 $1.29 $1.24 $0.97 $1.00 -- -- Accumulation unit value at end of period $1.58 $1.41 $1.33 $1.29 $1.24 $0.97 -- -- Number of accumulation units outstanding at end of period (000 omitted) 7,383 8,562 6,720 1,419 14 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.64 $1.42 $1.27 $1.08 $0.77 $1.00 -- -- Accumulation unit value at end of period $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 -- -- Number of accumulation units outstanding at end of period (000 omitted) 831 683 680 562 136 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.92 $1.70 $1.58 $1.35 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 221 168 168 143 64 18 -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.34 $1.27 $1.26 $1.18 $1.03 $1.00 -- -- Accumulation unit value at end of period $1.44 $1.34 $1.27 $1.26 $1.18 $1.03 -- -- Number of accumulation units outstanding at end of period (000 omitted) 44,474 21,466 9,445 2,076 137 5 -- -- - --------------------------------------------------------------------------------------------------------------------------------- PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.03 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 37,481 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (05/01/2002) Accumulation unit value at beginning of period $1.15 $1.14 $1.02 $0.97 $0.84 $1.00 -- -- Accumulation unit value at end of period $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 -- -- Number of accumulation units outstanding at end of period (000 omitted) 136 162 175 177 188 73 -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000) Accumulation unit value at beginning of period $0.95 $0.75 $0.68 $0.60 $0.47 $0.58 $0.75 $1.00 Accumulation unit value at end of period $1.01 $0.95 $0.75 $0.68 $0.60 $0.47 $0.58 $0.75 Number of accumulation units outstanding at end of period (000 omitted) 1,511 1,624 1,716 1,786 1,760 1,350 1,244 708 - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.44 $1.25 $1.18 $1.00 -- -- -- -- Accumulation unit value at end of period $1.23 $1.44 $1.25 $1.18 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 355 5,948 89 5 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (03/03/2000) Accumulation unit value at beginning of period $0.57 $0.55 $0.50 $0.43 $0.33 $0.48 $0.73 $1.00 Accumulation unit value at end of period $0.58 $0.57 $0.55 $0.50 $0.43 $0.33 $0.48 $0.73 Number of accumulation units outstanding at end of period (000 omitted) 632 916 1,031 1,143 1,270 1,246 1,676 814 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND (05/01/2007) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.99 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 28,284 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.24 $1.08 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.29 $1.24 $1.08 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 7 8 8 2 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.55 $1.31 $1.26 $1.07 $0.79 $1.00 -- -- Accumulation unit value at end of period $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 -- -- Number of accumulation units outstanding at end of period (000 omitted) 11,900 10,097 9,125 1,935 72 20 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (03/01/2002) Accumulation unit value at beginning of period $1.00 $0.97 $0.96 $0.97 $0.99 $1.00 -- -- Accumulation unit value at end of period $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 -- -- Number of accumulation units outstanding at end of period (000 omitted) 5,476 2,192 1,151 399 76 -- -- -- *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.78% and 2.82%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.10 $1.07 $1.07 $1.04 $1.01 $1.00 -- -- Accumulation unit value at end of period $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 -- -- Number of accumulation units outstanding at end of period (000 omitted) 67,959 33,990 1,077 842 152 40 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 141
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 $1.00 Accumulation unit value at end of period $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 35,371 27,624 9,764 608 392 325 144 40 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- -- -- -- -- Accumulation unit value at end of period $1.09 $1.02 -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,149 26,599 -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.25 $1.14 $1.07 $1.00 -- -- -- -- Accumulation unit value at end of period $1.27 $1.25 $1.14 $1.07 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,798 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (03/03/2000) Accumulation unit value at beginning of period $1.25 $1.14 $1.12 $1.02 $0.83 $0.90 $0.87 $1.00 Accumulation unit value at end of period $1.25 $1.25 $1.14 $1.12 $1.02 $0.83 $0.90 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 6,703 8,935 4,144 855 325 80 90 8 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (06/01/2004) Accumulation unit value at beginning of period $1.18 $1.11 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.19 $1.18 $1.11 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 20,776 8,355 8 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2000) Accumulation unit value at beginning of period $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 $1.00 Accumulation unit value at end of period $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 Number of accumulation units outstanding at end of period (000 omitted) 14,409 15,807 17,584 7,616 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (08/30/2002) Accumulation unit value at beginning of period $1.40 $1.42 $1.31 $1.22 $1.02 $1.00 -- -- Accumulation unit value at end of period $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 597 708 735 335 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP VALUE FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.00 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 136 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.11 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.30 $1.26 $1.11 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 367 227 227 174 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/03/2000) Accumulation unit value at beginning of period $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 $1.00 Accumulation unit value at end of period $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 6,207 5,084 3,085 1,544 1,019 864 413 65 - --------------------------------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.02 $1.54 $1.17 $1.00 -- -- -- -- Accumulation unit value at end of period $2.75 $2.02 $1.54 $1.17 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10,106 9,010 5,172 1,070 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND) Accumulation unit value at beginning of period $1.56 $1.28 $1.14 $1.00 -- -- -- -- Accumulation unit value at end of period $1.73 $1.56 $1.28 $1.14 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 20 20 16 1 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.70 $1.49 $1.45 $1.26 $0.98 $1.00 -- -- Accumulation unit value at end of period $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 -- -- Number of accumulation units outstanding at end of period (000 omitted) 36,774 36,888 18,912 3,700 73 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $0.85 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 7,208 -- -- -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 142 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- Accumulation unit value at end of period $1.12 -- -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 8 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $2.14 $1.58 $1.37 $1.00 -- -- -- -- Accumulation unit value at end of period $1.74 $2.14 $1.58 $1.37 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 553 510 443 177 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- WANGER INTERNATIONAL SMALL CAP* (04/30/2004) Accumulation unit value at beginning of period $1.94 $1.44 $1.20 $1.00 -- -- -- -- Accumulation unit value at end of period $2.21 $1.94 $1.44 $1.20 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10,278 8,406 4,181 858 -- -- -- -- *Effective June 1, 2008, the Fund will change its name to Wanger International. - --------------------------------------------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.26 $1.15 $1.00 -- -- -- -- Accumulation unit value at end of period $1.39 $1.34 $1.26 $1.15 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13,828 7,563 5,332 946 -- -- -- -- *Effective June 1, 2008, the Fund will change its name to Wanger USA. - ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.22 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.21 $1.22 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- 5 5 6 - ----------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.17 $1.13 $1.06 $1.00 Accumulation unit value at end of period $1.28 $1.17 $1.13 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.18 $1.10 $1.00 Accumulation unit value at end of period $1.45 $1.34 $1.18 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.02 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.04 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 22 -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.22 $1.13 $1.07 $1.00 Accumulation unit value at end of period $1.31 $1.22 $1.13 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- 1 1 1 - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED SHARES PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.18 $1.08 $1.06 $1.00 Accumulation unit value at end of period $1.18 $1.18 $1.08 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.15 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.29 $1.26 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 143
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.80 $1.36 $1.19 $1.00 Accumulation unit value at end of period $1.85 $1.80 $1.36 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 59 67 39 6 - ------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.03 $1.04 $1.05 $1.00 Accumulation unit value at end of period $1.11 $1.03 $1.04 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 141 224 126 22 - ------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.89 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.00 $1.06 $1.06 $1.00 Accumulation unit value at end of period $1.18 $1.00 $1.06 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 91 149 50 -- - ------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.09 $1.00 Accumulation unit value at end of period $1.20 $1.29 $1.11 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- COLUMBIA HIGH YIELD FUND, VARIABLE SERIES, CLASS B (04/28/2006) Accumulation unit value at beginning of period $1.06 $1.00 -- -- Accumulation unit value at end of period $1.06 $1.06 -- -- Number of accumulation units outstanding at end of period (000 omitted) 42 70 -- -- - ------------------------------------------------------------------------------------------------------- COLUMBIA MARSICO GROWTH FUND, VARIABLE SERIES, CLASS A (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.12 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 43 -- -- -- - ------------------------------------------------------------------------------------------------------- COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES FUND, VARIABLE SERIES, CLASS B (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.13 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- COLUMBIA SMALL CAP VALUE FUND, VARIABLE SERIES, CLASS B (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.20 $1.16 $1.00 Accumulation unit value at end of period $1.34 $1.40 $1.20 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 30 -- -- -- - ------------------------------------------------------------------------------------------------------- CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.10 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.20 $1.13 $1.00 Accumulation unit value at end of period $1.25 $1.26 $1.20 $1.13 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.18 $1.04 $1.02 $1.00 Accumulation unit value at end of period $1.24 $1.18 $1.04 $1.02 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.09 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.24 $1.14 $1.00 Accumulation unit value at end of period $1.51 $1.49 $1.24 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.98 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13 -- -- -- - -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 144 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.37 $1.26 $1.10 $1.00 Accumulation unit value at end of period $1.58 $1.37 $1.26 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 177 296 101 8 - ------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.10 $1.06 $1.03 $1.00 Accumulation unit value at end of period $1.37 $1.10 $1.06 $1.03 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.04 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.06 $1.04 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 166 215 115 19 - ------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.53 $1.40 $1.21 $1.00 Accumulation unit value at end of period $1.73 $1.53 $1.40 $1.21 Number of accumulation units outstanding at end of period (000 omitted) 38 39 16 -- - ------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.27 $1.10 $1.00 Accumulation unit value at end of period $1.68 $1.47 $1.27 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 2 5 6 5 - ------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.12 $1.00 Accumulation unit value at end of period $1.30 $1.29 $1.11 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.10 $1.09 $1.00 Accumulation unit value at end of period $1.20 $1.26 $1.10 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.17 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.27 $1.17 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.36 $1.18 $1.09 $1.00 Accumulation unit value at end of period $1.38 $1.36 $1.18 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 6 16 -- -- - ------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.21 $1.10 $1.16 $1.00 Accumulation unit value at end of period $1.31 $1.21 $1.10 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 64 78 39 8 - ------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.19 $1.12 $1.00 Accumulation unit value at end of period $1.42 $1.42 $1.19 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.32 $1.19 $1.00 Accumulation unit value at end of period $1.51 $1.49 $1.32 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 58 65 28 3 - ------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.93 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- JANUS ASPEN SERIES LARGE CAP GROWTH PORTFOLIO: SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.05 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 55 -- -- -- - ------------------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE SMALL CAP GROWTH PORTFOLIO, CLASS I (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.03 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 145
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.18 $1.07 $1.04 $1.00 Accumulation unit value at end of period $1.18 $1.18 $1.07 $1.04 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.09 $1.08 $1.00 Accumulation unit value at end of period $1.21 $1.19 $1.09 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.81 $1.41 $1.24 $1.00 Accumulation unit value at end of period $2.25 $1.81 $1.41 $1.24 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.08 $1.06 $1.00 Accumulation unit value at end of period $1.27 $1.14 $1.08 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 57 87 48 8 - ------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.53 $1.47 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.25 $1.16 $1.00 Accumulation unit value at end of period $1.35 $1.40 $1.25 $1.16 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.07 $1.07 $1.00 Accumulation unit value at end of period $1.20 $1.12 $1.07 $1.07 Number of accumulation units outstanding at end of period (000 omitted) 120 136 68 12 - ------------------------------------------------------------------------------------------------------- PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.03 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 46 -- -- -- - ------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.14 $1.03 $1.00 Accumulation unit value at end of period $1.11 $1.14 $1.14 $1.03 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.56 $1.25 $1.14 $1.00 Accumulation unit value at end of period $1.66 $1.56 $1.25 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.23 $1.18 $1.00 Accumulation unit value at end of period $1.21 $1.42 $1.23 $1.18 Number of accumulation units outstanding at end of period (000 omitted) 4 12 -- -- - ------------------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.28 $1.24 $1.13 $1.00 Accumulation unit value at end of period $1.30 $1.28 $1.24 $1.13 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND (05/01/2007) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.98 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 41 -- -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.22 $1.08 $1.09 $1.00 Accumulation unit value at end of period $1.26 $1.22 $1.08 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 146 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.40 $1.19 $1.15 $1.00 Accumulation unit value at end of period $1.30 $1.40 $1.19 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 56 72 43 5 - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (04/30/2004) Accumulation unit value at beginning of period $1.02 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.04 $1.02 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- 7 4 -- *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.29% and 2.32%, respectively. - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.08 $1.05 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 66 40 -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (04/30/2004) Accumulation unit value at beginning of period $1.50 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.58 $1.50 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 160 181 83 -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- Accumulation unit value at end of period $1.08 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 38 29 -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.13 $1.07 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.13 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.19 $1.19 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 38 55 30 4 - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (06/01/2004) Accumulation unit value at beginning of period $1.17 $1.10 $1.09 $1.00 Accumulation unit value at end of period $1.17 $1.17 $1.10 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 31 14 -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.09 $1.05 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.09 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 2 14 21 19 - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.15 $1.06 $1.00 Accumulation unit value at end of period $1.25 $1.12 $1.15 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- 1 1 1 - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP VALUE FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.99 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.24 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.28 $1.24 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (04/30/2004) Accumulation unit value at beginning of period $1.00 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.03 $1.00 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- 9 5 -- - ------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.00 $1.52 $1.16 $1.00 Accumulation unit value at end of period $2.70 $2.00 $1.52 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 32 46 24 3 - -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 147
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND) Accumulation unit value at beginning of period $1.54 $1.27 $1.14 $1.00 Accumulation unit value at end of period $1.70 $1.54 $1.27 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.30 $1.15 $1.13 $1.00 Accumulation unit value at end of period $1.24 $1.30 $1.15 $1.13 Number of accumulation units outstanding at end of period (000 omitted) 192 235 119 13 - ------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.84 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 11 -- -- -- - ------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.12 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $2.11 $1.57 $1.37 $1.00 Accumulation unit value at end of period $1.71 $2.11 $1.57 $1.37 Number of accumulation units outstanding at end of period (000 omitted) -- 3 3 3 - ------------------------------------------------------------------------------------------------------- WANGER INTERNATIONAL SMALL CAP* (04/30/2004) Accumulation unit value at beginning of period $1.91 $1.42 $1.20 $1.00 Accumulation unit value at end of period $2.17 $1.91 $1.42 $1.20 Number of accumulation units outstanding at end of period (000 omitted) 46 61 32 3 *Effective June 1, 2008, the Fund will change its name to Wanger International. - ------------------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.32 $1.25 $1.15 $1.00 Accumulation unit value at end of period $1.36 $1.32 $1.25 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 49 56 28 4 *Effective June 1, 2008, the Fund will change its name to Wanger USA. - -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 148 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 149 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 150 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 151 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 273416 J (5/08) PROSPECTUS MAY 1, 2008 EVERGREEN PATHWAYS(SM) VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT NEW EVERGREEN PATHWAYS(SM) VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY BEING OFFERED. This prospectus contains information that you should know before investing in RiverSource Evergreen Pathways Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds, Series II Shares AllianceBernstein Variable Products Series Fund, Inc. (Class B) Evergreen Variable Annuity Trust - Class 2 Fidelity(R) Variable Insurance Products - Service Class 2 Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 MFS(R) Variable Insurance Trust(SM) - Service Class Oppenheimer Variable Account Funds, Service Shares Putnam Variable Trust - Class IB Shares RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds Van Kampen Life Investment Trust - Class II Shares The Universal Institutional Funds, Inc. - Class I Shares Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. RiverSource Life offers several different annuities which your investment professional may or may not be authorized to offer to you. Each annuity has different features and benefits that may be appropriate for you based on your financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges may also be different between each annuity. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 1 TABLE OF CONTENTS KEY TERMS....................................... 3 THE CONTRACT IN BRIEF........................... 5 EXPENSE SUMMARY................................. 7 CONDENSED FINANCIAL INFORMATION (UNAUDITED)..... 11 FINANCIAL STATEMENTS............................ 11 THE VARIABLE ACCOUNT AND THE FUNDS.............. 11 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............ 19 THE FIXED ACCOUNT............................... 21 BUYING YOUR CONTRACT............................ 22 CHARGES......................................... 24 VALUING YOUR INVESTMENT......................... 27 MAKING THE MOST OF YOUR CONTRACT................ 28 WITHDRAWALS..................................... 33 TSA -- SPECIAL PROVISIONS....................... 34 CHANGING OWNERSHIP.............................. 34 BENEFITS IN CASE OF DEATH....................... 34 OPTIONAL BENEFITS............................... 38 THE ANNUITY PAYOUT PERIOD....................... 46 TAXES........................................... 48 VOTING RIGHTS................................... 50 SUBSTITUTION OF INVESTMENTS..................... 51 ABOUT THE SERVICE PROVIDERS..................... 51 ADDITIONAL INFORMATION.......................... 52 APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)....................... 54 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........... 61
- -------------------------------------------------------------------------------- 2 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract, that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of the funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you may may allocate purchase payments or transfer contract value of at least $1,000. These accounts have guaranteed interest rates for Guarantee Periods we declare when you allocate purchase payments or transfer contract value to a GPA. Withdrawals and transfers from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a Guarantee Period Account is withdrawn or transferred more than 30 days before the end of its guarantee period. ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts you allocate to this account earn interest at rates that we declare periodically. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and RiverSource Life refer to RiverSource Life Insurance Company. VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 3 valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our administrative office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our administrative office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Contract Option L offers a four year withdrawal charge schedule and investment options in the GPAs, one-year fixed account and/or the subaccounts. Contract Option C eliminates the withdrawal charge schedule in exchange for a higher mortality and expense risk fee and and allows investments in the subaccounts only(1). Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to invest. PURPOSE: The purpose of these contracts is to allow you to accumulate money for retirement. You do this by making one or more purchase payments. For contract Option L, you may allocate your purchase payments to the GPAs, one-year fixed account and/or subaccounts. For contract Option C, you may allocate purchase payments to the subaccounts. These accounts, in turn, may earn returns that increase the value of a contract. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. FREE LOOK PERIOD: You may return your contract to your investment professional or to our administrative office within the time stated on the first page of your contract and receive a full refund of the contract value. We will not deduct any charges. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: Generally, you may allocate purchase payments to the GPAs, one-year fixed account and/or the subaccounts, depending on the contract option you select. If you select contract Option L, you may allocate your purchase payments among any or all of: - - the subaccounts, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - GPAs which earn interest at rates declared when you make an allocation to that account. The required minimum investment in each GPA is $1,000. These accounts may not be available in all states. (see "The Guarantee Period Accounts (GPAs)") - - one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account. (see "The Fixed Account -- One-Year Fixed Account") If you select contract Option C, you may allocate purchase payments to the subaccounts only. We no longer offer new contracts. However, you have the option of making additional purchase payments in the future. TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to a MVA unless an exception applies. You may establish automated transfers among the accounts. We reserve the right to limit transfers to the GPAs and the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract. (see "Making the Most of Your Contract - Transferring Among Accounts") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you purchased a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 5 payout period, your choices for subaccounts may be limited. The GPAs are not available during the payout period. (see "The Annuity Payout Period") OPTIONAL BENEFITS: These contracts offer optional features that are available for additional charges if you meet certain criteria. (see "Optional Benefits") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount at least equal to the contract value. (see "Benefits in Case of Death") WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including an IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") TAXES: Generally, income earned on your contract value grows tax deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and nonqualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. However, Roth IRAs may grow and be distributed tax free if you meet certain distribution requirements. (see "Taxes") - -------------------------------------------------------------------------------- 6 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSE THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (Contingent deferred sales charge as a percentage of the amount withdrawn) You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE CONTRACT OPTION L PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if the assumed investment rate is 5%. For contract Option C, the discount rate we use in the calculation will be 5.55% if the assumed investment rate is 3.5% and 7.05% if the assumed investment rate is 5%. The withdrawal charge equals the present value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) YOU CAN CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND THE DEATH BENEFIT GUARANTEE PROVIDED. THE COMBINATION YOU CHOOSE DETERMINES THE FEES YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES ROP death benefit 0.15% 1.25% 1.40% MAV death benefit 0.15 1.35 1.50 EDB 0.15 1.55 1.70 IF YOU SELECT CONTRACT OPTION C AND: ROP death benefit 0.15 1.35 1.50 MAV death benefit 0.15 1.45 1.60 EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the current contract anniversary.) BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER (BENEFIT 0.25%* PROTECTOR) FEE
(As a percentage of the contract value charged annually on the contract anniversary.) BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER (BENEFIT 0.40%* PROTECTOR PLUS) FEE
(As a percentage of the contract value charged annually on the contract anniversary.) GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract anniversary.) * This fee applies only if you elect this optional feature. ** For applications signed prior to May 1, 2003, the following current annual rider charges apply: GMIB -- 0.30%. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 7 ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDING DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(a)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense reimbursements 0.60% 1.31%
(a) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us and/or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Basic Value Fund, Series II 0.67% 0.25% 0.29% --% 1.21% Shares AIM V.I. Capital Appreciation Fund, 0.61 0.25 0.27 -- 1.13 Series II Shares AIM V.I. Capital Development Fund, 0.75 0.25 0.31 -- 1.31(1) Series II Shares AllianceBernstein VPS Global 0.75 0.25 0.17 -- 1.17 Technology Portfolio (Class B) AllianceBernstein VPS Growth and 0.55 0.25 0.04 -- 0.84 Income Portfolio (Class B) AllianceBernstein VPS Large Cap 0.75 0.25 0.07 -- 1.07 Growth Portfolio (Class B) Evergreen VA Balanced Fund - Class 2 0.30 0.25 0.22 0.02 0.79 (effective May 30, 2008, the Fund will change its name to Evergreen VA Diversified Capital Builder Fund - Class 2) Evergreen VA Core Bond Fund - Class 2 0.32 0.25 0.25 0.03 0.85 Evergreen VA Diversified Income 0.40 0.25 0.24 0.01 0.90 Builder Fund - Class 2 (previously Evergreen VA Strategic Income Fund -- Class 2) Evergreen VA Fundamental Large Cap 0.58 0.25 0.17 -- 1.00 Fund - Class 2 Evergreen VA Growth Fund - Class 2 0.70 0.25 0.20 0.01 1.16 Evergreen VA High Income Fund - Class 0.50 0.25 0.30 0.01 1.06 2 Evergreen VA International Equity 0.39 0.25 0.24 -- 0.88 Fund - Class 2 Evergreen VA Omega Fund - Class 2 0.52 0.25 0.19 -- 0.96 Evergreen VA Special Values 0.78 0.25 0.18 0.01 1.22 Fund - Class 2 Fidelity(R) VIP Contrafund(R) 0.56 0.25 0.09 -- 0.90 Portfolio Service Class 2 Fidelity(R) VIP Growth Portfolio 0.56 0.25 0.09 -- 0.90 Service Class 2 Fidelity(R) VIP Mid Cap Portfolio 0.56 0.25 0.10 -- 0.91 Service Class 2 FTVIPT Franklin Small Cap Value 0.51 0.25 0.15 0.02 0.93(2) Securities Fund - Class 2 FTVIPT Mutual Shares Securities 0.59 0.25 0.13 -- 0.97 Fund - Class 2 FTVIPT Templeton Foreign Securities 0.63 0.25 0.14 0.02 1.04(2) Fund - Class 2 MFS(R) New Discovery Series - Service 0.90 0.25 0.11 -- 1.26 Class MFS(R) Total Return Series - Service 0.75 0.25 0.08 -- 1.08(3) Class MFS(R) Utilities Series - Service 0.75 0.25 0.10 -- 1.10(3) Class Oppenheimer Capital Appreciation 0.64 0.25 0.02 -- 0.91 Fund/VA, Service Shares Oppenheimer Global Securities 0.62 0.25 0.02 -- 0.89 Fund/VA, Service Shares Oppenheimer Main Street Small Cap 0.70 0.25 0.02 -- 0.97 Fund/VA, Service Shares
- -------------------------------------------------------------------------------- 8 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES Oppenheimer Strategic Bond Fund/VA, 0.57% 0.25% 0.02% 0.02% 0.86%(4) Service Shares Putnam VT Growth and Income 0.50 0.25 0.05 -- 0.80 Fund - Class IB Shares Putnam VT Health Sciences 0.70 0.25 0.13 -- 1.08 Fund - Class IB Shares Putnam VT International Equity 0.73 0.25 0.11 0.01 1.10 Fund - Class IB Shares RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(5) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable 0.33 0.13 0.14 -- 0.60 Portfolio - Cash Management Fund RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Mid Cap Growth Fund RVST RiverSource(R) Variable 0.48 0.13 0.18 -- 0.79 Portfolio - Short Duration U.S. Government Fund Van Kampen Life Investment Trust 0.56 0.25 0.03 -- 0.84 Comstock Portfolio, Class II Shares Van Kampen Life Investment Trust 0.56 0.25 0.04 -- 0.85 Growth and Income Portfolio, Class II Shares Van Kampen UIF U.S. Real Estate 0.74 -- 0.30 -- 1.04 Portfolio, Class I Shares
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series II shares to 1.45% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 1.30% for AIM V.I. Capital Development Fund, Series II Shares. (2) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the acquired fund) to the extent that the Fund's fees and expenses are due to those of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. After fee reductions net expenses would be 0.91% for FTVIPT Franklin Small Cap Value Securities Fund - Class 2 and 1.02% for FTVIPT Templeton Foreign Securities Fund -- Class 2. (3) MFS has agreed in writing to reduce its management fee to 0.65% for MFS Total Return Series annually on average daily net assets in excess of $3 billion and 0.70% for MFS Utilities Series annually on average daily net assets in excess of $1 billion. After fee reductions net expenses would be 1.05% for MFS Total Return Series - Service Class and 1.07% for MFS Utilities Series - Service Class. This written agreement will remain in effect until modified by the Fund's Board of Trustees. (4) The "Other expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year. That undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended Dec. 31, 2007, the transfer agent fees did not exceed this expense limitation. The Manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the acquired fund fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund and OFI Master Loan Fund LLC. After fee waivers and expense reimbursements, the net expenses would be 0.82% for Oppenheimer Strategic Bond Fund/VA, Service Shares. (5) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 9 EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the EDB and the GMIB. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with EDB $1,193 $1,898 $1,995 $4,186 $384 $1,174 $1,995 $4,186 Contract Option C with EDB 394 1,202 2,041 4,271 394 1,202 2,041 4,271
MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP death benefit and do not select any optional benefits. Although your actual costs maybe higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with ROP death benefit $1,031 $1,403 $1,098 $2,367 $207 $640 $1,098 $2,367 Contract Option C with ROP death benefit 217 669 1,147 2,465 217 669 1,147 2,465
(1) In these examples, the $40 contract administrative charge is approximated as a .021% charge for Option L and a .014% charge for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. - -------------------------------------------------------------------------------- 10 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and highest variable account combinations in the Appendix. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statement date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. The contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - PRIVATE LABEL: This contract is a "private label" variable annuity. This means the contract includes funds affiliated with the distributor of this contract. Purchase payments and contract values you allocate to subaccounts investing in any of the Evergreen Variable Annuity Trust funds available under this contract are generally more profitable for the distributor and its affiliates than allocations you make to other subaccounts. In contrast, purchase payments and contract values you allocate to subaccounts investing in any of the RiverSource Variable Series Trust funds are generally more profitable for us and our - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 11 affiliates (see "Revenue we receive from the funds may create conflicts of interest"). These relationships may influence recommendations your investment professional makes regarding whether you should invest in the contract, and whether you should allocate purchase payments or contract values to a particular subaccount. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under any asset allocation program we offer or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and when there is substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue including, but not limited to, expense payments and non-cash compensation a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue, including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - -------------------------------------------------------------------------------- 12 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 13 YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Basic Value Fund, Long-term growth of capital. Invests at least Invesco Aim Advisors, Inc. adviser, Series II Shares 65% of its total assets in equity securities of advisory entities affiliated with U.S. issuers that have market capitalizations of Invesco Aim Advisors, Inc., greater than $500 million and are believed to be subadvisers. undervalued in relation to long-term earning power or other factors. The Fund may invest up to 25% of its total assets in foreign securities. AIM V.I. Capital Growth of capital. Invests principally in common Invesco Aim Advisors, Inc. adviser, Appreciation Fund, Series II stocks of companies likely to benefit from new advisory entities affiliated with Shares or innovative products, services or processes as Invesco Aim Advisors, Inc., well as those with above-average long-term subadvisers. growth and excellent prospects for future growth. The Fund can invest up to 25% of its total assets in foreign securities that involve risks not associated with investing solely in the United States. AIM V.I. Capital Development Long-term growth of capital. Invests primarily Invesco Aim Advisors, Inc. adviser, Fund, Series II Shares in securities (including common stocks, advisory entities affiliated with convertible securities and bonds) of small- and Invesco Aim Advisors, Inc., medium-sized companies. The Fund may invest up subadvisers. to 25% of its total assets in foreign securities. AllianceBernstein VPS Global Long-term growth of capital. The Fund invests at AllianceBernstein L.P. Technology Portfolio (Class least 80% of its net assets in securities of B) companies that use technology extensively in the development of new or improved products or processes. Invests in a global portfolio of securities of U.S. and foreign companies selected for their growth potential. AllianceBernstein VPS Growth Long-term growth of capital. Invests primarily AllianceBernstein L.P. and Income Portfolio (Class in the equity securities of domestic companies B) that the Advisor deems to be undervalued. AllianceBernstein VPS Large Long-term growth of capital. Invests primarily AllianceBernstein L.P. Cap Growth Portfolio (Class in equity securities of U.S. companies. Unlike B) most equity funds, the Portfolio focuses on a relatively small number of intensively researched companies. Evergreen VA Balanced Capital growth and current income. The Fund Evergreen Investment Management Fund - Class 2 seeks to achieve its goal by investing in a Company, LLC, adviser; Tattersall (effective May 30, 2008, the combination of equity and debt securities. Under Advisory Group, Inc., subadviser. Fund will change its name to normal conditions, the Fund will invest at least Evergreen VA Diversified 25% of its assets in debt securities and the Capital Builder Fund - Class remainder in equity securities. 2) Effective May 30, 2008: The Fund seeks to achieve its goal by investing in a combination of equity and debt securities. The Fund generally expects to invest approximately 10% to 30% of its assets in fixed income securities.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Evergreen VA Core Bond Maximize total return through a combination of Evergreen Investment Management Fund - Class 2 current income and capital growth. The Fund Company, LLC, adviser; Tattersall invests primarily in U.S. dollar denominated Advisory Group, Inc., subadviser. investment grade debt securities including debt securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. Government, corporate bonds, mortgage-backed securities, asset-backed securities, and other income producing securities. Evergreen VA Diversified High current income from interest on debt Evergreen Investment Management Income Builder Fund - Class securities with a secondary objective of Company, LLC, adviser; Evergreen 2 potential for growth of capital in selecting International Advisors, subadviser. securities. The Fund seeks to achieve its goal (previously Evergreen VA by investing primarily in domestic below Strategic Income Fund - investment grade bonds and other debt securities Class 2) (which may be denominated in U.S. dollars or in non-U.S. currencies) of foreign governments and foreign corporations. Evergreen VA Fundamental Capital growth with the potential for current Evergreen Investment Management Large Cap Fund - Class 2 income. Invests primarily in common stocks of Company, LLC large U.S. companies whose market capitalizations measured at time of purchase fall within the market capitalization range of the companies tracked by the Russell 1000(R) Index. Evergreen VA Growth Long-term capital growth. The Fund seeks to Evergreen Investment Management Fund - Class 2 achieve its goal by investing at least 75% of Company, LLC its assets in common stocks of small- and medium-sized companies whose market capitalizations measured at time of purchase falls within the market capitalization range of the companies tracked by the Russell 2000(R) Growth Index. Evergreen VA High Income High level of current income, with capital Evergreen Investment Management Fund - Class 2 growth as secondary objective. The Fund seeks to Company, LLC achieve its goal by investing primarily in both low-rated and high-rated fixed-income securities, including debt securities, convertible securities, and preferred stocks that are consistent with its primary investment objective of high current income. Evergreen VA International Long-term capital growth, with modest income as Evergreen Investment Management Equity Fund - Class 2 a secondary objective. The Fund seeks to achieve Company, LLC its goal by investing primarily in equity securities issued by established, quality non-U.S. companies located in countries with developed markets and may purchase securities across all market capitalizations. The Fund may also invest in emerging markets. Evergreen VA Omega Long-term capital growth. Invests primarily in Evergreen Investment Management Fund - Class 2 common stocks and securities convertible into Company, LLC common stocks of U.S. companies across all market capitalizations. Evergreen VA Special Values Capital growth in the value of its shares. The Evergreen Investment Management Fund - Class 2 Fund seeks to achieve its goal by investing at Company, LLC least 80% of its assets in common stocks of small U.S. companies whose market capitalizations measured at the time of purchase fall within the market capitalization range of the companies tracked by the Russell 2000(R) Index.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Fidelity(R) VIP Long-term capital appreciation. Normally invests Fidelity Management & Research Company Contrafund(R) Portfolio primarily in common stocks. Invests in (FMR), investment manager; FMR U.K. and Service Class 2 securities of companies whose value it believes FMR Far East, sub-advisers. is not fully recognized by the public. Invests in either "growth" stocks or "value" stocks or both. The fund invests in domestic and foreign issuers. Fidelity(R) VIP Growth Achieve capital appreciation. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Invests in companies (FMR), investment manager; FMR U.K., that it believes have above-average growth FMR Far East, sub-advisers. potential (stocks of these companies are often called "growth" stocks). The Fund invests in domestic and foreign issuers. Fidelity(R) VIP Mid Cap Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Normally invests at (FMR), investment manager; FMR U.K., least 80% of assets in securities of companies FMR Far East, sub-advisers. with medium market capitalizations. May invest in companies with smaller or larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both. FTVIPT Franklin Small Cap Long-term total return. The Fund normally Franklin Advisory Services, LLC Value Securities invests at least 80% of its net assets in Fund - Class 2 investments of small capitalization companies, and normally invests predominantly in equity securities. The Fund invests mainly in equity securities of companies that the manager believes are undervalued. FTVIPT Mutual Shares Capital appreciation, with income as a secondary Franklin Mutual Advisers, LLC Securities Fund - Class 2 goal. The Fund normally invests primarily in equity securities of companies that the manager believes are undervalued. The Fund also invests, to a lesser extent in risk arbitrage securities and distressed companies. FTVIPT Templeton Foreign Long-term capital growth. The Fund normally Templeton Investment Counsel, LLC Securities Fund - Class 2 invests at least 80% of its net assets in investments of issuers located outside the U.S., including those in emerging markets, and normally invests predominantly in equity securities. MFS(R) New Discovery Capital appreciation. Invests in stocks of MFS Investment Management(R) Series - Service Class companies MFS believes to have above average earnings growth potential compared to other companies (growth companies). Growth companies tend to have stock prices that are high relative to their earnings, dividends, book value, or other financial measures. The Fund generally focuses on companies with small capitalizations. MFS(R) Total Return Total return. Invests primarily in equity and MFS Investment Management(R) Series - Service Class fixed income securities. MFS invests between 40% and 75% of the fund's net assets in equity securities and at least 25% of the fund's total assets in fixed-income senior securities. MFS(R) Utilities Series - Total return. Normally invests at least 80% of MFS Investment Management(R) Service Class the fund's net assets in securities of issuers in the utilities industry. The Fund's assets may be invested in companies of any size.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Oppenheimer Capital Capital appreciation by investing in securities OppenheimerFunds, Inc. Appreciation Fund/VA, of well- known, established companies. Service Shares Oppenheimer Global Long-term capital appreciation. Invests mainly OppenheimerFunds, Inc. Securities Fund/VA, Service in common stocks of U.S. and foreign issuers Shares that are "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. Oppenheimer Main Street Capital appreciation. Invests mainly in common OppenheimerFunds, Inc. Small Cap Fund/VA, Service stocks of small-capitalization U.S. companies Shares that the fund's investment manager believes have favorable business trends or prospects. Oppenheimer Strategic Bond High level of current income principally derived OppenheimerFunds, Inc. Fund/VA, Service Shares from interest on debt securities. Invests mainly in three market sectors: debt securities of foreign governments and companies, U.S. government securities and lower-rated high yield securities of U.S. and foreign companies. Putnam VT Growth and Income Capital growth and current income. The fund Putnam Investment Management, LLC Fund - Class IB Shares pursues its goal by investing mainly in common stocks of U.S. companies, with a focus on value stocks that offer the potential for capital growth, current income or both. Putnam VT Health Sciences Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Fund - Class IB Shares by investing mainly in common stocks of companies in the health sciences industries, with a focus on growth stocks. Under normal circumstances, the fund invests at least 80% of its net assets in securities of (a) companies that derive at least 50% of their assets, revenues or profits from the pharmaceutical, health care services, applied research and development and medical equipment and supplies industries, or (b) companies Putnam Management thinks have the potential for growth as a result of their particular products, technology, patents or other market advantages in the health sciences industries. Putnam VT International Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Equity Fund - Class IB by investing mainly in common stocks of Shares companies outside the United States that Putnam Management believes have favorable investment potential. Under normal circumstances, the fund invests at least 80% of its net assets in equity investments. RVST RiverSource Partners Long-term capital appreciation. Under normal RiverSource Investments, LLC, adviser; Variable Portfolio - Small market conditions, at least 80% of the Fund's River Road Asset Management, LLC, Cap Value Fund net assets will be invested in small cap Donald Smith & Co., Inc., Franklin companies with market capitalization, at the Portfolio Associates LLC, Barrow, (previously RiverSource time of investment, of up to $2.5 billion or Hanley, Mewhinney & Strauss, Inc. and Variable Portfolio - Small that fall within the range of the Russell Denver Investment Advisors LLC, Cap Value Fund) 2000(R) Value Index. The Fund may invest up to subadvisers. 25% of its net assets in foreign investments.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Maximum current income consistent with liquidity RiverSource Investments, LLC Portfolio - Cash Management and stability of principal. Invests primarily in Fund money market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper. RVST RiverSource Variable High level of current income while attempting to RiverSource Investments, LLC Portfolio - Diversified Bond conserve the value of the investment for the Fund longest period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage- and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets. RVST RiverSource Variable High level of current income and, as a secondary RiverSource Investments, LLC Portfolio - Diversified goal, steady growth of capital. Under normal Equity Income Fund market conditions, the Fund invests at least 80% of its net assets in dividend- paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Capital appreciation. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Equity conditions, the Fund invests at least 80% of its Fund net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Growth of capital. Under normal market RiverSource Investments, LLC Portfolio - Mid Cap Growth conditions, the Fund invests at least 80% of its Fund net assets at the time of purchase in equity securities of mid capitalization companies. The investment manager defines mid-cap companies as those whose market capitalization (number of shares outstanding multiplied by the share price) falls within the range of the Russell Midcap(R) Growth Index. RVST RiverSource Variable High level of current income and safety of RiverSource Investments, LLC Portfolio - Short Duration principal consistent with investment in U.S. U.S. Government Fund government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Van Kampen Life Investment Capital growth and income through investments in Van Kampen Asset Management Trust Comstock Portfolio, equity securities, including common stocks, Class II Shares preferred stocks and securities convertible into common and preferred stocks. The Portfolio emphasizes value style of investing seeking well-established, undervalued companies believed by the Portfolio's investment adviser to posses the potential for capital growth and income. Van Kampen Life Investment Long-term growth of capital and income. The Van Kampen Asset Management Trust Growth and Income portfolio seeks to achieve its investment Portfolio, Class II Shares objective by investing primarily in income producing equity securities, including common stocks and convertible securities, and non- convertible preferred stocks and debt securities. Van Kampen UIF U.S. Real Above-average current income and long-term Morgan Stanley Investment Management Estate Portfolio, Class I capital appreciation by investing primarily in Inc., doing business as Van Kampen. Shares equity securities of companies in the U.S. real estate industry, including real estate investment trusts. Non-diversified Portfolio that invests primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts.
THE GUARANTEE PERIOD ACCOUNTS (GPAS) Investment in the GPA is not available under contract Option C.(1) The GPAs may not be available in some states. For contract Option L, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The minimum required investment in each GPA is $1,000. There are restrictions on the amount you can allocate to these accounts as well as on transfers from these accounts (see "Buying Your Contract" and "Transfer policies"). These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you allocate money to that account. That interest rate is then fixed for the Guarantee Period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion ("Future Rates"). We will determine Future Rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life Annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. You may transfer or withdraw contract value out of the GPAs within 30 days before the end of the Guarantee Period without receiving a MVA (see "Market Value Adjustment (MVA)" below). During this 30 day window you may choose to start a new Guarantee Period of the same length, transfer the contract value to another GPA, transfer the contract value to any of the subaccounts, or withdraw the contract value from the contract (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your Guarantee Period our current practice is to automatically transfer the contract value into the one-year fixed account. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 19 We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable Guarantee Periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly Duff & Phelp's) -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. (1) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. MARKET VALUE ADJUSTMENT (MVA) We guarantee the contract value allocated to your GPA, including the interest credited, if you do not make any transfers or withdrawals from that GPA prior to 30 days before the end of the Guarantee Period. However, we will apply a MVA if a transfer or withdrawal occurs prior to this time, unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. The MVA also affects amounts withdrawn from a GPA prior to 30 days before the end of the Guarantee Period that are used to purchase payouts under an annuity payout plan. We will refer to all of these transactions as "early withdrawals" in the discussion below. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your Guarantee Period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES As the examples below demonstrate, the application of an MVA may result in either a gain or loss of principal. We refer to all of the transactions described below as "early withdrawals." ASSUME: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate so the MVA will be negative. - -------------------------------------------------------------------------------- 20 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and you have begun your fourth contract year at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges on contract Option L, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you requested after we apply the MVA (and any applicable withdrawal charge for contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. We will not apply MVAs to amounts withdrawn for annual contract charges, to amounts we pay as death claims or to automatic transfers from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep Strategy. THE FIXED ACCOUNT The fixed account is our general account. Amounts allocated to the fixed account become part of our general account. The fixed account includes the one-year fixed account. We credit interest on amounts you allocate to the fixed account at rates we determine from time to time in our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns we earn on our general account investments, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 21 minimum interest rate on amounts invested in the fixed account may vary by state but will not be lower than state law allows. We back the principal and interest guarantees relating to the fixed account. These guarantees are based on the continued claims-paying ability of RiverSource Life. The fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the fixed account, however, disclosures regarding the fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ONE-YEAR FIXED ACCOUNT Investment in the one-year fixed account is not available for contract Option C.(1) For contract Option L, you may allocate purchase payments or transfer accumulated value to the one-year fixed account. Some states may restrict the amount you can allocate to this account. We back the principal and interest guarantees relating to the one-year fixed account. These guarantees are based on the continued claims-paying ability of the company. The value of the one-year fixed account increases as we credit interest to the account. Purchase payments and transfers to the one-year fixed account become part of our general account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. The interest rate we apply to each purchase payment or transfer to the one-year fixed account is guaranteed for one year. There are restrictions on the amount you can allocate to this account as well as on transfers from this account. (see "Making the Most of Your Contract -- Transfer policies") Interest in the one-year fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the one-year fixed account, however, disclosures regarding the one-year fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. (1) Restriction of investment in the GPAs for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. BUYING YOUR CONTRACT New contracts are not currently being offered. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. As the owner, you have all rights and may receive all benefits under the contract. Generally, you can own different contracts with the same underlying funds. These contracts have different mortality and expense risk fees, withdrawal charges and may offer purchase payment credits. For information on these contracts, please call us at the telephone number listed on the first page of this prospectus or ask your investment professional. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 90 or younger. (The age limit may be younger for qualified annuities in some states.) When you applied, you selected (if available in your state): - - contract Option L or Option C; - - a death benefit option(1); - - the optional Benefit Protector Death Benefit Rider(2); - - the optional Benefit Protector Plus Death Benefit Rider(2); - - the optional Guaranteed Minimum Income Benefit Rider(3); - - the GPAs, the one-year fixed account and/or subaccounts in which you want to invest(4); - - how you want to make purchase payments; and - - a beneficiary. (1) If you and the annuitant are 79 or younger at contract issue, you may select from either the ROP death benefit, MAV death benefit or EDB. If you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. EDB may not be available in all states. (2) Not available with the EDB. May not be available in all states. (3) Available at the time you purchase your contract if the annuitant is 75 or younger at contract issue and you also select the EDB. May not be available in all states. (4) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs and one-year fixed account under contract Option C has been filed in the various states in which the contract is offered. Please check with your sales representative to determine whether this restriction applies to your state. Some states restrict the amount you can allocate to the GPAs and the one-year fixed account. GPAs are not available under contracts issued in Maryland, Oregon, Pennsylvania, or Washington and may not be available in other states. The contract provides for allocation of purchase payments to the subaccounts of the variable account, to the GPAs and/or to the one-year fixed account in even 1% increments subject to the $1,000 minimum required investment for the GPAs. For contracts - -------------------------------------------------------------------------------- 22 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS with applications signed on or after June 16, 2003, the amount of any purchase payment allocated to the GPAs and the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish a dollar cost averaging arrangement with respect to the purchase payment according to procedures currently in effect, or you are participating according to the rules of an asset allocation model portfolio program available under the contract, if any. We apply your purchase payments to the GPAs, one-year fixed account and subaccounts you select. If we receive your purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive your purchase payment at our administrative office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a SIP. To begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts are scheduled to begin on the retirement date. When we processed your application, we established the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. You can also select a date within the maximum limits. Your selected date can align with your actual retirement from a job, or it can be a different future date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75 or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the retirement date generally must be: - - for IRAs, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 85th birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, then the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 23 PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM PURCHASE PAYMENTS If paying by SIP: $50 initial payment. $50 for additional payments. If paying by any other method: $10,000 initial payment. $100 for additional payments. MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS* $1,000,000 for issue ages up to 85. $100,000 for issue ages 86 to 90.
* This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the tax-deferred retirement plan's or the Code's limits on annual contributions also apply. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including, but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values or to satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers, withdrawals or death benefits until instructions are received from the appropriate governmental authority or a court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary or earlier if the contract is withdrawn. We prorate this charge among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. Some states limit the amount of any contract charge allocated to the GPAs or the one-year fixed account. We will waive this charge when your contract value is $100,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct this charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the one-year fixed account. We cannot - -------------------------------------------------------------------------------- 24 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS increase these fees. These fees are based on the contract you select (either Option L or Option C) and the death benefit that applies to your contract:
CONTRACT CONTRACT OPTION L OPTION C ROP death benefit: 1.25% 1.35% MAV death benefit: 1.35 1.45 EDB: 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the annuity payout period even if the annuity payout plan does not involve a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L discussed below will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts. If you select contract Option L and you withdraw all or part of your contract, you may be subject to a withdrawal charge. A withdrawal charge applies if you make a withdrawal in the first four contract years. You may withdraw amounts totaling up to 10% of your prior anniversary's contract value free of charge during the first four years of your contract. (We consider your initial purchase payment to be the prior anniversary's contract value during the first contract year.) We do not assess a withdrawal charge on this amount. The withdrawal charge percentages that apply to you are shown below and are stated in your contract. In addition, amounts withdrawn from a GPA more than 30 days before the end of the applicable Guarantee Period are generally subject to a MVA. (See "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR WITHDRAWAL CHARGE CONTRACT OPTION L PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. The withdrawal charge percentage is applied to this total amount. We pay you the amount you requested. EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal charge of 7%. The total amount we actually deduct from your contract is $1,075.27. We determine this amount as follows: AMOUNT REQUESTED $1,000 - ------------------------- OR ------ = $1,075.27 1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is $75.27. We pay you the $1,000 you requested. If you make a full withdrawal of your contract, we also will deduct the applicable contract administrative charge. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 25 the assumed investment rate is 5%. For contract Option C, the discount rate we use in the calculation will be 5.55% if the assumed investment rate is 3.5% and 7.05% if the assumed investment rate is 5%. The withdrawal charge equals the present value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. WAIVER OF WITHDRAWAL CHARGES We do not assess withdrawal charges for: - - withdrawals of amounts totaling up to 10% of your prior contract anniversary's contract value; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required minimum distribution amount calculated under your specific contract currently in force; - - contracts settled using an annuity payout plan; - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. - - Withdrawals you make if you or the annuitant become disabled within the meaning of the Code Section 72(m)(7) after contract issue. The disabled person must also be receiving Social Security disability or state long term disability benefits. The disabled person must be age 70 or younger at the time of withdrawal. You must provide us with a signed letter from the disabled person stating that he or she meets the above criteria, a legible photocopy of Social Security disability or state long term disability benefit payments and the application for such payments. POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. OPTIONAL DEATH BENEFIT CHARGES BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary We prorate this fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the subaccounts, the GPAs and one-year fixed account in the same proportion your interest in each account bears to your total contract value. - -------------------------------------------------------------------------------- 26 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. OPTIONAL LIVING BENEFIT CHARGES GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE* We charge a fee (currently 0.70%) based on the GMIB benefit base for this optional feature only if you select it. If selected, we deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate the GMIB fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the GMIB fee from the proceeds payable adjusted for the number of calendar days coverage was in place. We cannot increase the GMIB fee after the rider effective date and it does not apply after annuity payouts begin. * For applications signed prior to May 1, 2003, the following current annual rider charges apply: GMIB -- 0.30%. VALUING YOUR INVESTMENT We value your accounts as follows: GPAS AND ONE-YEAR FIXED ACCOUNT We value the amounts you allocated to the GPAs and the one-year fixed account directly in dollars. The value of these accounts equals: - - the sum of your purchase payments and transfer amounts allocated to the one-year fixed account and the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after the MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Benefit Protector rider; - Benefit Protector Plus rider; and/or - Guaranteed Minimum Income Benefit rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or a fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: to calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 27 Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and the deduction of a prorated portion of: - - the fee for any of the following optional benefits you have selected: - Benefit Protector rider; - Benefit Protector Plus rider; and/or - Guaranteed Minimum Income Benefit rider. Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten year GPAs are not available for automated transfers. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from either the one-year fixed account or the two-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low .... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. - -------------------------------------------------------------------------------- 28 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY If you select contract Option L and your net contract value(1) is at least $10,000, you can choose to participate in the Special DCA program. There is no charge for the Special DCA program. Under the Special DCA program, you can allocate a new purchase payment to a six-month or twelve-month Special DCA account. You may only allocate a new purchase payment of at least $1,000 to a Special DCA account. You cannot transfer existing contract values into a Special DCA account. Each Special DCA account lasts for either six or twelve months (depending on the time period you select) from the time we receive your first purchase payment. We make monthly transfers of your total Special DCA account value into the GPAs, one-year fixed account and/or subaccounts you select over the time period you select (either six or twelve months). If you elect to transfer into a GPA, you must meet the $1,000 minimum required investment limitation for each transfer. (1) "Net contract value" equals your current contract value plus any new purchase payment. If this is a new contract funded by purchase payments from multiple sources, we determine your net contract value based on the purchase payments, withdrawal requests and exchange requests submitted with your application. We reserve the right to credit a lower interest rate to each Special DCA account if you select the GPAs or the one-year fixed account as part of your Special DCA transfers. We will change the interest rate on each Special DCA account from time to time at our discretion. We base these rates on competition and on the interest rate we are crediting to the one-year fixed account at the time of the change. Once we credit interest to a particular purchase payment that rate does not change even if we change the rate we credit on new purchase payments or if your net contract value changes. We credit each Special DCA account with current guaranteed annual rate that is in effect on the date we receive your purchase payment. However, we credit this annual rate over the six or twelve-month period on the balance remaining in your Special DCA account. Therefore, the net effective interest rate you receive is less than the stated annual rate. We do not credit this interest after we transfer the value out of the Special DCA account into the accounts you selected. Once you establish a Special DCA account, you cannot allocate additional purchase payments to it. However, you may establish another new Special DCA account and allocate new purchase payments to it when we change the interest rates we offer on these accounts. If you are funding a Special DCA account from multiple sources, we apply each purchase payment to the account and credit interest on that purchase payment on the date we receive it. This means that all purchase payments may not be in the Special DCA account at the beginning of the six or twelve-month period. Therefore, you may receive less total interest than you would have if all your purchase payments were in the Special DCA account from the beginning. If we receive any of your multiple payments after the six or twelve-month period ends, you can either allocate those payments to a new Special DCA account (if available) or to any other accounts available under your contract. You cannot participate in the Special DCA program if you are making payments under a Systematic Investment Plan. You may simultaneously participate in the Special DCA program and the asset-rebalancing program as long as your subaccount allocation is the same under both programs. If you elect to change your subaccount allocation under one program, we automatically will change it under the other program so they match. If you participate in more than one Special DCA account, the asset allocation for each account may be different as long as you are not also participating in the asset-rebalancing program. You may terminate your participation in the Special DCA program at any time. If you do, we will not credit the current guaranteed annual interest rate on any remaining Special DCA account balance. We will transfer the remaining balance from your Special DCA account to the other accounts you selected for your DCA transfers or we will allocate it in any manner you specify. Similarly, if we cannot accept any additional purchase payments into the Special DCA program, we will allocate the purchase payments to the other accounts you selected for your DCA transfers or in any other manner you specify. We can modify the terms or discontinue the Special DCA program at any time. Any modifications will not affect any purchase payments that are already in a Special DCA account. For more information on the Special DCA program, contact your investment professional. The Special DCA program does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long term goals. ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 29 periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed account. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. If you are also participating in the Special DCA program and you change your subaccount asset allocation for the asset-rebalancing program, we will change your subaccount asset allocation under the Special DCA program to match. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. TRANSFERRING AMONG ACCOUNTS You may transfer contract value from any one subaccount, GPAs or the one-year fixed account, to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. When your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. We reserve the right to limit transfers to the GPAs and the one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - It is our general policy to allow you to transfer contract values from the one-year fixed account to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to a MVA. For contracts issued before June 16, 2003, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at any time. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. For contracts with applications signed on or before June 16, 2003, the amount of contract value transferred to the GPAs and the one-year fixed account cannot result in the value of the GPAs and the one-year fixed account in total being greater than 30% of the contract value. The time limitations on transfers from the GPAs and one-year fixed account will be enforced, and transfers out of the GPAs and one-year fixed account are limited to 30% of the GPA and one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the Guarantee Period will receive a MVA*, which may result in a gain or loss of contract value. - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - If you select a variable payout, once annuity payouts begin, you may make transfers once per contract year among the subaccounts and we reserve the right to limit the number of subaccounts in which you may invest. - - Once annuity payouts begin, you may not make any transfers to the GPAs. * Unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. - -------------------------------------------------------------------------------- 30 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under our automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 31 NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund, may require us to reject your transfer request. For example, while we disregard transfers permitted under any asset allocation, dollar-cost averaging and asset rebalancing programs that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our corporate office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers or partial withdrawals among your subaccounts, GPAs or the one-year fixed account. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated transfers from the one-year fixed account to any one of the subaccounts may not exceed an amount that, if continued, would deplete the one-year fixed account within 12 months. Until further notice, however, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at any time. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly; $250 quarterly, semiannually or annually - -------------------------------------------------------------------------------- 32 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our corporate office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our administrative office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay withdrawal charges if you selected contract Option L, contract charges or any applicable optional rider charges (see "Charges"). Additionally, IRS taxes and penalties may apply (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Plan E (see "The Annuity Payout Period -- Annuity Payout Plans"). Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will withdraw money from all your subaccounts, GPAs and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless you request otherwise. After executing a partial withdrawal, the value in each subaccount, GPA and one-year fixed account must be either zero or at least $50. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 33 TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider will terminate upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are three death benefit options under your contract: - - Return of Purchase Payments (ROP) death benefit; - - Maximum Anniversary Value (MAV) death benefit; and - - Enhanced Death Benefit Rider (EDB). If it is available in your state and if both you and the annuitant 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. If you - -------------------------------------------------------------------------------- 34 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS select the GMIB you must elect EDB. Once you elect a death benefit, you cannot change it. We show the option that applies in your contract. The combination of the contract and death benefit option you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under all options, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you selected when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. RETURN OF PURCHASE PAYMENTS DEATH BENEFIT The ROP is intended to help protect your beneficiaries financially in that they will never receive less than your purchase payments adjusted for withdrawals. If you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greater of: 1. CONTRACT VALUE; OR 2. TOTAL PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS. ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH = PW X DB BENEFIT ------- CV
PW = the partial withdrawal including any applicable MVA or withdrawal charge (contract Option L only). DB = the death benefit on the date of (but prior to) the partial withdrawal. CV = contract value on the date of (but prior to) the partial withdrawal. EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary you make an additional purchase payment of $5,000. - - During the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal. - - During the third contract year the contract value grows to $23,000. WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS: CONTRACT VALUE AT DEATH: $23,000.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45 MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT (MAV) The MAV death benefit is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. The MAV death benefit does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not the MAV death benefit is appropriate for your situation. If it is available in your state and if both you and the annuitant are age 79 or younger at contract issue, you may choose to add the MAV death benefit to your contract at the time of purchase. Once you select the MAV death benefit, you may not cancel it. The MAV death benefit provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of the following: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary. MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each contract anniversary through age 80. There is no MAV prior to the first contract anniversary. On the first contract anniversary we set the MAV equal to the greater of: (a) your current contract value, or (b) total purchase payments minus adjusted partial withdrawals. Every contract anniversary after that, through age 80, we compare the previous anniversary's MAV (plus any purchase payments since that anniversary minus adjusted - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 35 partial withdrawals since that anniversary) to the current contract value and we reset the MAV to the higher value. We stop resetting the MAV after you or the annuitant reach age 81. However, we continue to add subsequent purchase payments and subtract adjusted partial withdrawals from the MAV. EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary the contract value grows to $29,000. - - During the second contract year the contract value falls to $22,000, at which point you take a $1,500 partial withdrawal, leaving a contract value of $20,500. WE CALCULATE THE MAV DEATH BENEFIT AS FOLLOWS: CONTRACT VALUE AT DEATH: $20,500.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments $20,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $20,000 ----------------- = -1,363.64 $22,000 ---------- for a return of purchase payment death benefit of: $18,636.36 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $29,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $29,000 ----------------- = -1,977.27 $22,000 ---------- for a MAV death benefit of: $27,022.73 ----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES: $27,022.73 ENHANCED DEATH BENEFIT RIDER (EDB) The EDB is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. The EDB does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not the EDB is appropriate for your situation. If it is available in your state and both you and the annuitant are 79 or younger at contract issue, you may choose to add the EDB to your contract at the time you purchase your contract. If you select the GMIB you must elect the EDB. The EDB provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. 5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts at issue increased by 5%, - - plus any subsequent amounts allocated to the subaccounts, - - minus adjusted transfers and partial withdrawals from the subaccounts. Thereafter, we continue to add subsequent amounts allocated to the subaccounts and subtract adjusted transfers and partial withdrawals from the subaccounts. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. - -------------------------------------------------------------------------------- 36 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS PWT X VAF 5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = --------- SV
PWT = the amount transferred from the subaccounts or the amount of the partial withdrawal (including MVA and any applicable withdrawal charge for contract Option L) from the subaccounts. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts on the date of (but prior to) the transfer or partial withdrawal.
EXAMPLE - - You purchase contract Option L with a payment of $25,000 with $5,000 allocated to the one-year fixed account and $20,000 allocated to the subaccounts. - - On the first contract anniversary, the one-year fixed account value is $5,200 and the subaccount value is $17,000. Total contract value is $23, 200. - - During the second contract year the one-year fixed account value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT IS CALCULATED AS FOLLOWS: CONTRACT VALUE AT DEATH: $22,800.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ----------------- = -1,543.21 $24,300 ---------- for a ROP death benefit of: $23,456.79 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ----------------- = -1,543.21 $24,300 ---------- for a MAV death benefit of: $23,456.79 ---------- The 5% rising floor: The variable account floor on the first contract anniversary is calculated as: $21,000.00 1.05 X $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% rising floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ----------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the one-year fixed account value: +5,300.00 5% rising floor (value of the GPAs, one-year fixed account and the variable $24,642.11 account floor): ----------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES: $24,642.11 IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. If requested, we will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 37 new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and Benefit Protector Plus rider, if selected, will terminate. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the Code; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and the Benefit Protector Plus rider, if selected, will terminate. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus or the EDB. We reserve the right to discontinue offering the Benefit Protector for new contracts. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit (see "Benefits in Case of Death"); plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. - -------------------------------------------------------------------------------- 38 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR: - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with the MAV death benefit. - - During the first contract year the contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000
- - On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000
- - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $58,667
- - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000
- - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 39 - - During the eleventh contract year, the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. NOTE: For special tax considerations associated with the Benefit Protector, see "Taxes." BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is available only for purchase through a transfer, exchange or rollover from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector or the EDB. We reserve the right to discontinue offering the Benefit Protector Plus for new contracts. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking required minimum distributions. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus: - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) IF YOU OR THE ANNUITANT ARE AGE 70 CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% X (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. - -------------------------------------------------------------------------------- 40 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR PLUS - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with the MAV death benefit. - - During the first contract year the contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000
- - On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000
- - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 -------- Total death benefit of: $64,167
- - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 41 - - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000
- - During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (death benefit MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). NOTE: For special tax considerations associated with the Benefit Protector Plus, see "Taxes." GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) The GMIB is intended to provide you with a guaranteed minimum lifetime income regardless of the volatility inherent in the investments in the subaccounts. If the annuitant is between age 70 and age 75 at contract issue, you should consider whether the GMIB is appropriate for your situation because: - - you must hold the GMIB for 10 years*; - - the GMIB terminates** on the contract anniversary after the annuitant's 86th birthday; - - you can only exercise the GMIB within 30 days after a contract anniversary*; - - the MAV and the 5% rising floor values we use in the GMIB benefit base to calculate annuity payouts under the GMIB are limited after age 81; and - - there are additional costs associated with the rider. Be sure to discuss whether or not the GMIB is appropriate for your situation with your investment professional. * Unless the annuitant qualifies for a contingent event (see "Charges - Contingent events"). ** The rider and annual fee terminate on the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. If you are purchasing the contract as a qualified annuity, such as an IRA, and you are planning to begin annuity payouts after the date on which minimum distributions required by the IRS must begin, you should consider whether the GMIB is appropriate for you. Partial withdrawals you take from the contract, including those taken to satisfy RMDs, will reduce the GMIB benefit base (defined below), which in turn may reduce or eliminate the amount of any annuity payments available under the rider (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Consult a tax advisor before you purchase any GMIB with a qualified annuity, such as an IRA. If this rider is available in your state and the annuitant is 75 or younger at contract issue, you may choose to add this optional benefit to your contract for an additional annual charge which we describe below. If you select the the GMIB, you must elect the EDB at the time you purchase your contract and your rider effective date will be the contract issue date. In some instances we may allow you to add the GMIB to your contract at a later date if it was not available when you initially purchased your contract. In these instances, we would add the GMIB on the next contract anniversary and this would become the rider effective date. For purposes of calculating the GMIB benefit base under these circumstances, we consider the contract value on the rider effective date to be the initial purchase payment; we disregard all previous purchase payments, transfers and withdrawals in the GMIB calculations. INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate your purchase payments or transfers to any of the subaccounts, GPAs or the one-year fixed account. For contract Option C, you may allocate purchase payments to the - -------------------------------------------------------------------------------- 42 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS subaccounts. We reserve the right to limit the amount you allocate to subaccounts investing in the RiverSource Variable Portfolio -- Cash Management Fund to 10% of the total amount in the subaccounts. If we are required to activate this restriction, and you have more than 10% of your subaccount value in this fund, we will send you a notice and ask that you reallocate your contract value so that the 10% limitation is satisfied within 60 days. We will terminate the GMIB if you have not satisfied the limitation after 60 days. GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit base is the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the maximum anniversary value at the last contract anniversary plus any payments made since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. Keep in mind that the MAV and the 5% rising floor values are limited after age 81. We reserve the right to exclude from the GMIB benefit base any purchase payments you make in the five years before you exercise the GMIB. We would do so only if such payments total $50,000 or more or if they are 25% or more of total contract payments. If we exercise this right, we: - - subtract each payment adjusted for market value from the contract value and the MAV. - - subtract each payment from the 5% rising floor. We adjust the payments made to the GPAs and the one-year fixed account for market value. We increase payments allocated to the subaccounts by 5% for the number of full contract years they have been in the contract before we subtract them from the 5% rising floor. For each payment, we calculate the market value adjustment to the contract value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor as: PMT X CVG --------- ECV
PMT = each purchase payment made in the five years before you exercise the GMIB. CVG = current contract value at the time you exercise the GMIB. ECV = the estimated contract value on the anniversary prior to the payment in question. We assume that all payments and partial withdrawals occur at the beginning of a contract year. For each payment, we calculate the 5% increase of payments allocated to the subaccounts as: PMT X (1.05)(CY) CY = the full number of contract years the payment has been in the contract. EXERCISING THE GMIB: - - you may only exercise the GMIB within 30 days after any contract anniversary following the expiration of a ten-year waiting period from the rider effective date. However, there is an exception if at any time the annuitant experiences a "contingent event" (disability, terminal illness or confinement to a nursing home or hospital, see "Charges -- Contingent events" for more details.) - - the annuitant on the retirement date must be between 50 and 86 years old. - - you can only take an annuity payout under one of the following annuity payout plans: - Plan A - Life Annuity -- no refund; - Plan B - Life Annuity with ten years certain; - Plan D - Joint and last survivor life annuity -- no refund; - - you may change the annuitant for the payouts. When you exercise your GMIB, you may select a fixed or variable annuity payout plan. Fixed annuity payouts are calculated using the annuity purchase rates based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale G. Your annuity payouts remain fixed for the lifetime of the annuity payout period. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 43 First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. If you exercise the GMIB under a contingent event, you can take up to 50% of the benefit base in cash. You can use the balance of the GMIB benefit base for annuity payouts calculated using the guaranteed annuity purchase rates under any one of the payout plans listed above as long as the annuitant is between 50 and 86 years old on the retirement date. The GMIB benchmarks the contract growth at each anniversary against several comparison values and sets the GMIB benefit base equal to the largest value. The GMIB benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the GMIB. If the GMIB benefit base is greater than the contract value, the GMIB may provide a higher annuity payout level than is otherwise available. However, the GMIB uses guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we will apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the GMIB may be less than the income the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the GMIB, you will receive the higher standard payout option. The GMIB does not create contract value or guarantee the performance of any investment option. TERMINATING THE GMIB - - You may terminate the rider within 30 days after the first and fifth rider anniversaries. - - You may terminate the rider any time after the tenth rider anniversary. - - The rider will terminate on the date: - you make a full withdrawal from the contract; - a death benefit is payable; or - you choose to begin taking annuity payouts under the regular contract provisions. - - The rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. EXAMPLE - - You purchase the contract during the 2006 calendar year with a payment of $100,000 and you allocate all your purchase payments to the subaccounts. - - There are no additional purchase payments and no partial withdrawals. - - Assume the annuitant is male and age 55 at contract issue. For the joint and last survivor option (annuity payout Plan D), the joint annuitant is female and age 55 at contract issue. - -------------------------------------------------------------------------------- 44 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS Taking into account fluctuations in contract value due to market conditions, we calculate the GMIB benefit base as:
CONTRACT GMIB ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE 1 $107,000 $107,000 $105,000 2 125,000 125,000 110,250 3 132,000 132,000 115,763 4 150,000 150,000 121,551 5 85,000 150,000 127,628 6 120,000 150,000 134,010 7 138,000 150,000 140,710 8 152,000 152,000 147,746 9 139,000 152,000 155,133 10 126,000 152,000 162,889 $162,889 11 138,000 152,000 171,034 171,034 12 147,000 152,000 179,586 179,586 13 163,000 163,000 188,565 188,565 14 159,000 163,000 197,993 197,993 15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally, the GMIB benefit base may increase if the contract value increases. However, you should keep in mind that you are always entitled to annuitize using the contract value without exercising the GMIB. If you annuitize the contract within 30 days after a contract anniversary, the payout under a fixed annuity option (which is the same as the minimum payout for the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME CONTRACT PLAN A - PLAN B - PLAN D JOINT AND ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND $162,889 (5% rising 10 floor) $ 840.51 $ 817.70 $672.73 15 212,000(MAV) 1,250.80 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates of 3% as stated in Table B of the contract. Payouts under the standard provisions of this contract will be based on our annuity rates in effect at annuitization and are guaranteed to be greater than or equal to the guaranteed annuity rates stated in Table B of the contract. The fixed annuity payout available under the standard provisions of this contract would be at least as great as shown below:
PLAN A - PLAN B - PLAN D - JOINT AND CONTRACT LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE ANNIVERSARY CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND AT EXERCISE 10 $126,000 $ 650.16 $ 632.52 $520.38 15 212,000 1,250.80 1,193.56 968.84
At the 15th contract anniversary you would not experience a benefit from the GMIB as the payout available to you is equal to or less than the payout available under the standard provisions of the contract. When the GMIB payout is less than the payout available under the standard provisions of the contract, you will receive the higher standard payout. Remember that after the first year, lifetime income payouts under a variable annuity payout option will depend on the investment performance of the subaccounts you select. If your subaccount performance is 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. This fee currently costs 0.70% of the GMIB benefit base annually and it is taken in a lump sum from the contract value on each contract anniversary at the end of each contract year. If the contract is terminated or if annuity payouts begin, we will deduct the - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 45 fee at that time adjusted for the number of calendar days coverage was in place. We cannot increase the GMIB fee after the rider effective date and it does not apply after annuity payouts begin. We calculate the fee as follows: BB + AT - FAV BB = the GMIB benefit base. AT = adjusted transfers from the subaccounts to the GPAs or the one-year fixed account made in the six months before the contract anniversary calculated as:
PT X VAT -------- SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-year fixed account within six months of the contract anniversary VAT = variable account floor on the date of (but prior to) the transfer SVT = value of the subaccounts on the date of (but prior to) the transfer FAV = the value of your GPAs and the one-year fixed account.
The result of AT - FAV will never be greater than zero. This allows us to base the GMIB fee largely on the subaccounts. EXAMPLE - - You purchase the contract with a payment of $100,000 and allocate all of your payment to the subaccounts. - - You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU 1 $ 80,000 0.70% 5% rising floor = $100,000 X 1.05 $ 735 2 150,000 0.70% Contract value = $150,000 1,050 3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below except under annuity payout plan E. You also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin, see "Making the Most of Your Contract -- Transfer policies." ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to - -------------------------------------------------------------------------------- 46 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payment, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we have made only one monthly payout, we will not make any more payouts. - - PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly payouts for a guaranteed payout period of five, ten or 15 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect. We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the annuity payout period, you may make full and partial withdrawals. If you make a full withdrawal, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. If the original contract was an Option L contract, the discount rate we use in the calculation will vary between 5.45% and 6.95% depending on the applicable assumed investment rate. If the original contract was an Option C contract, the discount rate we use in the calculation will vary between 5.55% and 7.05% depending on the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes.") ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 47 TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the - -------------------------------------------------------------------------------- 48 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 49 - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. - -------------------------------------------------------------------------------- 50 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or no longer the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource(SM) Variable Portfolio -- Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate, serves as the principal underwriter of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. Although we no longer offer the contract for sale, you may continue to make purchase payments if permitted under the terms of your contract. We pay commissions to an affiliated selling firm of up to 4.25% of purchase payments on the contract as well as service/trail commissions of up to 1.00% based on annual total contract value for as long as the contract remains in effect. We also may pay a temporary additional sales commission of up to 1.00% of purchase payments for a period of time we select. These commissions do not change depending on which subaccounts you choose to allocate your purchase payments. From time to time and in accordance with applicable laws and regulations, we may also pay or provide the selling firm with various cash and non-cash promotional incentives including, but not limited to bonuses, short-term sales incentive payments, marketing allowances, costs associated with sales conferences and educational seminars and sales recognition awards. A portion of the payments made to the selling firm may be passed on to its sales representatives in accordance with its internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. Ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your contract. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 51 We pay the commissions and other compensation described above from our assets. Our assets include: - - revenues we receive from fees and expenses that you will pay when buying, owning and surrendering the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- the funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The funds"); and - - revenues we receive from other contracts and policies we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part of all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including surrender charges; and - - fees and expenses charged by the underlying funds in which the subaccounts you select invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement and other materials we file. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. In - -------------------------------------------------------------------------------- 52 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 53 APPENDIX: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (07/31/2002) Accumulation unit value at beginning of period $1.58 $1.42 $1.37 $1.25 $0.95 $1.00 -- -- -- -- Accumulation unit value at end of period $1.58 $1.58 $1.42 $1.37 $1.25 $0.95 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 677 773 870 898 614 11 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (03/01/2002) Accumulation unit value at beginning of period $1.18 $1.13 $1.06 $1.01 $0.79 $1.00 -- -- -- -- Accumulation unit value at end of period $1.30 $1.18 $1.13 $1.06 $1.01 $0.79 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 874 1,950 234 212 71 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.76 $1.54 $1.43 $1.25 $0.94 $1.00 -- -- -- -- Accumulation unit value at end of period $1.92 $1.76 $1.54 $1.43 $1.25 $0.94 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 98 101 108 109 86 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (09/22/1999) Accumulation unit value at beginning of period $0.73 $0.68 $0.67 $0.65 $0.46 $0.79 $1.08 $1.40 $1.00 -- Accumulation unit value at end of period $0.86 $0.73 $0.68 $0.67 $0.65 $0.46 $0.79 $1.08 $1.40 -- Number of accumulation units outstanding at end of period (000 omitted) 717 914 1,202 1,283 1,451 1,387 1,958 2,278 105 -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.62 $1.41 $1.36 $1.24 $0.95 $1.00 -- -- -- -- Accumulation unit value at end of period $1.68 $1.62 $1.41 $1.36 $1.24 $0.95 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 387 427 407 363 215 2 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (09/22/1999) Accumulation unit value at beginning of period $0.77 $0.79 $0.70 $0.65 $0.54 $0.79 $0.96 $1.17 $1.00 -- Accumulation unit value at end of period $0.87 $0.77 $0.79 $0.70 $0.65 $0.54 $0.79 $0.96 $1.17 -- Number of accumulation units outstanding at end of period (000 omitted) 1,619 1,808 2,130 2,021 2,140 2,312 2,574 3,368 56 -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA BALANCED FUND - CLASS 2* (07/31/2002) Accumulation unit value at beginning of period $1.33 $1.23 $1.19 $1.14 $1.00 $1.00 -- -- -- -- Accumulation unit value at end of period $1.40 $1.33 $1.23 $1.19 $1.14 $1.00 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 114 115 114 103 76 -- -- -- -- -- *Effective May 30, 2008, the Fund will change its name to Evergreen VA Diversified Capital Builder Fund - Class 2. - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA CORE BOND FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.12 $1.09 $1.08 $1.06 $1.04 $1.00 -- -- -- -- Accumulation unit value at end of period $1.16 $1.12 $1.09 $1.08 $1.06 $1.04 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,185 2,483 2,472 2,284 1,363 106 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA DIVERSIFIED INCOME BUILDER FUND - CLASS 2 (07/31/2002) (PREVIOUSLY EVERGREEN VA STRATEGIC INCOME FUND - CLASS 2) Accumulation unit value at beginning of period $1.35 $1.29 $1.33 $1.24 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.38 $1.35 $1.29 $1.33 $1.24 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,996 2,405 2,518 2,479 927 4 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA FUNDAMENTAL LARGE CAP FUND - CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.57 $1.41 $1.32 $1.23 $0.96 $1.00 -- -- -- -- Accumulation unit value at end of period $1.67 $1.57 $1.41 $1.32 $1.23 $0.96 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 770 872 1,000 624 458 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA GROWTH FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.73 $1.58 $1.51 $1.35 $0.99 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.73 $1.58 $1.51 $1.35 $0.99 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 230 250 267 205 138 4 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 54 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA HIGH INCOME FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.38 $1.29 $1.29 $1.21 $1.04 $1.00 -- -- -- -- Accumulation unit value at end of period $1.39 $1.38 $1.29 $1.29 $1.21 $1.04 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 665 708 763 952 751 103 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.95 $1.61 $1.41 $1.20 $0.93 $1.00 -- -- -- -- Accumulation unit value at end of period $2.20 $1.95 $1.61 $1.41 $1.20 $0.93 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 679 717 623 663 493 12 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA OMEGA FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.49 $1.43 $1.40 $1.33 $0.96 $1.00 -- -- -- -- Accumulation unit value at end of period $1.64 $1.49 $1.43 $1.40 $1.33 $0.96 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 464 531 573 580 441 13 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA SPECIAL VALUES FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.87 $1.57 $1.44 $1.21 $0.95 $1.00 -- -- -- -- Accumulation unit value at end of period $1.70 $1.87 $1.57 $1.44 $1.21 $0.95 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,130 1,328 1,360 1,273 460 7 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.76 $1.60 $1.39 $1.23 $0.97 $1.00 -- -- -- -- Accumulation unit value at end of period $2.03 $1.76 $1.60 $1.39 $1.23 $0.97 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 9,083 10,127 5,827 3,099 1,289 8 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.06 $1.01 $0.97 $0.95 $0.73 $1.00 -- -- -- -- Accumulation unit value at end of period $1.32 $1.06 $1.01 $0.97 $0.95 $0.73 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 726 815 744 882 256 14 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 $1.00 -- -- -- Accumulation unit value at end of period $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,308 3,045 2,336 1,901 1,151 250 94 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.73 $1.50 $1.40 $1.14 $0.88 $1.00 -- -- -- -- Accumulation unit value at end of period $1.66 $1.73 $1.50 $1.40 $1.14 $0.88 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 771 847 873 749 442 55 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999) Accumulation unit value at beginning of period $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 $1.00 -- Accumulation unit value at end of period $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 -- Number of accumulation units outstanding at end of period (000 omitted) 9,245 10,913 11,340 11,643 4,692 966 546 170 31 -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.66 $1.39 $1.28 $1.09 $0.84 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.66 $1.39 $1.28 $1.09 $0.84 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,425 1,562 1,549 1,200 1,018 286 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.17 $1.05 $1.01 $0.97 $0.73 $1.00 -- -- -- -- Accumulation unit value at end of period $1.18 $1.17 $1.05 $1.01 $0.97 $0.73 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 149 175 203 227 180 20 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.29 $1.17 $1.16 $1.06 $0.93 $1.00 -- -- -- -- Accumulation unit value at end of period $1.33 $1.29 $1.17 $1.16 $1.06 $0.93 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,307 3,207 3,304 3,221 1,510 11 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $2.16 $1.67 $1.46 $1.14 $0.85 $1.00 -- -- -- -- Accumulation unit value at end of period $2.72 $2.16 $1.67 $1.46 $1.14 $0.85 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 163 161 159 55 38 6 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.44 $1.35 $1.31 $1.25 $0.97 $1.00 -- -- -- -- Accumulation unit value at end of period $1.61 $1.44 $1.35 $1.31 $1.25 $0.97 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 289 319 300 302 167 -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 55
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.66 $1.43 $1.28 $1.09 $0.77 $1.00 -- -- -- -- Accumulation unit value at end of period $1.74 $1.66 $1.43 $1.28 $1.09 $0.77 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 864 940 833 690 347 12 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.95 $1.72 $1.59 $1.35 $0.95 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.95 $1.72 $1.59 $1.35 $0.95 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 307 330 355 322 247 4 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.36 $1.29 $1.27 $1.19 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.47 $1.36 $1.29 $1.27 $1.19 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 9,868 6,464 4,642 2,922 1,544 10 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (10/05/1998) Accumulation unit value at beginning of period $1.51 $1.32 $1.28 $1.16 $0.93 $1.16 $1.26 $1.18 $1.18 $1.00 Accumulation unit value at end of period $1.40 $1.51 $1.32 $1.28 $1.16 $0.93 $1.16 $1.26 $1.18 $1.18 Number of accumulation units outstanding at end of period (000 omitted) 2,565 3,460 4,185 4,645 5,239 5,706 6,280 6,616 4,302 239 - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (05/01/2002) Accumulation unit value at beginning of period $1.17 $1.15 $1.03 $0.98 $0.84 $1.00 -- -- -- -- Accumulation unit value at end of period $1.14 $1.17 $1.15 $1.03 $0.98 $0.84 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 185 196 167 147 87 12 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999) Accumulation unit value at beginning of period $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 $1.00 -- Accumulation unit value at end of period $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 -- Number of accumulation units outstanding at end of period (000 omitted) 1,885 2,110 2,185 2,258 2,177 1,856 1,775 2,192 347 -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.57 $1.33 $1.27 $1.07 $0.79 $1.00 -- -- -- -- Accumulation unit value at end of period $1.47 $1.57 $1.33 $1.27 $1.07 $0.79 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,297 2,129 2,323 692 192 35 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (02/21/1995) Accumulation unit value at beginning of period $1.29 $1.26 $1.24 $1.25 $1.26 $1.26 $1.24 $1.18 $1.15 $1.11 Accumulation unit value at end of period $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26 $1.24 $1.18 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 3,976 3,923 6,630 7,059 5,254 8,572 8,409 4,421 941 749 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 3.07% and 3.12%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (02/21/1995) Accumulation unit value at beginning of period $1.68 $1.63 $1.62 $1.58 $1.53 $1.47 $1.38 $1.33 $1.33 $1.33 Accumulation unit value at end of period $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47 $1.38 $1.33 $1.33 Number of accumulation units outstanding at end of period (000 omitted) 12,248 8,733 8,279 9,515 7,119 7,272 8,923 9,498 8,127 5,689 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 $1.00 -- -- Accumulation unit value at end of period $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 -- -- Number of accumulation units outstanding at end of period (000 omitted) 6,387 5,210 2,698 1,026 605 238 115 7 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (02/21/1995) Accumulation unit value at beginning of period $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 $1.56 Accumulation unit value at end of period $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 Number of accumulation units outstanding at end of period (000 omitted) 4,871 5,898 4,590 4,708 4,663 5,116 6,019 6,358 5,864 5,163 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (08/30/2002) Accumulation unit value at beginning of period $1.41 $1.44 $1.32 $1.23 $1.02 $1.00 -- -- -- -- Accumulation unit value at end of period $1.59 $1.41 $1.44 $1.32 $1.23 $1.02 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,722 2,222 377 159 29 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/03/2000) Accumulation unit value at beginning of period $1.18 $1.15 $1.15 $1.16 $1.16 $1.11 $1.06 $1.00 -- -- Accumulation unit value at end of period $1.23 $1.18 $1.15 $1.15 $1.16 $1.16 $1.11 $1.06 -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,176 2,281 2,359 2,330 1,256 248 117 39 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 56 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.72 $1.50 $1.46 $1.26 $0.98 $1.00 -- -- -- -- Accumulation unit value at end of period $1.66 $1.72 $1.50 $1.46 $1.26 $0.98 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 5,949 6,248 3,864 1,094 458 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST GROWTH AND INCOME PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.69 $1.47 $1.36 $1.21 $0.96 $1.00 -- -- -- -- Accumulation unit value at end of period $1.70 $1.69 $1.47 $1.36 $1.21 $0.96 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 435 454 439 458 215 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS I SHARES (08/30/2002) Accumulation unit value at beginning of period $2.75 $2.02 $1.75 $1.30 $0.96 $1.00 -- -- -- -- Accumulation unit value at end of period $2.25 $2.75 $2.02 $1.75 $1.30 $0.96 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 111 141 136 149 28 1 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (07/31/2002) Accumulation unit value at beginning of period $1.55 $1.40 $1.35 $1.24 $0.95 $1.00 Accumulation unit value at end of period $1.55 $1.55 $1.40 $1.35 $1.24 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 38 52 63 48 -- -- - ----------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (03/01/2002) Accumulation unit value at beginning of period $1.16 $1.11 $1.04 $1.00 $0.79 $1.00 Accumulation unit value at end of period $1.27 $1.16 $1.11 $1.04 $1.00 $0.79 Number of accumulation units outstanding at end of period (000 omitted) 130 452 79 25 -- -- - ----------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.73 $1.52 $1.41 $1.25 $0.94 $1.00 Accumulation unit value at end of period $1.88 $1.73 $1.52 $1.41 $1.25 $0.94 Number of accumulation units outstanding at end of period (000 omitted) 42 42 40 -- -- -- - ----------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.49 $1.40 $1.37 $1.33 $0.94 $1.00 Accumulation unit value at end of period $1.75 $1.49 $1.40 $1.37 $1.33 $0.94 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.58 $1.38 $1.34 $1.23 $0.95 $1.00 Accumulation unit value at end of period $1.63 $1.58 $1.38 $1.34 $1.23 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 72 74 71 10 -- -- - ----------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.31 $1.34 $1.19 $1.11 $0.92 $1.00 Accumulation unit value at end of period $1.46 $1.31 $1.34 $1.19 $1.11 $0.92 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA BALANCED FUND - CLASS 2* (07/31/2002) Accumulation unit value at beginning of period $1.31 $1.22 $1.18 $1.13 $1.00 $1.00 Accumulation unit value at end of period $1.37 $1.31 $1.22 $1.18 $1.13 $1.00 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- *Effective May 30, 2008, the Fund will change its name to Evergreen VA Diversified Capital Builder Fund - Class 2. - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA CORE BOND FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.10 $1.08 $1.07 $1.05 $1.04 $1.00 Accumulation unit value at end of period $1.13 $1.10 $1.08 $1.07 $1.05 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 58 84 60 7 -- 118 - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA DIVERSIFIED INCOME BUILDER FUND - CLASS 2 (07/31/2002) (PREVIOUSLY EVERGREEN VA STRATEGIC INCOME FUND - CLASS 2) Accumulation unit value at beginning of period $1.32 $1.27 $1.31 $1.23 $1.08 $1.00 Accumulation unit value at end of period $1.34 $1.32 $1.27 $1.31 $1.23 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 41 59 45 4 -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA FUNDAMENTAL LARGE CAP FUND - CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.54 $1.39 $1.30 $1.22 $0.96 $1.00 Accumulation unit value at end of period $1.63 $1.54 $1.39 $1.30 $1.22 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 16 18 9 9 -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA GROWTH FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.69 $1.56 $1.49 $1.34 $0.98 $1.00 Accumulation unit value at end of period $1.85 $1.69 $1.56 $1.49 $1.34 $0.98 Number of accumulation units outstanding at end of period (000 omitted) 6 10 11 -- -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA HIGH INCOME FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.36 $1.27 $1.28 $1.20 $1.03 $1.00 Accumulation unit value at end of period $1.36 $1.36 $1.27 $1.28 $1.20 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 36 51 35 4 32 32 - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.91 $1.58 $1.39 $1.19 $0.93 $1.00 Accumulation unit value at end of period $2.15 $1.91 $1.58 $1.39 $1.19 $0.93 Number of accumulation units outstanding at end of period (000 omitted) 25 31 25 -- -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA OMEGA FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.46 $1.41 $1.38 $1.32 $0.96 $1.00 Accumulation unit value at end of period $1.60 $1.46 $1.41 $1.38 $1.32 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 23 32 31 2 -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA SPECIAL VALUES FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.84 $1.55 $1.42 $1.21 $0.95 $1.00 Accumulation unit value at end of period $1.67 $1.84 $1.55 $1.42 $1.21 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 44 45 43 43 -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.72 $1.57 $1.37 $1.21 $0.97 $1.00 Accumulation unit value at end of period $1.98 $1.72 $1.57 $1.37 $1.21 $0.97 Number of accumulation units outstanding at end of period (000 omitted) 2,145 2,526 1,386 524 -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.03 $0.99 $0.95 $0.94 $0.72 $1.00 Accumulation unit value at end of period $1.29 $1.03 $0.99 $0.95 $0.94 $0.72 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.90 $1.72 $1.48 $1.21 $0.89 $1.00 Accumulation unit value at end of period $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 Number of accumulation units outstanding at end of period (000 omitted) 458 374 196 54 19 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.69 $1.47 $1.38 $1.14 $0.88 $1.00 Accumulation unit value at end of period $1.62 $1.69 $1.47 $1.38 $1.14 $0.88 Number of accumulation units outstanding at end of period (000 omitted) 15 22 22 23 20 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.50 $1.29 $1.19 $1.07 $0.87 $1.00 Accumulation unit value at end of period $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 94 154 -- 138 153 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.60 $1.34 $1.24 $1.07 $0.83 $1.00 Accumulation unit value at end of period $1.82 $1.60 $1.34 $1.24 $1.07 $0.83 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.14 $1.03 $1.00 $0.96 $0.73 $1.00 Accumulation unit value at end of period $1.15 $1.14 $1.03 $1.00 $0.96 $0.73 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $1.25 $1.14 $1.13 $1.04 $0.92 $1.00 Accumulation unit value at end of period $1.27 $1.25 $1.14 $1.13 $1.04 $0.92 Number of accumulation units outstanding at end of period (000 omitted) 49 33 45 -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002) Accumulation unit value at beginning of period $2.07 $1.61 $1.41 $1.10 $0.85 $1.00 Accumulation unit value at end of period $2.60 $2.07 $1.61 $1.41 $1.10 $0.85 Number of accumulation units outstanding at end of period (000 omitted) 3 -- -- -- -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 58 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.41 $1.33 $1.29 $1.23 $0.96 $1.00 Accumulation unit value at end of period $1.57 $1.41 $1.33 $1.29 $1.23 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 210 239 206 63 -- -- - ----------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.96 $1.70 $1.51 $1.30 $0.92 $1.00 Accumulation unit value at end of period $2.04 $1.96 $1.70 $1.51 $1.30 $0.92 Number of accumulation units outstanding at end of period (000 omitted) 76 62 54 101 83 -- - ----------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.91 $1.70 $1.58 $1.35 $0.95 $1.00 Accumulation unit value at end of period $1.85 $1.91 $1.70 $1.58 $1.35 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 16 17 19 -- -- -- - ----------------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.26 $1.20 $1.19 $1.12 $1.04 $1.00 Accumulation unit value at end of period $1.36 $1.26 $1.20 $1.19 $1.12 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 2,174 1,584 1,042 417 -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.28 $1.12 $1.09 $1.00 $0.81 $1.00 Accumulation unit value at end of period $1.18 $1.28 $1.12 $1.09 $1.00 $0.81 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (08/30/2002) Accumulation unit value at beginning of period $1.33 $1.32 $1.18 $1.12 $0.97 $1.00 Accumulation unit value at end of period $1.30 $1.33 $1.32 $1.18 $1.12 $0.97 Number of accumulation units outstanding at end of period (000 omitted) 5 5 5 -- -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.33 $1.20 $1.06 $0.84 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 Number of accumulation units outstanding at end of period (000 omitted) 12 12 14 14 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (07/31/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.87 $1.58 $1.52 $1.29 $0.96 $1.00 Accumulation unit value at end of period $1.75 $1.87 $1.58 $1.52 $1.29 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 794 763 746 325 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (03/01/2002) Accumulation unit value at beginning of period $1.00 $0.97 $0.96 $0.97 $0.99 $1.00 Accumulation unit value at end of period $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 472 174 48 24 21 132 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.67% and 2.71%, respectively. - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.07 $1.04 $1.04 $1.01 $1.01 $1.00 Accumulation unit value at end of period $1.10 $1.07 $1.04 $1.04 $1.01 $1.01 Number of accumulation units outstanding at end of period (000 omitted) 1,965 638 -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.42 $1.27 $1.10 $0.80 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 Number of accumulation units outstanding at end of period (000 omitted) 1,539 1,423 623 -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2003) Accumulation unit value at beginning of period $1.60 $1.42 $1.36 $1.31 $1.00 -- Accumulation unit value at end of period $1.62 $1.60 $1.42 $1.36 $1.31 -- Number of accumulation units outstanding at end of period (000 omitted) 647 681 810 502 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (08/30/2002) Accumulation unit value at beginning of period $1.39 $1.42 $1.31 $1.22 $1.02 $1.00 Accumulation unit value at end of period $1.55 $1.39 $1.42 $1.31 $1.22 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 124 136 140 85 -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 59
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/01/2002) Accumulation unit value at beginning of period $1.02 $1.00 $1.00 $1.01 $1.02 $1.00 Accumulation unit value at end of period $1.05 $1.02 $1.00 $1.00 $1.01 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 419 519 197 31 39 -- - ----------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.69 $1.48 $1.45 $1.26 $0.98 $1.00 Accumulation unit value at end of period $1.62 $1.69 $1.48 $1.45 $1.26 $0.98 Number of accumulation units outstanding at end of period (000 omitted) 1,946 2,067 1,345 383 8 8 - ----------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST GROWTH AND INCOME PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.64 $1.44 $1.34 $1.19 $0.96 $1.00 Accumulation unit value at end of period $1.65 $1.64 $1.44 $1.34 $1.19 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 8 9 9 9 -- -- - ----------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS I SHARES (08/30/2002) Accumulation unit value at beginning of period $2.70 $1.99 $1.74 $1.29 $0.96 $1.00 Accumulation unit value at end of period $2.20 $2.70 $1.99 $1.74 $1.29 $0.96 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 60 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 61 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 62 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 63 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 64 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 65 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 66 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 67 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 45275 J (5/08) PROSPECTUS MAY 1, 2008 EVERGREEN PATHWAYS(SM) SELECT VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE ENTERPRISE MVA ACCOUNT This prospectus contains information that you should know before investing in Evergreen Pathways Select Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds, Series II Shares AllianceBernstein Variable Products Series Fund, Inc. (Class B) American Century(R) Variable Portfolios, Inc., Class II Dreyfus Investment Portfolios, Service Share Class Dreyfus Variable Investment Fund, Service Share Class Evergreen Variable Annuity Trust Fidelity(R) Variable Insurance Products Service Class 2 Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 Goldman Sachs Variable Insurance Trust (VIT) Oppenheimer Variable Account Funds, Service Shares Putnam Variable Trust - Class IB Shares RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds The Universal Institutional Funds, Inc., Class II Shares Van Kampen Life Investment Trust Class II Shares Wanger Advisors Trust NEW EVERGREEN PATHWAYS(SM) SELECT VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY BEING OFFERED. Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. RiverSource Life offers several different annuities which your investment professional may or may not be authorized to offer to you. Each annuity has different features and benefits that may be appropriate for you based on your financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges may also be different between each annuity. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 1 TABLE OF CONTENTS KEY TERMS....................................... 3 THE CONTRACT IN BRIEF........................... 5 EXPENSE SUMMARY................................. 7 CONDENSED FINANCIAL INFORMATION (UNAUDITED)..... 12 FINANCIAL STATEMENTS............................ 12 THE VARIABLE ACCOUNT AND THE FUNDS.............. 12 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............ 22 BUYING YOUR CONTRACT............................ 23 CHARGES......................................... 25 VALUING YOUR INVESTMENT......................... 30 MAKING THE MOST OF YOUR CONTRACT................ 31 WITHDRAWALS..................................... 40 TSA -- SPECIAL PROVISIONS....................... 40 CHANGING OWNERSHIP.............................. 41 BENEFITS IN CASE OF DEATH....................... 41 OPTIONAL BENEFITS............................... 44 THE ANNUITY PAYOUT PERIOD....................... 57 TAXES........................................... 59 VOTING RIGHTS................................... 62 SUBSTITUTION OF INVESTMENTS..................... 62 ABOUT THE SERVICE PROVIDERS..................... 62 ADDITIONAL INFORMATION.......................... 64 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)................. 66 APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE.............. 68 APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES....... 69 APPENDIX D: EXAMPLE -- DEATH BENEFITS........... 73 APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER.......... 76 APPENDIX F: GUARANTOR WITHDRAWAL BENEFIT RIDER -- RIDER B DISCLOSURE................... 78 APPENDIX G: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER............ 83 APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT RIDER -- ADDITIONAL RMD DISCLOSURE............ 85 APPENDIX I: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS................. 86 APPENDIX J: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER......... 91 APPENDIX K: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER.... 93 APPENDIX L: CONDENSED FINANCIAL INFORMATION (UNAUDITED)... 95 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........... 102
- -------------------------------------------------------------------------------- 2 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract, that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of the funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you may allocate purchase payments or transfer contract value of at least $1,000. These accounts have guaranteed interest rates for guarantee periods we declare when you allocate purchase payments or transfer contract value to a GPA. Unless an exception applies, transfers or withdrawals from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a Guarantee Period Account is withdrawn or transferred more than 30 days before the end of its guarantee period. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider to becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life" refer to RiverSource Life Insurance Company. VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our administrative office before the close of business, we will process your payment or transaction using the accumulation unit value - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 3 we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our administrative office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Contract Option L offers a four year withdrawal charge schedule. Contract Option C eliminates the withdrawal charge schedule in exchange for a higher mortality and expense risk fee. Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to invest. PURPOSE: These contracts allow you to accumulate money for retirement or similar long term goal. You do this by making one or more purchase payments. You may allocate your purchase payments to the GPAs and/or subaccounts of the variable account under the contract; however you risk losing amounts you invest in the subaccounts of the variable account. These accounts, in turn, may earn returns that increase the value of a contract. You may be able to purchase an optional benefit to reduce the investment risk you assume. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). BUYING A CONTRACT: We no longer offer new contracts. However, you have the option of making additional purchase payments in the future subject to certain limitations. Purchase payment amounts and purchase payment timing may be limited under the terms of your contract and/or pursuant to state requirements. (see "Buying Your Contract") It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract. We will not deduct any contract charges or fees. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: Generally, you may allocate purchase payments among the: - - subaccounts of the variable account, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - GPAs which earn interest at rates that we declare when you allocate purchase payments or transfer contract value to these accounts. The required minimum investment in a GPA is $1,000. These accounts may not be available in all states. (see "The Guarantee Period Accounts (GPAs)") TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to an MVA, unless an exception applies. You may establish automated transfers among the accounts. (See "Making the Most of Your Contract -- Transferring Among Accounts") WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (See "Withdrawals") OPTIONAL BENEFITS: This contract offers features that are available for additional charges if you meet certain criteria. Optional benefits may require the use of an asset allocation model portfolio which may limit transfers and allocations; may limit the - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 5 timing, amount and allocation of purchase payments; and may limit the amount of partial withdrawals that can be taken under the optional benefit during a contract year. (See "Optional Benefits") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount based on the death benefit selected. (See "Benefits in Case of Death") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you buy a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs are not available during the payout period. (See "The Annuity Payout Period") TAXES: Generally, income earned on your contract value grows tax-deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. (See "Taxes") - -------------------------------------------------------------------------------- 6 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (Contingent deferred sales charge as a percentage of purchase payment withdrawn) You select either contract Option L or Option C at the time of application. Option C has no withdrawal charge schedule but carries a higher mortality and expense risk fee than Option L.
CONTRACT OPTION L YEARS FROM PURCHASE WITHDRAWAL CHARGE PAYMENT RECEIPT PERCENTAGE 1-2 8% 3 7 4 6 Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal we impose a withdrawal charge. This charge will vary based on the contract option shown below and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in the table below. (See "Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout Plans.")
IF YOUR AIR IS 3.5%, THEN YOUR IF YOUR AIR IS 5%, THEN YOUR DISCOUNT RATE PERCENT (%) IS: DISCOUNT RATE PERCENT (%) IS: CONTRACT OPTION L 6.55% 8.05% CONTRACT OPTION C 6.65% 8.15%
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE FOUR DEATH BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE ROP Death Benefit 1.55% 0.15% 1.70% MAV Death Benefit 1.75 0.15 1.90 5% Accumulation Death Benefit 1.90 0.15 2.05 Enhanced Death Benefit 1.95 0.15 2.10
IF YOU SELECT CONTRACT OPTION C AND: ROP Death Benefit 1.65% 0.15% 1.80% MAV Death Benefit 1.85 0.15 2.00 5% Accumulation Death Benefit 2.00 0.15 2.15 Enhanced Death Benefit 2.05 0.15 2.20
OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the current contract anniversary.) - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 7 OPTIONAL DEATH BENEFITS If eligible, you may select an optional death benefit in addition to the ROP and MAV Death Benefits. The fees apply only if you select one of these benefits. BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25% BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract anniversary.) OPTIONAL LIVING BENEFITS If eligible, you may select one of the following optional living benefits. Each optional living benefit requires the use of an asset allocation model. The fees apply only if you elect one of these benefits. ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract value or the Minimum Contract Accumulation Value, whichever is greater.) GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract anniversary.) INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1) INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE MAXIMUM: 1.75% CURRENT: 0.60%(1) RIDER FEE INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% MAXIMUM: 2.00% CURRENT: 0.65%(1) ACCUMULATION BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the contract anniversary.) (1) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. - -------------------------------------------------------------------------------- 8 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDING DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(a)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense reimbursements 0.52% 2.09%
(a) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor or investment adviser, transfer agent or their affiliates may pay us and/or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Capital Development Fund, 0.75% 0.25% 0.31% --% 1.31%(1) Series II Shares AllianceBernstein VPS Growth and Income 0.55 0.25 0.04 -- 0.84 Portfolio (Class B) AllianceBernstein VPS International 0.75 0.25 0.06 -- 1.06 Value Portfolio (Class B) American Century VP Inflation 0.49 0.25 0.01 -- 0.75 Protection, Class II American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16 American Century VP Value, Class II 0.83 0.25 0.01 -- 1.09 Dreyfus Investment Portfolios Technology 0.75 0.25 0.09 0.01 1.10 Growth Portfolio, Service Shares Dreyfus Variable Investment Fund 1.00 0.25 0.19 -- 1.44 International Value Portfolio, Service Shares Evergreen VA Core Bond Fund - Class 2 0.32 0.25 0.25 0.03 0.85 Evergreen VA Diversified Income Builder 0.40 0.25 0.24 0.01 0.90 Fund - Class 2 (previously Evergreen VA Strategic Income Fund - Class 2) Evergreen VA Fundamental Large Cap 0.58 0.25 0.17 -- 1.00 Fund - Class 2 Evergreen VA Growth Fund - Class 2 0.70 0.25 0.20 0.01 1.16 Evergreen VA High Income Fund - Class 2 0.50 0.25 0.30 0.01 1.06 Evergreen VA International Equity 0.39 0.25 0.24 -- 0.88 Fund - Class 2 Evergreen VA Omega Fund - Class 2 0.52 0.25 0.19 -- 0.96 Evergreen VA Special Values Fund - Class 0.78 0.25 0.18 0.01 1.22 2 Fidelity(R) VIP Contrafund(R) Portfolio 0.56 0.25 0.09 -- 0.90 Service Class 2 Fidelity(R) VIP Investment Grade Bond 0.32 0.25 0.11 -- 0.68 Portfolio Service Class 2 Fidelity(R) VIP Mid Cap Portfolio 0.56 0.25 0.10 -- 0.91 Service Class 2 Fidelity(R) VIP Overseas Portfolio 0.71 0.25 0.14 -- 1.10 Service Class 2 FTVIPT Franklin Income Securities 0.45 0.25 0.02 -- 0.72 Fund - Class 2 FTVIPT Templeton Global Income 0.50 0.25 0.14 -- 0.89 Securities Fund - Class 2 Goldman Sachs VIT Mid Cap Value 0.80 -- 0.07 -- 0.87 Fund - Institutional Shares Oppenheimer Capital Appreciation 0.64 0.25 0.02 -- 0.91 Fund/VA, Service Shares Oppenheimer Global Securities Fund/VA, 0.62 0.25 0.02 -- 0.89 Service Shares Oppenheimer Main Street Small Cap 0.70 0.25 0.02 -- 0.97 Fund/VA, Service Shares Putnam VT Health Sciences Fund - Class 0.70 0.25 0.13 -- 1.08 IB Shares Putnam VT Small Cap Value Fund - Class 0.77 0.25 0.10 0.07 1.19 IB Shares
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES RVST RiverSource(R) Partners Variable 0.83% 0.13% 1.13% --% 2.09%(2) Portfolio - Select Value Fund (previously RiverSource(R) Variable Portfolio - Select Value Fund) RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(2) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable 0.33 0.13 0.14 -- 0.60 Portfolio - Cash Management Fund RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.44 0.13 0.17 -- 0.74(2) Portfolio - Global Inflation Protected Securities Fund RVST RiverSource(R) Variable 0.60 0.13 0.16 -- 0.89 Portfolio - Growth Fund RVST RiverSource(R) Variable 0.61 0.13 0.17 -- 0.91 Portfolio - Income Opportunities Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund RVST RiverSource(R) Variable 0.59 0.13 0.36 -- 1.08(2) Portfolio - Large Cap Value Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Mid Cap Growth Fund RVST RiverSource(R) Variable 0.22 0.13 0.17 -- 0.52(2) Portfolio - S&P 500 Index Fund RVST RiverSource(R) Variable 0.48 0.13 0.18 -- 0.79 Portfolio - Short Duration U.S. Government Fund RVST Threadneedle(R) Variable 1.11 0.13 0.26 -- 1.50 Portfolio - Emerging Markets Fund (previously RiverSource(R) Variable Portfolio - Emerging Markets Fund) Van Kampen Life Investment Trust 0.56 0.25 0.03 -- 0.84 Comstock Portfolio, Class II Shares Van Kampen UIF U.S. Real Estate 0.74 0.35 0.29 -- 1.38(3) Portfolio, Class II Shares Wanger U.S. Smaller Companies 0.90 -- 0.05 -- 0.95 (effective June 1, 2008, the Fund will change its name to Wanger USA)
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series II shares to 1.45% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 1.30% for AIM V.I. Capital Development Fund, Series II Shares. (2) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed: 1.03% for RVST RiverSource(R) Partners Variable Portfolio - Select Value Fund, 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund, 0.72% for RVST RiverSource(R) Variable Portfolio - Global Inflation Protected Securities Fund, 1.05% for RVST RiverSource(R) Variable Portfolio - Large Cap Value Fund and 0.51% for RVST RiverSource(R) Variable Portfolio - S&P 500 Index Fund. (3) After giving effect to the Adviser's voluntary fee waivers and/or expense reimbursement, the net expenses incurred by investors including certain investment related expenses, was 1.28% for Van Kampen UIF U.S. Real Estate Portfolio, Class II Shares. - -------------------------------------------------------------------------------- 10 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the MAV Death Benefit, the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,462 $2,696 $3,342 $6,766 $662 $1,996 $3,342 $6,766 Contract Option C 672 2,023 3,384 6,834 672 2,023 3,384 6,834
MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP Death Benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,030 $1,408 $1,212 $2,598 $230 $708 $1,212 $2,598 Contract Option C 239 737 1,260 2,694 239 737 1,260 2,694
(1) In these examples, the $40 contract administrative charge is estimated as a .021% charge for Option L and a .014% for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. (2) Because these examples are intended to illustrate the most expensive combination of contract features, the maximum annual fee for each optional rider is reflected rather than the fee that is currently being charged. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 11 CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and highest total annual variable account expense combinations in Appendix L. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statements date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. This contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - PRIVATE LABEL: This contract is a "private label" variable annuity. This means the contract includes funds affiliated with the distributor of this contract. Purchase payments and contract values you allocate to subaccounts investing in any of the Evergreen Variable Annuity Trust funds available under this contract are generally more profitable for the distributor and its affiliates than allocations you make to other subaccounts. In contrast, purchase payments and contract values you allocate to subaccounts investing in any of the RiverSource Variable Series Trust funds are generally more profitable for us and our - -------------------------------------------------------------------------------- 12 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS affiliates (see "Revenue we receive from the funds may create conflicts of interest"). These relationships may influence recommendations your investment professional makes regarding whether you should invest in the contract, and whether you should allocate purchase payments or contract values to a particular subaccount. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under the asset allocation program we offer (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program") or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and upon any substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - - Compensating, training and educating investment professionals who sell the contracts. - - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 13 - - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - - Providing sub-transfer agency and shareholder servicing to contract owners. - - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- 14 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS UNLESS AN ASSET ALLOCATION PROGRAM WE OFFER IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Capital Development Long-term growth of capital. Invests primarily Invesco Aim Advisors, Inc. adviser, Fund, Series II Shares in securities (including common stocks, advisory entities affiliated with convertible securities and bonds) of small- and Invesco Aim Advisors, Inc., medium-sized companies. The Fund may invest up subadvisers. to 25% of its total assets in foreign securities. AllianceBernstein VPS Growth Long-term growth of capital. Invests primarily AllianceBernstein L.P. and Income Portfolio (Class in the equity securities of domestic companies B) that the Advisor deems to be undervalued. AllianceBernstein VPS Long-term growth of capital. Invests primarily AllianceBernstein L.P. International Value in a diversified portfolio of equity securities Portfolio (Class B) of established companies selected from more than 40 industries and from more than 40 developed and emerging market countries. American Century VP Long-term total return. To protect against U.S. American Century Investment Management, Inflation Protection, Class inflation. Inc. II American Century VP Long-term capital growth. Analytical research American Century Investment Management, Ultra(R), Class II tools and techniques are used to identify the Inc. stocks of larger-sized companies that appear to have the best opportunity of sustaining long-term above average growth. American Century VP Value, Long-term capital growth, with income as a American Century Investment Management, Class II secondary objective. Invests primarily in stocks Inc. of companies that management believes to be undervalued at the time of purchase. Dreyfus Investment Capital appreciation. The portfolio invests, The Dreyfus Corporation Portfolios Technology Growth under normal circumstances, at least 80% of its Portfolio, Service Shares assets in the stocks of growth companies of any size that Dreyfus believes to be leading producers or beneficiaries of technological innovation. Up to 25% of the portfolio's assets may be in foreign securities. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities. Dreyfus Variable Investment Long-term capital growth. To pursue this goal, The Dreyfus Corporation Fund International Value the portfolio normally invests at least 80% of Portfolio, Service Shares its assets in stocks. The portfolio ordinarily invests most of its assets in securities of foreign companies which Dreyfus considers to be value companies. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities, including those purchased in initial public offerings or shortly thereafter. The portfolio may invest in companies of any size. The portfolio may also invest in companies located in emerging markets.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Evergreen VA Core Bond Maximize total return through a combination of Evergreen Investment Management Fund - Class 2 current income and capital growth. The Fund Company, LLC, adviser; Tattersall invests primarily in U.S. dollar denominated Advisory Group, Inc., subadviser. investment grade debt securities including debt securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. Government, corporate bonds, mortgage-backed securities, asset-backed securities, and other income producing securities. Evergreen VA Diversified High current income from interest on debt Evergreen Investment Management Income Builder Fund - Class securities with a secondary objective of Company, LLC, adviser; Evergreen 2 potential for growth of capital in selecting International Advisors, subadviser. securities. The Fund seeks to achieve its goal (previously Evergreen VA by investing primarily in domestic below Strategic Income Fund - investment grade bonds and other debt securities Class 2) (which may be denominated in U.S. dollars or in non-U.S. currencies) of foreign governments and foreign corporations. Evergreen VA Fundamental Capital growth with the potential for current Evergreen Investment Management Large Cap Fund - Class 2 income. Invests primarily in common stocks of Company, LLC large U.S. companies whose market capitalizations measured at time of purchase fall within the market capitalization range of the companies tracked by the Russell 1000(R) Index. Evergreen VA Growth Long-term capital growth. The Fund seeks to Evergreen Investment Management Fund - Class 2 achieve its goal by investing at least 75% of Company, LLC its assets in common stocks of small- and medium-sized companies whose market capitalizations measured at time of purchase falls within the market capitalization range of the companies tracked by the Russell 2000(R) Growth Index. Evergreen VA High Income High level of current income, with capital Evergreen Investment Management Fund - Class 2 growth as secondary objective. The Fund seeks to Company, LLC achieve its goal by investing primarily in both low-rated and high-rated fixed-income securities, including debt securities, convertible securities, and preferred stocks that are consistent with its primary investment objective of high current income. Evergreen VA International Long-term capital growth, with modest income as Evergreen Investment Management Equity Fund - Class 2 a secondary objective. The Fund seeks to achieve Company, LLC its goal by investing primarily in equity securities issued by established, quality non-U.S. companies located in countries with developed markets and may purchase securities across all market capitalizations. The Fund may also invest in emerging markets. Evergreen VA Omega Long-term capital growth. Invests primarily in Evergreen Investment Management Fund - Class 2 common stocks and securities convertible into Company, LLC common stocks of U.S. companies across all market capitalizations. Evergreen VA Special Values Capital growth in the value of its shares. The Evergreen Investment Management Fund - Class 2 Fund seeks to achieve its goal by investing at Company, LLC least 80% of its assets in common stocks of small U.S. companies whose market capitalizations measured at the time of purchase fall within the market capitalization range of the companies tracked by the Russell 2000(R) Index.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Fidelity(R) VIP Long-term capital appreciation. Normally invests Fidelity Management & Research Company Contrafund(R) Portfolio primarily in common stocks. Invests in (FMR), investment manager; FMR U.K. and Service Class 2 securities of companies whose value it believes FMR Far East, sub- advisers. is not fully recognized by the public. Invests in either "growth" stocks or "value" stocks or both. The fund invests in domestic and foreign issuers. Fidelity(R) VIP Investment High level of current income consistent with the Fidelity Management & Research Company Grade Bond Portfolio Service preservation of capital. Normally invests at (FMR), investment manager; FMR U.K., Class 2 least 80% of assets in investment-grade debt FMR Far East, sub- advisers. securities (those of medium and high quality) of all types and repurchase agreements for those securities. Fidelity(R) VIP Mid Cap Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Normally invests at (FMR), investment manager; FMR U.K., least 80% of assets in securities of companies FMR Far East, sub- advisers. with medium market capitalizations. May invest in companies with smaller or larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both. Fidelity(R) VIP Overseas Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks of foreign (FMR), investment manager; FMR U.K., securities. Normally invests at least 80% of FMR Far East, Fidelity International assets in non-U.S. securities. Investment Advisors (FIIA) and FIIA U.K., sub-advisers. FTVIPT Franklin Income Maximize income while maintaining prospects for Franklin Advisers, Inc. Securities Fund - Class 2 capital appreciation. The Fund normally invests in both equity and debt securities. The Fund seeks income by investing in corporate, foreign, and U.S. Treasury bonds as well as stocks with dividend yields the manager believes are attractive. FTVIPT Templeton Global High current income consistent with preservation Franklin Advisers, Inc. Income Securities Fund - of capital, with capital appreciation as a Class 2 secondary consideration. The Fund normally invests mainly in debt securities of governments and their political subdivisions and agencies, supranational organizations and companies located anywhere in the world, including emerging markets.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Goldman Sachs VIT Mid Cap Long-term capital appreciation. The Fund Goldman Sachs Asset Management, L.P. Value Fund - Institutional invests, under normal circumstances, at least Shares 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase) ("Net Assets") in a diversified portfolio of equity investments in mid-cap issuers with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constituting the Russell Midcap(R) Value Index at the time of investment. If the market capitalization of a company held by the Fund moves outside this range, the Fund may, but is not required to, sell the securities. The capitalization range of the Russell Midcap(R) Value Index is currently between $1.1 billion and $21 billion. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its Net Assets in foreign securities, including securities of issuers in countries with emerging markets or economies ("emerging countries") and securities quoted in foreign currencies. The Fund may invest in the aggregate up to 20% of its Net Assets in companies with public stock market capitalizations outside the range of companies constituting the Russell Midcap(R) Value Index at the time of investment and in fixed-income securities, such as government, corporate and bank debt obligations. Oppenheimer Capital Capital appreciation by investing in securities OppenheimerFunds, Inc. Appreciation Fund/VA, of well- known, established companies. Service Shares Oppenheimer Global Long-term capital appreciation. Invests mainly OppenheimerFunds, Inc. Securities Fund/VA, Service in common stocks of U.S. and foreign issuers Shares that are "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. Oppenheimer Main Street Capital appreciation. Invests mainly in common OppenheimerFunds, Inc. Small Cap Fund/VA, Service stocks of small-capitalization U.S. companies Shares that the fund's investment manager believes have favorable business trends or prospects. Putnam VT Health Sciences Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Fund - Class IB Shares by investing mainly in common stocks of companies in the health sciences industries, with a focus on growth stocks. Under normal circumstances, the fund invests at least 80% of its net assets in securities of (a) companies that derive at least 50% of their assets, revenues or profits from the pharmaceutical, health care services, applied research and development and medical equipment and supplies industries, or (b) companies Putnam Management thinks have the potential for growth as a result of their particular products, technology, patents or other market advantages in the health sciences industries.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Putnam VT Small Cap Value Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Fund - Class IB Shares by investing mainly in common stocks of U.S. companies, with a focus on value stocks. Under normal circumstances, the fund invests at least 80% of its net assets in small companies of a size similar to those in the Russell 2000 Value Index. RVST RiverSource Partners Long-term growth of capital. Invests primarily RiverSource Investments, LLC, adviser; Variable Portfolio - Select in equity securities of mid cap companies as Systematic Financial Management, L.P. Value Fund well as companies with larger and smaller market and WEDGE Capital Management L.L.P., capitalizations. The Fund considers mid-cap sub- advisers. (previously RiverSource companies to be either those with a market Variable Portfolio - Select capitalization of up to $15 billion or those Value Fund) whose market capitalization falls within range of the Russell Midcap(R) Value Index. RVST RiverSource Partners Long-term capital appreciation. Under normal RiverSource Investments, LLC, adviser; Variable Portfolio - Small market conditions, at least 80% of the Fund's River Road Asset Management, LLC, Cap Value Fund net assets will be invested in small cap Donald Smith & Co., Inc., Franklin companies with market capitalization, at the Portfolio Associates LLC, Barrow, (previously RiverSource time of investment, of up to $2.5 billion or Hanley, Mewhinney & Strauss, Inc. and Variable Portfolio - Small that fall within the range of the Russell Denver Investment Advisors LLC, Cap Value Fund) 2000(R) Value Index. The Fund may invest up to subadvisers. 25% of its net assets in foreign investments. RVST RiverSource Variable Maximum current income consistent with liquidity RiverSource Investments, LLC Portfolio - Cash Management and stability of principal. Invests primarily in Fund money market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper. RVST RiverSource Variable High level of current income while attempting to RiverSource Investments, LLC Portfolio - Diversified Bond conserve the value of the investment for the Fund longest period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage- and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets. RVST RiverSource Variable High level of current income and, as a secondary RiverSource Investments, LLC Portfolio - Diversified goal, steady growth of capital. Under normal Equity Income Fund market conditions, the Fund invests at least 80% of its net assets in dividend- paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Total return that exceeds the rate of inflation RiverSource Investments, LLC Portfolio - Global Inflation over the long-term. Non-diversified mutual fund Protected Securities Fund that, under normal market conditions, invests at least 80% of its net assets in inflation-protected debt securities. These securities include inflation-indexed bonds of varying maturities issued by U.S. and foreign governments, their agencies or instrumentalities, and corporations. RVST RiverSource Variable Long-term capital growth. Invests primarily in RiverSource Investments, LLC Portfolio - Growth Fund common stocks and securities convertible into common stocks that appear to offer growth opportunities. These growth opportunities could result from new management, market developments, or technological superiority. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable High total return through current income and RiverSource Investments, LLC Portfolio - Income capital appreciation. Under normal market Opportunities Fund conditions, the Fund invests primarily in income-producing debt securities with an emphasis on the higher rated segment of the high-yield (junk bond) market. These income-producing debt securities include corporate debt securities as well as bank loans. The Fund will purchase only securities rated B or above, or unrated securities believed to be of the same quality. If a security falls below a B rating, the Fund may continue to hold the security. Up to 25% of the Fund may be in foreign investments. RVST RiverSource Variable Capital appreciation. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Equity conditions, the Fund invests at least 80% of its Fund net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Long-term growth of capital. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Value conditions, the Fund invests at least 80% of its Fund net assets in equity securities of companies with a market capitalization greater than $5 billion. The Fund may also invest in income-producing equity securities and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Growth of capital. Under normal market RiverSource Investments, LLC Portfolio - Mid Cap Growth conditions, the Fund invests at least 80% of its Fund net assets at the time of purchase in equity securities of mid capitalization companies. The investment manager defines mid-cap companies as those whose market capitalization (number of shares outstanding multiplied by the share price) falls within the range of the Russell Midcap(R) Growth Index. RVST RiverSource Variable Long-term capital appreciation. The Fund seeks RiverSource Investments, LLC Portfolio - S&P 500 Index to provide investment results that correspond to Fund the total return (the combination of appreciation and income) of large-capitalization stocks of U.S. companies. The Fund invests in common stocks included in the Standard & Poor's 500 Composite Stock Price Index (S&P 500). The S&P 500 is made up primarily of large-capitalization companies that represent a broad spectrum of the U.S. economy.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable High level of current income and safety of RiverSource Investments, LLC Portfolio - Short Duration principal consistent with investment in U.S. U.S. Government Fund government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. RVST Threadneedle Variable Long-term capital growth. The Fund's assets are RiverSource Investments, LLC, adviser; Portfolio - Emerging Markets primarily invested in equity securities of Threadneedle International Limited, an Fund emerging market companies. Under normal market indirect wholly-owned subsidiary of conditions, at least 80% of the Fund's net Ameriprise Financial, sub-adviser. (previously RiverSource assets will be invested in securities of Variable Portfolio - companies that are located in emerging market Emerging Markets Fund) countries, or that earn 50% or more of their total revenues from goods and services produced in emerging market countries or from sales made in emerging market countries. Van Kampen Life Investment Capital growth and income through investments in Van Kampen Asset Management Trust Comstock Portfolio, equity securities, including common stocks, Class II Shares preferred stocks and securities convertible into common and preferred stocks. The Portfolio emphasizes value style of investing seeking well-established, undervalued companies believed by the Portfolio's investment adviser to posses the potential for capital growth and income. Van Kampen UIF U.S. Real Above-average current income and long-term Morgan Stanley Investment Management Estate Portfolio, Class II capital appreciation by investing primarily in Inc., doing business as Van Kampen. Shares equity securities of companies in the U.S. real estate industry, including real estate investment trusts. Non-diversified Portfolio that invests primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts. Wanger U.S. Smaller Long-term growth of capital. Invests primarily Columbia Wanger Asset Management, L.P. Companies in stocks of small- and medium-size U.S. companies with market capitalizations of less Effective June 1, 2008, the than $5 billion at time of initial purchase. Fund will change its name to Wanger USA. Effective June 1, 2008: Long-term growth of capital. Under normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion.
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 21 THE GUARANTEE PERIOD ACCOUNTS (GPAS) The GPAs may not be available in some states. Currently, unless an asset allocation program is in effect, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The required minimum investment in each GPA is $1,000. These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the guarantee period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion (future rates). We will determine future rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable guarantee periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We will not apply an MVA to contract value you transfer or withdraw out of the GPAs within 30 days before the end of the guarantee period. During this 30 day window you may choose to start a new guarantee period of the same length, transfer the contract value to a GPA of another length, transfer the contract value to any of the subaccounts or withdraw the contract value (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your guarantee period, our current practice is to automatically transfer the contract value into the shortest GPA term offered in your state. We guarantee the contract value allocated to the GPAs, including interest credited, if you do not make any transfers or withdrawals from the GPAs prior to 30 days before the end of the Guarantee Period (30 day rule). At all other times, and unless one of the exceptions to the 30 day rule described below applies, we will apply an MVA if you withdraw or transfer contract value from a GPA including withdrawals under the Guarantor Withdrawal Benefit rider, or you elect an annuity payout plan while you have contract value invested in a GPA. We will refer to these transactions as "early withdrawals." The application of an MVA may result in either a gain or loss of principal. - -------------------------------------------------------------------------------- 22 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS The 30-day rule does not apply and no MVA will apply to: - - transfers from a one-year GPA occurring under an automated dollar-cost averaging program or Interest Sweep Strategy; - - automatic rebalancing under any Portfolio Navigator model portfolio we offer which contains one or more GPAs. However, an MVA may apply if you transfer to a new Portfolio Navigator asset allocation model portfolio; - - amounts applied to an annuity payout plan while a Portfolio Navigator model portfolio containing one or more GPAs is in effect; - - reallocation of your contract value according to an updated Portfolio Navigator model portfolio; - - amounts withdrawn for fees and charges; or - - amounts we pay as death claims. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your guarantee period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the guarantee period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A. BUYING YOUR CONTRACT New contracts are not currently being offered. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. Contract Option L has a four-year withdrawal charge schedule. Contract Option C eliminates the withdrawal charge schedule in exchange for a higher mortality and expense risk fee. Both contracts have the same underlying funds. As the owner, you have all rights and may receive all benefits under the contract. You can own a qualified or nonqualified annuity. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 85 or younger. (The age limit may be younger for qualified annuities in some states.) When you applied, you selected (if available in your state): - - contract Option L or Option C; - - GPAs and/or subaccounts in which you want to invest; - - how you want to make purchase payments; - - a beneficiary; - - the optional Portfolio Navigator asset allocation program(1); and - - one of the following Death Benefits: - ROP Death Benefit - MAV Death Benefit - 5% Accumulation Death Benefit(2) - Enhanced Death Benefit(2) In addition, you may also have selected (if available in your state): ANY ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM): - - Accumulation Protector Benefit rider - - Guarantor Withdrawal Benefit rider - - Income Assurer Benefit - MAV rider - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 23 - - Income Assurer Benefit - 5% Accumulation Benefit Base rider - - Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS: - - Benefit Protector Death Benefit rider(3) - - Benefit Protector Plus Death Benefit rider(3) (1) There is no additional charge for this feature (2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not available with Benefit Protector and Benefit Protector Plus Death Benefit riders. (3) Not available with the 5% Accumulation Death Benefit or Enhanced Death Benefit riders. The contract provides for allocation of purchase payments to the GPAs and/or to the subaccounts of the variable account in even 1% increments subject to the $1,000 required minimum investment for the GPAs. We apply your purchase payments to the GPAs and subaccounts you select. If we receive your additional purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our corporate office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a Systematic Investment Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts begin on the retirement date. When we processed your application, we established the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. Your selected date can align with your actual retirement from a job, or it can be a different date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75, or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE RETIREMENT DATE GENERALLY MUST BE: - - for IRAs by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 85th birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM ADDITIONAL PURCHASE PAYMENTS $50 for SIPs $100 for all other payment types - -------------------------------------------------------------------------------- 24 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS MAXIMUM TOTAL PURCHASE PAYMENTS*: $1,000,000 * This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the tax-deferred retirement plan's or the Code's limits on annual contributions also apply. We also reserve the right to restrict cumulative additional purchase payments for contracts with the Guarantor Withdrawal Benefit rider. Additional purchase payments are restricted during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT: If mandated by applicable law, including, but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values or to satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers, withdrawals or death benefits until instructions are received from the appropriate governmental authority or a court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary. We prorate this charge among the GPAs and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will waive this charge when your contract value is $50,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct the charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs. We cannot increase these fees. The contract (either Option L or Option C) and the death benefit guarantee you select determines the mortality and expense risk fee you pay:
CONTRACT CONTRACT OPTION L OPTION C ROP Death Benefit 1.55% 1.65% MAV Death Benefit 1.75 1.85 5% Accumulation Death Benefit 1.90 2.00 Enhanced Death Benefit 1.95 2.05
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 25 expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the annuity payout period even if the annuity payout plan does not involve a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L, discussed below, will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Contract Option C has no withdrawal charge schedule but carries a higher mortality and expense risk fee than contract Option L. If you select contract Option L and you withdraw all or part of your contract value before annuity payouts begin, we may deduct a withdrawal charge. As described below, a withdrawal charge applies to each purchase payment you make. The withdrawal schedule charge lasts for four years (See "Expense Summary"). You may withdraw an amount during any contract year without a withdrawal charge. We call this amount the Total Free Amount (TFA). The TFA varies depending on whether your contract Option L includes the Guarantor Withdrawal Benefit rider: CONTRACT OPTION L WITHOUT THE GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greater of: - - 10% of the contract value on the prior contract anniversary(1); or - - current contract earnings. CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the Remaining Benefit Payment. (1) We consider your initial purchase payment to be the prior contract anniversary's contract value during the first contract year. Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as described below. A withdrawal charge will apply if the amount you withdraw includes any of your prior purchase payments that are still within their withdrawal charge schedule. To determine whether your withdrawal includes any of your prior purchase payments that are still within their withdrawal charge schedule, we withdraw amounts from your contract in the following order: 1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA. 2. We withdraw purchase payments not previously withdrawn, in the order you made them: the oldest purchase payment first, the next purchase payment second, etc. until all purchase payments have been withdrawn. By applying this "first-in, first-out" rule, we do not assess a withdrawal charge on purchase payments that we received prior to the number of years stated in the withdrawal charge schedule you select when you purchase the contract. We only assess a withdrawal charge on purchase payments that are still within the withdrawal charge schedule you selected. EXAMPLE: Each time you make a purchase payment under the contract, a withdrawal charge schedule attaches to that purchase payment. The withdrawal charge percentage for each purchase payment declines according to the withdrawal charge schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 4-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY" ABOVE.) For example, if you select contract Option L, during the first two years after a purchase payment is made, the withdrawal charge percentage attached to that payment is 8%. The withdrawal charge percentage for that payment during the fourth year after it is made is 6%. At the beginning of the fifth year after that purchase payment is made, and thereafter, there is no longer a withdrawal charge as to that payment. We determine your withdrawal charge by multiplying each of your payments withdrawn by the applicable withdrawal charge percentage (See "Expense Summary"), and then adding the total withdrawal charges. - -------------------------------------------------------------------------------- 26 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. A partial withdrawal that includes contract value taken from the Guarantee Period Accounts may also be subject to a Market Value Adjustment (See "Guarantee Period Accounts -- Market Value Adjustment"). We pay you the amount you request. Note that the withdrawal charge is assessed against the original amount of your purchase payments that are subject to a withdrawal charge, even if your contract has lost value. This means that purchase payments withdrawn may be greater than the amount of contract value you withdraw. For an example, see Appendix C. WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION L We do not assess withdrawal charges for: - - withdrawals of any contract earnings; - - withdrawals of amounts totaling up to 10% of the contract value on the prior contract anniversary to the extent it exceeds contract earnings; - - if you elected the Guarantor Withdrawal Benefit rider, your contract's Remaining Benefit Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required amount calculated under your specific contract currently in force; and - - contracts settled using an annuity payout plan (EXCEPTION: As described below, if you select annuity payout Plan E, and choose later to withdraw the value of your remaining annuity payments, we will assess a withdrawal charge. This exception also applies to contract Option C.) - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal under this annuity payout plan we impose a withdrawal charge. Whether you have contract Option L or contract Option C. This charge will vary based on your contract option and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in a table in the "Expense Summary." (See "The Annuity Payout Period -- Annuity Payout Plans.") POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 27 OPTIONAL LIVING BENEFIT CHARGES ACCUMULATION PROTECTOR BENEFIT RIDER FEE We charge an annual fee of 0.55% of the greater of your contract value or the minimum contract accumulation value on your contract anniversary for this optional benefit only if you select it. We deduct the fee from the contract value on the contract anniversary. We prorate this fee among the GPAs and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Accumulation Protector Benefit rider, you may not cancel it and the fee will continue to be deducted until the end of the waiting period. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently, the Accumulation Protector Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Accumulation Protector Benefit rider charge will not exceed a maximum of 1.75%. We will not change the Accumulation Protector Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge; (b) you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (c) you change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. GUARANTOR WITHDRAWAL BENEFIT RIDER FEE THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B (SEE "OPTIONAL BENEFITS"). We charge an annual fee of 0.55% of contract value for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Guarantor Withdrawal Benefit, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payments begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the Remaining Benefit Amount (RBA) goes to zero but the contract value has not been depleted, you will continue to be charged. Currently the Guarantor Withdrawal Benefit rider charge does not vary with the Portfolio Navigator model selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each asset allocation model. The Guarantor Withdrawal Benefit rider charge will not exceed a maximum charge of 1.50%. We will not change the Guarantor Withdrawal Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to step up before the third contract anniversary, the Guarantor Withdrawal Benefit rider charge will not change until the third contract anniversary. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the spousal continuation step up under Rider A after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up or change your Portfolio Navigator model after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model. On the next contract anniversary, we - -------------------------------------------------------------------------------- 28 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. INCOME ASSURER BENEFIT RIDER FEE We charge an annual fee for this optional feature only if you select it. We determine the fee by multiplying the guaranteed income benefit base by the charge of the Income Assurer Benefit rider you select. There are three Income Assurer Benefit rider options available under your contract (see "Optional Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed income benefit base calculation. The charge for each Income Assurer Benefit rider is as follows:
MAXIMUM CURRENT Income Assurer Benefit - MAV 1.50% 0.30%(1) Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1) Income Assurer Benefit - Greater of MAV or 5% Accumulation 2.00 0.65(1) Benefit Base
(1) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. We deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate this fee among the GPAs and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently the Income Assurer Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate charge for each model portfolio but not to exceed the maximum charges shown above. We cannot change the Income Assurer Benefit charge after the rider effective date, unless you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge and/or charge a separate charge for each model portfolio. If you choose to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge, you will pay the charge that is in effect on the valuation date we receive your written request to change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. For an example of how each Income Assurer Benefit fee is calculated, see Appendix B. OPTIONAL DEATH BENEFIT CHARGES BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the GPAs and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the GPAs and the subaccounts in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 29 VALUING YOUR INVESTMENT We value your accounts as follows: GPAS We value the amounts you allocated to the GPAs directly in dollars. The value of a GPA equals: - - the sum of your purchase payments and transfer amounts allocated to the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after any applicable MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: To calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and - - the deduction of a prorated portion of: - - the contract administrative charge; and - -------------------------------------------------------------------------------- 30 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS - - the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. Accumulation unit values will fluctuate due to: - - changes in funds net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year GPA to one or more subaccounts. Only the one-year GPA is available for automated transfers. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from the one-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn on the one-year GPA will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low ... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. Automated dollar-cost averaging is not available when a Portfolio Navigator model portfolio is in effect (see "Asset Allocation Program" below). ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 31 of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. Different rules apply to asset rebalancing under a Portfolio Navigator model portfolio (see "Asset Allocation Program" and "Portfolio Navigator Asset Allocation Program" below). ASSET ALLOCATION PROGRAM For contracts purchased before May 1, 2006, we offered an asset allocation program called Portfolio Navigator. You could elect to participate in the asset allocation program, and there is no additional charge. If you purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider, you are required to participate in the PN program under the terms of the rider. This asset allocation program allows you to allocate your contract value to a model portfolio that consists of subaccounts and may include certain GPAs (if available under the asset allocation program), which represent various asset classes. By spreading your contract value among these various asset classes, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will occur. Asset allocation does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. If you choose or are required to participate in the asset allocation program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool that can help you determine which model portfolio is suited to your needs based on factors such as your investment goals, your tolerance for risk, and how long you intend to invest. Currently, there are five model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. You are allowed to request a change to another model portfolio twice per contract year. Each model portfolio specifies allocation percentages to each of the subaccounts and any GPAs that make up that model portfolio. By participating in the asset allocation program, you authorize us to invest your contract value in the subaccounts and any GPAs (if included) according to the allocation percentages stated for the specific model portfolio you have selected. You also authorize us to automatically rebalance your contract value quarterly beginning three months after the effective date of your contract in order to maintain alignment with the allocation percentages specified in the model portfolio. Special rules will apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio (see "Guarantee Period Accounts -- Market Value Adjustment"). Under the asset allocation program, the subaccounts and any GPAs (if included) that make up the model portfolio you selected and the allocation percentages to those subaccounts, any GPAs (if included) will not change unless we adjust the composition of the model portfolio to reflect the liquidation, substitution or merger of an underlying fund, a change of investment objective by an underlying fund or when an underlying fund stops selling its shares to the variable account. We reserve the right to change the terms and conditions of the asset allocation program upon written notice to you. If permitted under applicable securities law, we reserve the right to: - - reallocate your current model portfolio to an updated version of your current model portfolio; or - - substitute a fund of funds for your current model portfolio. We also reserve the right to discontinue the asset allocation program. We will give you 30 days' written notice of any such change. If you elected to participate in the asset allocation program, you may discontinue your participation in the program at any time by giving us written notice. Upon cancellation, automated rebalancing associated with the asset allocation program will end. You can elect to participate in the asset allocation program again at any time. - -------------------------------------------------------------------------------- 32 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS REQUIRED USE OF ASSET ALLOCATION PROGRAM WITH ACCUMULATION PROTECTOR BENEFIT RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER If you are required to participate in the asset allocation program because you purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider, you may not discontinue your participation in the asset allocation program unless permitted by the terms of the rider as summarized below: - - ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation Protector Benefit rider. As long as the Accumulation Protector Benefit rider is in effect, your contract value must be invested in one of the model portfolios. The Accumulation Protector Benefit rider automatically ends at the end of the waiting period as does the requirement that you participate in the asset allocation program. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS UNTIL THE END OF THE WAITING PERIOD. - - GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit rider requires that your contract value be invested in one of the model portfolios for the life of the contract, and you cannot terminate the Guarantor Withdrawal Benefit rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS FOR THE LIFE OF THE CONTRACT. - - INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit rider during a 30-day period after the first rider anniversary and at any time after the expiration of the waiting period. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. As long as the Income Assurer Benefit rider is in effect, your contract value must be invested in one of the model portfolios. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS DURING THE PERIOD OF TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT. PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM The Portfolio Navigator Asset Allocation Program (PN program) described in this section replaces the previously offered asset allocation program described above for contract owners who choose to move from the previously offered asset allocation program to the PN program or who add the PN program on or after May 1, 2006. The PN program is available for nonqualified annuities and for qualified annuities. The PN program allows you to allocate your contract value to a PN program model portfolio that consists of subaccounts, each of which invests in an underlying fund with a particular investment objective (underlying fund), and may include certain GPAs (if available under the PN program) that represent various asset classes (allocation options). The PN program also allows you to periodically update your model portfolio or transfer to a new model portfolio. You are required to participate in the PN program if your contract purchased after May 1, 2006 includes an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider. If your contract does not include one of these riders, you also may elect to participate in the PN program at no additional charge. You should review any PN program information, including the terms of the PN program, carefully. Your investment professional can provide you with additional information and can answer questions you may have on the PN program. SERVICE PROVIDERS TO THE PN PROGRAM. RiverSource Investments, an affiliate of ours, serves as non-discretionary investment adviser for the PN program solely in connection with the development of the model portfolios and periodic updates of the model portfolios. In this regard, RiverSource Investments enters into an investment advisory agreement with each contract owner participating in the PN program. In its role as investment adviser to the PN program, RiverSource Investments relies upon the recommendations of a third party service provider. In developing and updating the model portfolios, RiverSource Investments reviews the recommendations, and the third party's rationale for the recommendations, with the third party service provider. RiverSource Investments also conducts periodic due diligence and provides ongoing oversight with respect to the process utilized by the third party service provider. For more information on RiverSource Investment's role as investment adviser for the PN program, please see the Portfolio Navigator Asset Allocation Program Investment Adviser Disclosure Document, which is based on Part II of RiverSource Investment's Form ADV, the SEC investment adviser registration form. The Disclosure Document is delivered to contract owners at or before the time they enroll in the PN program. Currently, the PN program model portfolios are designed and periodically updated for RiverSource Investments by Morningstar Associates, LLC, a registered investment adviser and wholly owned subsidiary of Morningstar, Inc. RiverSource Investments may replace Morningstar Associates and may hire additional firms to assist with the development and periodic updates of the model portfolios in the future. Also, RiverSource Investments may elect to develop and periodically update the model portfolios without the assistance of a third party service provider. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 33 The criteria used in developing and updating the model portfolios do not guarantee or predict future performance. Neither Morningstar Associates nor RiverSource Investments, in connection with their respective roles, provides any individualized investment advice to contract owners regarding the application of a particular model portfolio to his or her circumstances. Contract owners are solely responsible for determining whether any model portfolio is appropriate. We identify to Morningstar Associates the universe of allocation options that can be included in the model portfolios and, in limited circumstances, underlying funds of such allocation options (the universe of allocation options). The universe of allocation options may not include all allocation options available under your contract. We may modify from time to time such universe of allocation options. These modifications may reflect instructions from, or respond to actions taken by, any party making an allocation option available to us. For example, we may modify the universe of allocation options in response to the liquidation, merger or other closure of a fund. Once we identify this universe of allocation options to Morningstar Associates, neither RiverSource Investments, nor any of its affiliates, including us, dictates to Morningstar Associates the number of allocation options that should be included in a model portfolio, the percentage that any allocation option represents in a model portfolio, or whether a particular allocation option may be included in a model portfolio. However, as described below under "Potential conflict of interest", there are certain conflicts of interest associated with RiverSource Investments and its affiliates' influence over the development and updating of the model portfolios. POTENTIAL CONFLICT OF INTEREST. In identifying the universe of allocation options, we and our affiliates, including RiverSource Investments, are subject to competing interests that may influence the allocation options we propose. These competing interests involve compensation that RiverSource Investments or its affiliates may receive as the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options as well as compensation we or an affiliate of ours may receive for providing services in connection with the RiverSource Variable Series Trust funds and such allocation options or their underlying funds. These competing interests also involve compensation we or an affiliate of ours may receive if certain funds that RiverSource Investments does not advise are included in model portfolios. The inclusion of funds that pay compensation to RiverSource Investments or an affiliate may have a positive or negative impact on performance. As an affiliate of RiverSource Investments, the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options, we may have an incentive to identify the RiverSource Variable Series Trust funds and such allocation options for consideration as part of a model portfolio over unaffiliated funds. In addition, RiverSource Investments, in its capacity as investment adviser to the RiverSource Variable Series Trust funds, monitors the performance of the RiverSource Variable Series Trust funds. In this role, RiverSource Investments may, from time to time, recommend certain changes to the board of directors of the RiverSource Variable Series Trust funds. These changes may include but not be limited to a change in portfolio management or fund strategy or the closure or merger of a RiverSource Variable Series Trust fund. RiverSource Investments also may believe that certain RiverSource Variable Series Trust funds may benefit from additional assets or could be harmed by redemptions. All of these factors may impact RiverSource Investment's view regarding the composition and allocation of a model portfolio. RiverSource Investments' role as investment adviser to the PN program in connection with the development and updating of the model portfolios, and our identification of the universe of allocation options to Morningstar Associates for consideration, may influence the allocation of assets to or away from allocation options that are affiliated with, or managed or advised by RiverSource Investments or its affiliates. RiverSource Investments, we or another affiliate of ours may receive higher compensation from certain unaffiliated funds that RiverSource Investments does not advise or manage. (See "Expense Summary -- Annual Operating Expenses of the Funds" and "The Variable Account and the Funds -- The Funds.") Therefore, we may have an incentive to identify these unaffiliated funds to Morningstar Associates for inclusion in the model portfolios. In addition, we or an affiliate of ours may receive higher compensation from certain GPAs than from other allocation options. We therefore may have an incentive to identify these allocation options to Morningstar Associates for inclusion in the model portfolios. Some officers and employees of RiverSource Investments are also officers or employees of us or our affiliates which may be involved in, and/or benefit from, your participation in the PN program. These officers and employees may have an incentive to make recommendations, or take actions, that benefit one or more of the entities they represent, rather than participants in the PN program. PARTICIPATING IN THE PN PROGRAM. If you choose or are required to participate in the PN program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool to help define your investing style which is based on factors such as your investment goals, your tolerance for risk and how long you intend to invest. Your responses to the investor questionnaire can help determine which model portfolio most closely matches your investing style. While the scoring of the investor questionnaire is objective, there is no guarantee that your responses to the investor questionnaire accurately reflect your tolerance for risk. Similarly, there is no guarantee that the asset mix reflected in the model portfolio you select after completing the investor questionnaire is appropriate to your ability to withstand investment risk. - -------------------------------------------------------------------------------- 34 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS Neither RiverSource Life nor RiverSource Investments is responsible for your decision to participate in the PN program, your selection of a specific model portfolio or your decision to change to an updated or different model portfolio. Currently, there are five PN model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. Each model portfolio specifies allocation percentages to each of the subaccounts or any GPAs that make up that model portfolio. By participating in the PN program, you instruct us to invest your contract value in the subaccounts, any GPAs (if included) according to the allocation percentages stated for the specific model portfolio you have selected. By participating in the PN program, you also instruct us to automatically rebalance your contract value quarterly in order to maintain alignment with these allocation percentages. Special rules apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); - - no MVA will apply if you reallocate your contract value according to an updated model portfolio; and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio. (See "Guarantee Period Accounts -- Market Value Adjustment.") Each model portfolio is evaluated periodically by Morningstar Associates, which may then provide updated recommendations to RiverSource Investments. As a result, the model portfolios may be updated from time to time (typically annually) with new allocation options and allocation percentages. When these reassessments are completed and changes to the model portfolios occur, you will receive a reassessment letter. This reassessment letter will notify you that the model portfolio has been reassessed and that, unless you instruct us not to do so, your contract value is scheduled to be reallocated according to the updated model portfolio. The reassessment letter will specify the scheduled reallocation date and will be sent to you at least 30 days prior to this date. Based on the written authorization you provided when you enrolled in the PN program, if you do not notify us otherwise, you will be deemed to have instructed us to reallocate your contract value according to the updated model portfolio. If you do not want your contract value to be reallocated according to the updated model portfolio, you must provide written or other authorized notification as specified in the reassessment letter. In addition to this periodic reassessment and reallocation of the model portfolios, you may also request a change to your model portfolio up to twice per contract year by written request on an authorized form or by another method agreed to by us. Such changes include changing to a different model portfolio at any time or requesting to reallocate according to the updated version of your existing model portfolio other than according to the reassessment process described above. If your contract includes an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider and you make such a change (other than a scheduled periodic reallocation), we may charge you a higher fee for your optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider. We reserve the right to change the terms and conditions of the PN program upon written notice to you. This includes but is not limited to the right to: - - limit your choice of models based on the amount of your initial purchase payment we accept or when you take a withdrawal; - - cancel required participation in the program after 30 days written notice; - - substitute a fund of funds for your current model portfolio if permitted under applicable securities law; and - - discontinue the PN program. We will give you 30 days' written notice of any such change. In addition, RiverSource Investments has the right to terminate its investment advisory agreement with you upon 30 days' written notice. If RiverSource Investments terminates its investment advisory agreement with you and other participants in the PN program, we would either have to find a replacement investment adviser or terminate the PN program unless otherwise permitted by applicable law, regulations or positions of the SEC staff. The investment advisory agreement will terminate automatically in the event that we are notified of a death which results in a death benefit becoming payable under the contract. In this case, your investment advisory relationship with RiverSource Investments and the notification of future reassessments will cease, but prior instructions provided by you in connection with your participation in the PN program will continue (e.g., rebalancing instructions provided to insurer). RISKS. Asset allocation through the PN program does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. By spreading your contract value among various allocation options under the PN program, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will happen. Although each model portfolio is intended to optimize returns given various levels of risk tolerance, a model portfolio may not perform as intended. A model portfolio, the allocation options and market performance may differ in the future from historical performance and from the assumptions upon which the model portfolio is based, which could cause the model portfolio to be ineffective or less effective in reducing volatility. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 35 Investment performance of your contract value could be better or worse by participating in the PN program than if you had not participated. A model portfolio may perform better or worse than any single fund or allocation option or any other combination of funds or allocation options. The performance of a model portfolio depends on the performance of the component funds. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of the model portfolios can cause their component funds to incur transactional expenses to raise cash for money flowing out of the funds or to buy securities with money flowing into the funds. Moreover, a large outflow of money from the funds may increase the expenses attributable to the assets remaining in the funds. These expenses can adversely affect the performance of the relevant funds and of the model portfolios. In addition, when a particular fund needs to buy or sell securities due to quarterly rebalancing or periodic updating of a model portfolio, it may hold a large cash position. A large cash position could detract from the achievement of the fund's investment objective in a period of rising market prices; conversely, a large cash position would reduce the fund's magnitude of loss in the event of falling market prices and provide the fund with liquidity to make additional investments or to meet redemptions. (See also the description of competing interests in the section titled "Service Providers to the PN Program" above.) For additional information regarding the risks of investing in a particular fund, see that fund's prospectus. PN PROGRAM UNDER THE ACCUMULATION PROTECTOR BENEFIT RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER If you purchase the optional Accumulation Protector Benefit rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider, you are required to participate in the PN program under the terms of each rider. - - ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation Protector Benefit rider. As long as the Accumulation Protector Benefit rider is in effect, your contract value must be invested in one of the model portfolios. The Accumulation Protector Benefit rider automatically ends at the end of the waiting period as does the requirement that you participate in the PN program. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD. - - GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit rider requires that your contract value be invested in one of the model portfolios for the life of the contract, and you cannot terminate the Guarantor Withdrawal Benefit rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. - - INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit rider during a 30-day period after the first rider anniversary and at any time after the expiration of the waiting period. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. As long as the Income Assurer Benefit rider is in effect, your contract value must be invested in one of the model portfolios. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) DURING THE PERIOD OF TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT. OPTIONAL PN PROGRAM If you do not select the optional Accumulation Protector Benefit rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider with your contract, you may elect to participate in the PN program. You may elect the PN program at any time. You may cancel your participation in the PN program at any time by giving us written notice or by any other method authorized by us. Upon cancellation, automated rebalancing associated with the PN program will end. You may ask us in writing to allocate the variable subaccount portion of your policy value according to the percentage that you then choose (see "Asset Rebalancing"). You can elect to participate in the PN program again at any time. You will also cancel the PN program if you initiate transfers other than transfers to one of the current model portfolios. Partial withdrawals do not cancel the PN program. Your participation in the PN program will terminate on the date you make a full withdrawal from your contract, on your retirement date or when your contract terminates for any reason. - -------------------------------------------------------------------------------- 36 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS TRANSFERRING AMONG ACCOUNTS The transfer rights discussed in this section do not apply while a Portfolio Navigator model portfolio is in effect. You may transfer contract value from any one subaccount or GPA to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs. The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs at any time. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the Guarantee Period will receive an MVA, which may result in a gain or loss of contract value, unless an exception applies (see "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)"). - - If you select a variable annuity payout, once annuity payouts begin, you may make transfers once per contract year among the subaccounts and we reserve the right to limit the number of subaccounts in which you may invest. - - Once annuity payouts begin, you may not make any transfers to or from the GPAs but you may make transfers once per contract year among the subaccounts. During the annuity payout period, we reserve the right to limit the number of subaccounts in which you may invest. When annuity payments begin, you must transfer all contract value out of your GPAs. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 37 IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under our automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund, may require us to reject your transfer request. For example, while we disregard transfers permitted under any asset allocation, dollar-cost averaging and asset rebalancing programs that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - -------------------------------------------------------------------------------- 38 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our corporate office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers or partial withdrawals among your subaccounts or GPAs. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - If a Portfolio Navigator Model Portfolio is in effect, you are not allowed to set up automated transfers (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly $250 quarterly, semiannually or annually 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 39 Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our corporate office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our corporate office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay administrative charges, withdrawal charges, or any applicable optional rider charges (see "Charges") and IRS taxes and penalties (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.") Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced. If you have elected the Guarantor Withdrawal Benefit rider and your partial withdrawals in any contract year exceed the permitted withdrawal amount under the terms of the Guarantor Withdrawal Benefit rider, your benefits under the rider may be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will automatically withdraw from all your subaccounts and GPAs in the same proportion as your value in each account correlates to your total contract value, unless requested otherwise. After executing a partial withdrawal, the value in each subaccount and GPA must be either zero or at least $50. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - -------------------------------------------------------------------------------- 40 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have an Income Assurer Benefit(SM) and/or Benefit Protector(SM) Plus, the riders will terminate upon transfer of ownership of the annuity contract. The Accumulation Protector Benefit(SM) and the Guarantor(SM) Withdrawal Benefit riders will continue upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector(SM) is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are four death benefit options under your contract. You must select one of the following death benefits: - - Return of Purchase Payment (ROP) Death Benefit; - - Maximum Anniversary Value (MAV) Death Benefit - - 5% Accumulation Death Benefit - - Enhanced Death Benefit. If it is available in your state and if both you and the annuitant are 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP Death Benefit will apply. Once you elect a death benefit, you cannot change it. We show the death benefit that applies in your contract. The death benefit you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under each option, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you chose when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 41 HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS: ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV = PW X DB DEATH BENEFITS) ------------ CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA. DB = the death benefit on the date of (but prior to) the partial withdrawal CV = contract value on the date of (but prior to) the partial withdrawal MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus adjusted partial withdrawals. Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by adjusted partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. 5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts at issue increased by 5%; - - plus any subsequent amounts allocated to the subaccounts; - - minus adjusted transfers and partial withdrawals from the subaccounts. Thereafter, we continue to add subsequent amounts allocated to the subaccounts and subtract adjusted transfers and partial withdrawals from the subaccounts. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. 5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED = PWT X VAF PARTIAL WITHDRAWALS --------------- SV
PWT = the amount transferred from the subaccounts or the amount of the partial withdrawal (including any applicable withdrawal charge or MVA) from the subaccounts. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts on the date of (but prior to) the transfer of partial withdrawal.
The amount of purchase payment withdrawn from or transferred from any subaccount or fixed account (if applicable) or GPA account is calculated as (a) times (b) where: (a) is the amount of purchase payment in the account or subaccount on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount transferred or withdrawn from the account or subaccount to the value in the account or subaccount on the date of (but prior to) the current withdrawal or transfer. For contracts issued in New Jersey, the cap on the variable account floor is 200% of the sum of the purchase payments allocated to the subaccounts that have not been withdrawn or transferred out of the subaccounts. NOTE: The 5% variable account floor is calculated differently and is not the same value as the Income Assurer Benefit 5% variable account floor. RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT The ROP Death Benefit is the basic death benefit to the contract that will pay your beneficiaries no less than your purchase payments, adjusted for withdrawals. If you or the annuitant die before annuity payouts begin and while this contract is in force, the death benefit will be the greater of these two values: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. The ROP Death Benefit will apply unless you select one of the alternative death benefits described immediately below. IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR REGISTERED REPRESENTATIVE WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION. - -------------------------------------------------------------------------------- 42 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT The MAV Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the MAV on the date of death. 5% ACCUMULATION DEATH BENEFIT The 5% Accumulation Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the 5% variable account floor. ENHANCED DEATH BENEFIT The Enhanced Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the MAV on the date of death; or 4. the 5% variable account floor. For an example of how each death benefit is calculated, see Appendix D. IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. We will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The Accumulation Protector Benefit and the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits"). If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the IRS; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 43 There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The Accumulation Protector Benefit and the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits"). - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS ACCUMULATION PROTECTOR BENEFIT RIDER The Accumulation Protector Benefit rider is an optional benefit that you may select for an additional charge. The Accumulation Protector Benefit rider may provide a guaranteed contract value at the end of the specified waiting period on the benefit date, but not until then, under the following circumstances:
ON THE BENEFIT DATE, IF: THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER BENEFIT IS: The Minimum Contract Accumulation Value The contract value is increased on the benefit date to (defined below) as determined under the equal the Minimum Contract Accumulation Value as Accumulation Protector Benefit rider is determined under the Accumulation Protector Benefit rider greater than your contract value, on the benefit date. The contract value is equal to or greater than Zero; in this case, the Accumulation Protector Benefit the Minimum Contract Accumulation Value as rider ends without value and no benefit is payable. determined under the Accumulation Protector Benefit rider,
If the contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time during the waiting period and before the benefit date, the contract and all riders, including the Accumulation Protector Benefit rider will terminate without value and no benefits will be paid. EXCEPTION: If you are still living on the benefit date, we will pay you an amount equal to the Minimum Contract Accumulation Value as determined under the Accumulation Protector Benefit rider on the valuation date your contract value reached zero. If this rider is available in your state, you may elect the Accumulation Protector Benefit rider at the time you purchase your contract and the rider effective date will be the contract issue date. The Accumulation Protector Benefit rider may not be terminated once you have elected it, except as described in the "Terminating the Rider" section below. An additional charge for the Accumulation Protector Benefit rider will be assessed annually during the waiting period. The rider ends when the waiting period expires and no further benefit will be payable and no further fees for the rider will be deducted. The Accumulation Protector Benefit rider may not be purchased with the optional Guarantor Withdrawal Benefit rider or any Income Assurer Benefit rider. When the rider ends, you may be able to purchase another optional rider we then offer by written request received within 30 days of that contract anniversary date. The Accumulation Protector Benefit may not be available in all states. You should consider whether a Accumulation Protector Benefit rider is appropriate for you because: - - you must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts and GPAs that are available under the contract to contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Asset Allocation Program" and "Portfolio Navigator Asset Allocation Program"); - - you may not make additional purchase payments to your contract during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider; - - if you purchase this annuity as a qualified annuity, for example, an IRA, you may need to take partial withdrawals from your contract to satisfy the minimum distribution requirements of the Code (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Partial withdrawals, including those you take to satisfy RMDs, will reduce any potential benefit - -------------------------------------------------------------------------------- 44 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS that the Accumulation Protector Benefit rider provides. You should consult your tax advisor if you have any questions about the use of this rider in your tax situation; - - if you think you may withdraw all of your contract value before you have held your contract with this benefit rider attached for 10 years, or you are considering selecting an annuity payout option within 10 years of the effective date of your contract, you should consider whether this optional benefit is right for you. You must hold the contract a minimum of 10 years from the effective date of the Accumulation Protector Benefit rider, which is the length of the waiting period under the Accumulation Protector Benefit rider, in order to receive the benefit, if any, provided by the Accumulation Protector Benefit rider. In some cases, as described below, you may need to hold the contract longer than 10 years in order to qualify for any benefit the Accumulation Protector Benefit rider may provide; - - the 10 year waiting period under the Accumulation Protector Benefit rider will restart if you exercise the Elective Step Up Option (described below) or your surviving spouse exercises the spousal continuation Elective Step Up (described below); and - - the 10 year waiting period under the Accumulation Protector Benefit rider may be restarted if you elect to change model portfolios to one that causes the Accumulation Protector Benefit rider charge to increase (see "Charges"). Be sure to discuss with your investment professional whether a Accumulation Protector Benefit rider is appropriate for your situation. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE ACCUMULATION PROTECTOR BENEFIT: BENEFIT DATE: This is the first valuation date immediately following the expiration of the waiting period. MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the Accumulation Protector Benefit rider. The contract value will be increased to equal the MCAV on the benefit date if the contract value on the benefit date is less than the MCAV on the benefit date. ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial withdrawal from the contract is equal to the amount derived from multiplying (a) and (b) where: (a) is 1 minus the ratio of the contract value on the date of (but immediately after) the partial withdrawal to the contract value on the date of (but immediately prior to) the partial withdrawal; and (b) is the MCAV on the date of (but immediately prior to) the partial withdrawal. WAITING PERIOD: The waiting period for the rider is 10 years. We reserve the right to restart the waiting period on the latest contract anniversary if you change your asset allocation model after we have exercised our rights to increase the rider charge for new contract owners, or if you change your asset allocation model after we have exercised our rights to charge a separate charge for each model. Your initial MCAV is equal to your initial purchase payment. It is increased by the amount of any subsequent purchase payments received within the first 180 days that the rider is effective. It is reduced by adjustments for any partial withdrawals made during the waiting period. AUTOMATIC STEP UP On each contract anniversary after the effective date of the rider, the MCAV will be set to the greater of: 1. 80% of the contract value on the contract anniversary; or 2. the MCAV immediately prior to the automatic step up. The automatic step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The automatic step up of the MCAV does not restart the waiting period or increase the charge (although the total fee for the rider may increase). ELECTIVE STEP UP OPTION Within thirty days following each contract anniversary after the rider effective date, but prior to the benefit date, you may notify us in writing that you wish to exercise the annual elective step up option. You may exercise this elective step up option only once per contract year during this 30 day period. If your contract value on the valuation date we receive your written request to step up is greater than the MCAV on that date, your MCAV will increase to 100% of that contract value. When you exercise the annual elective step up, we may be charging more for the Accumulation Protector Benefit rider at that time for new contract owners. If your MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, you will pay the charge that is in effect on the valuation date we receive your written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. Failure to exercise this - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 45 elective step up in subsequent years will not reinstate any prior waiting period. Rather, the waiting period under the rider will always commence from the most recent anniversary for which the elective step up option was exercised. The elective step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The elective step up option is not available to non-spouse beneficiaries that continue the contract during the waiting period. SPOUSAL CONTINUATION If a spouse chooses to continue the contract under the spousal continuation provision, the rider will continue as part of the contract. Once, within the thirty days following the date of spousal continuation, the spouse may choose to exercise an elective step up. The spousal continuation elective step up is in addition to the annual elective step up. If the contract value on the valuation date we receive the written request to exercise this option is greater than the MCAV on that date, we will increase the MCAV to that contract value. If the MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, the spouse will pay the charge that is in effect on the valuation date we receive their written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. TERMINATING THE RIDER The rider will terminate under the following conditions: The rider will terminate before the benefit date without paying a benefit on the date: - you take a full withdrawal; or - annuitization begins; or - the contract terminates as a result of the death benefit being paid. The rider will terminate on the benefit date. For an example, see Appendix E. GUARANTOR WITHDRAWAL BENEFIT RIDER The Guarantor Withdrawal Benefit rider is an optional benefit that you may select for an additional annual charge if: - - you purchase your contract on or after April 29, 2005(1),(2); - - you and the annuitant are 79 or younger on the date the contract is issued. You must elect the Guarantor Withdrawal Benefit rider when you purchase your contract (original rider). This benefit may not be available in your state. The original rider you receive at contract issue offers an elective annual step-up and any withdrawal after a step up during the first three years is considered an excess withdrawal, as described below. The rider effective date of the original rider is the contract issue date. (1) The Guarantor Withdrawal Benefit rider is not available under an inherited qualified annuity. (2) In previous disclosures, we have referred to this rider as Rider A. We also offered an earlier version of this rider, previously referred to as Rider B. See Appendix F for information regarding Rider B which is no longer offered. See the rider attached to your contract for the actual terms of the benefit you purchased. We will offer you the option of replacing the original rider with a new Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The enhanced rider offers an automatic annual step-up and a withdrawal after a step up during the first three years is not necessarily an excess withdrawal, as described below. The effective date of the enhanced rider will be the contract issue date except for the automatic step-up which will apply to contract anniversaries that occur after you accept the enhanced rider. The descriptions below apply to both the original and enhanced riders unless otherwise noted. The Guarantor Withdrawal Benefit initially provides a guaranteed minimum withdrawal benefit that gives you the right to take limited partial withdrawals in each contract year that over time will total an amount equal to your purchase payments. Certain withdrawals and step ups, as described below, can cause the initial guaranteed withdrawal benefit to change. The guarantee remains in effect if your partial withdrawals in a contract year do not exceed the allowed amount. As long as your withdrawals in each contract year do not exceed the allowed amount, you will not be assessed a withdrawal charge. Under the original rider, the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third contract anniversary, as described below). Under the enhanced rider, the allowed amount is equal to 7% of purchase payments for the first three years, and the GBP in all other years. If you withdraw an amount greater than the allowed amount in a contract year, we call this an "excess withdrawal" under the rider. If you make an excess withdrawal under the rider: - - withdrawal charges, if applicable, will apply only to the amount of the withdrawal that exceeds the allowed amount; - - the guaranteed benefit amount will be adjusted as described below; and - - the remaining benefit amount will be adjusted as described below. - -------------------------------------------------------------------------------- 46 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Withdrawals"). Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. If you select the Guarantor Withdrawal Benefit rider, you may not select an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. If you exercise the annual step up election (see "Elective Step Up" and "Annual Step Up" below), the special spousal continuation step up election (see "Spousal Continuation and Special Spousal Continuation Step Up" below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). You should consider whether the Guarantor Withdrawal Benefit is appropriate for you because: - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: If you selected this Guarantor Withdrawal Benefit rider before May 1, 2006, you must participate in the asset allocation program (see "Making the Most of Your Contract -- Asset Allocation Program"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts or GPAs that are available under the contract to contract owners who do not elect this rider; - - TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income; - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD. If you make a withdrawal in any contract year to satisfy an RMD, this may constitute an excess withdrawal, as defined below, and the excess withdrawal procedures described below will apply. Under the terms of the enhanced rider, we allow you to satisfy the RMD based on the life expectancy RMD for your contract and the requirements of the Code and regulations in effect when you purchase your contract, without the withdrawal being treated as an excess withdrawal. It is our current administrative practice to make the same accommodation under the original rider, however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. See Appendix H for additional information. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit rider may be of limited value to you. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments. - - INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than GBP under this rider. Any amount you withdraw in a contract year under the contract's TFA provision that exceeds the GBP is subject to the excess withdrawal procedures for the GBA and RBA described below. THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE GUARANTOR(SM) WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION. GUARANTEED BENEFIT AMOUNT The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment, adjusted for subsequent purchase payments, partial withdrawals in excess of the GBP, and step ups. The maximum GBA is $5,000,000. The GBA is determined at the following times: - - At contract issue -- the GBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment plus any purchase payment credit has its own GBA equal to the amount of the purchase payment. The total GBA when an additional purchase payment is added is the sum of the individual GBAs immediately prior to the receipt of the additional purchase payment, plus the GBA associated with the additional purchase payment; - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 47 - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the GBA remains unchanged. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: c) under the original rider in a contract year after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups GBA EXCESS WITHDRAWAL PROCEDURE The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT The remaining benefit amount (RBA) at any point is the total guaranteed amount available for future partial withdrawals. The maximum RBA is $5,000,000. The RBA is determined at the following times: - - At contract issue -- the RBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own RBA equal to the amount of the purchase payment. The total RBA when an additional purchase payment is added is the sum of the individual RBAs immediately prior to the receipt of the additional purchase payment, plus the RBA associated with the additional payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the RBA becomes the RBA immediately prior to the partial withdrawal, less the partial withdrawal. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; c) under the original rider after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; RBA EXCESS WITHDRAWAL PROCEDURE The RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, any reduction of the RBA will be taken out of each payment's RBA in the following manner: The withdrawal amount up to the remaining benefit payment (defined below) is taken out of each RBA bucket in proportion to its remaining benefit payment at the time of the withdrawal; and the withdrawal amount above the remaining benefit payment and any amount determined by the excess withdrawal procedure are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. - -------------------------------------------------------------------------------- 48 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS GUARANTEED BENEFIT PAYMENT Under the original rider, the GBP is the amount you may withdraw under the terms of the rider in each contract year until the RBA is depleted, subject to certain restrictions prior to the third anniversary (see "Elective Step Up" above). The GBP is equal to 7% of the GBA. Under the enhanced rider, the GBP is the withdrawal amount that you are entitled to take each contract year after the third anniversary until the RBA is depleted. The GBP is the lesser of (a) 7% of the GBA; or (b) the RBA. Under both the original and enhanced riders, if you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. REMAINING BENEFIT PAYMENT Under the original rider, at the beginning of each contract year, the remaining benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA. Under the enhanced rider, at the beginning of each contract year, during the first three years and prior to any withdrawal, the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. At the beginning of any other contract year, each individual RBP is set equal to each individual GBP. Each additional purchase payment has its own RBP established equal to that payment's GBP. The total RBP is equal to the sum of the individual RBPs. Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY) You have the option to increase the RBA, the GBA, the GBP and the RBP beginning with the first contract anniversary. An annual elective step up option is available for 30 days after the contract anniversary. The elective step up option allows you to step up the remaining benefit amount and guaranteed benefit amount to the contract value on the valuation date we receive your written request to step up. The elective step up is subject to the following rules: - - If you do not take any withdrawals during the first three contract years, you may step up annually beginning with the first contract anniversary; - - If you take any withdrawals during the first three contract years, the annual elective step up will not be available until the third contract anniversary; - - If you step up on the first or second contract anniversary but then take a withdrawal prior to the third contract anniversary, you will lose any prior step ups and the withdrawal will be considered an excess withdrawal subject to the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed Benefit Amount" and "Remaining Benefit Amount" headings above; and - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. You may only step up if your contract value on the valuation date we receive your written request to step up is greater than the RBA. The elective step up will be determined as follows: - - The effective date of the elective step up is the valuation date we receive your written request to step up. - - The RBA will be increased to an amount equal to the contract value on the valuation date we receive your written request to step up. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract value on the valuation date we receive your written request to step up. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up less any withdrawals made during that contract year. You may elect a step up only once each contract year within 30 days after the contract anniversary. Once a step up has been elected, another step up may not be elected until the next contract anniversary. ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY) Beginning with the first contract anniversary after you accept the enhanced rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A step up does not create contract value, guarantee performance of any investment options, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, and RBP, and may extend the payment period or increase allowable payment. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 49 The annual step up is subject to the following rules: - - The annual step up is available when the RBA would increase on the step up date. The applicable step up date depends on whether the annual step up is applied on an automatic or elective basis. - - If the application of the step does not increase the rider charge, the annual step up will be automatically applied to your contract and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the first three contract years, any previously applied step ups will be reversed and the annual step up will not be available until the third contract anniversary; - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. The annual step up will be determined as follows: - - The RBA will be increased to an amount equal to the contract value on the step up date. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the annual step up; or (b) the contract value on the step up date. - - The GBP will be calculated as described earlier, but based on the increased GBA and RBA. - - The RBP will be reset as follows: (a) Prior to any withdrawals during the first three years, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made during the current contract year, but never less than zero. SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP If a surviving spouse elects to continue the contract, this rider also continues. The spousal continuation step up is in addition to the elective step up or the annual step up. When a spouse elects to continue the contract, any rider feature processing particular to the first three years of the contract as described in this prospectus no longer applies. The GBA, RBA and GBP values remain unchanged. The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. A surviving spouse may elect a spousal continuation step up by written request within 30 days following the spouse's election to continue the contract. This step up may be made even if withdrawals have been taken under the contract during the first three years. Under this step up, the RBA will be reset to the greater of the RBA or the contract value on the valuation date we receive the spouse's written request to step up; the GBA will be reset to the greater of the GBA or the contract value on the same valuation date. If a spousal continuation step up is elected and we have increased the charge for the rider for new contract owners, the spouse will pay the charge that is in effect on the valuation date we receive the written request to step up. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payments have been made for less than the RBA, the remaining payments will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). - -------------------------------------------------------------------------------- 50 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. IF CONTRACT VALUE REDUCES TO ZERO If the contract value reduces to zero and the RBA remains greater than zero, the following will occur: - - you will be paid according to the annuity payout option described above; - - we will no longer accept additional purchase payments; - - you will no longer be charged for the rider; - - any attached death benefit riders will terminate; and - - the death benefit becomes the remaining payments under the annuity payout option described above. If the contract value falls to zero and the RBA is depleted, the Guarantor Withdrawal Benefit rider and the contract will terminate. For an example, see Appendix G. INCOME ASSURER BENEFIT RIDERS There are three optional Income Assurer Benefit riders available under your contract: - - Income Assurer Benefit - MAV; - - Income Assurer Benefit - 5% Accumulation Benefit Base; or - - Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. The Income Assurer Benefit riders are intended to provide you with a guaranteed minimum income regardless of the volatility inherent in the investments in the subaccounts. The riders benchmark the contract growth at each anniversary against several comparison values and set the guaranteed income benefit base (described below) equal to the largest value. The guaranteed income benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the rider. If the guaranteed income benefit base is greater than the contract value, the guaranteed income benefit base may provide a higher annuity payout level than is otherwise available. However, the riders use guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we may apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the riders may be less than the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the riders, you will receive the higher standard payout option. The guaranteed income benefit base does not create contract value or guarantee the performance of any investment option. The general information in this section applies to each Income Assurer Benefit rider. This section is followed by a description of each specific Income Assurer Benefit rider and how it is calculated. You should consider whether an Income Assurer Benefit rider is appropriate for you because: - - you must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts and GPAs (if available) to those that are in the asset allocation model you select. This means you will not be able to allocate contract value to all of the subaccounts or GPAs that are available under the contract to other contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Asset Allocation Program" and "Portfolio Navigator Asset Allocation Program"); - - if you are purchasing the contract as a qualified annuity, such as an IRA, and you are planning to begin annuity payouts after the date on which minimum distributions required by the Code must begin, you should consider whether an Income Assurer Benefit is appropriate for you (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Partial withdrawals you take from the contract, including those used to satisfy RMDs, will reduce the guaranteed income benefit base (defined below), which in turn may reduce or eliminate the amount of any annuity payouts available under the rider. Consult a tax advisor before you purchase any Income Assurer Benefit rider with a qualified annuity; - - you must hold the Income Assurer Benefit for 10 years unless you elect to terminate the rider within 30 days following the first anniversary after the effective date of the rider; - - you can only exercise the Income Assurer Benefit within 30 days after a contract anniversary following the expiration of the 10-year waiting period; - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 51 - - the 10-year waiting period may be restarted if you elect to change the Portfolio Navigator model portfolio to one that causes the rider charge to increase (see "Charges -- Income Assurer Benefit"); and - - the Income Assurer Benefit rider terminates* on the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate on the contract anniversary after the annuitant's 86th birthday, however, if you exercise the Income Assurer Benefit rider before this time, your benefits will continue according to the annuity payout plan you have selected. If the Income Assurer Benefit rider is available in your state and the annuitant is 75 or younger at contract issue, you may choose this optional benefit at the time you purchase your contract for an additional charge. The amount of the charge is determined by the Income Assurer Benefit rider you select (see "Charges -- Income Assurer Benefit Rider Fee"). The effective date of the rider will be the contract issue date. The Accumulation Protector Benefit and the Guarantor Withdrawal Benefit riders are not available with any Income Assurer Benefit rider. If the annuitant is between age 73 and age 75 at contract issue, you should consider whether a Income Assurer Benefit rider is appropriate for your situation because of the 10-year waiting period requirement. Be sure to discuss with your investment professional whether an Income Assurer Benefit rider is appropriate for your situation. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT RIDERS IN THE SECTIONS BELOW: GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value that will be used to determine minimum annuity payouts when the rider is exercised. It is an amount we calculate, depending on the Income Assurer Benefit rider you choose, that establishes a benefit floor. When the benefit floor amount is greater than the contract value, there may be a higher annuitization payout than if you annuitized your contract without the Income Assurer Benefit. Your annuitization payout will never be less than that provided by your contract value. EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your contract under contract data and will include the RiverSource Variable Portfolio -- Cash Management Fund and, if available under your contract, the GPAs. Excluded investment options are not used in the calculation of this riders' variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. EXCLUDED PAYMENTS: These are purchase payments paid in the last five years before exercise of the benefit which we reserve the right to exclude from the calculation of the guaranteed income benefit base. PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the product of (a) times (b) where: (a) is the ratio of the amount of the partial withdrawal (including any withdrawal charges or MVA) to the contract value on the date of (but prior to) the partial withdrawal; and (b) is the benefit on the date of (but prior to) the partial withdrawal. PROTECTED INVESTMENT OPTIONS: All investment options available under this contract that are not defined as excluded investment options under contract data are known as protected investment options for purposes of this rider and are used in the calculation of the variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. WAITING PERIOD: This rider can only be exercised after the expiration of a 10-year waiting period. We reserve the right to restart the waiting period if you elect to change your model portfolio to one that causes the rider charge to increase. THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT: EXERCISING THE RIDER Rider exercise conditions are: - - you may only exercise the Income Assurer Benefit rider within 30 days after any contract anniversary following the expiration of the Waiting Period; - - the annuitant on the retirement date must be between 50 to 86 years old; and - - you can only take an annuity payment in one of the following annuity payout plans: PLAN A - LIFE ANNUITY -- NO REFUND; PLAN B - LIFE ANNUITY WITH TEN OR TWENTY YEARS CERTAIN; PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND; - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH TWENTY YEARS CERTAIN; or PLAN E - TWENTY YEARS CERTAIN. After the expiration of the waiting period, the Income Assurer Benefit(SM) rider guarantees a minimum amount of fixed annuity lifetime income during annuitization or the option of variable annuity payments with a guaranteed minimum initial payment or a combination of the two options. - -------------------------------------------------------------------------------- 52 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS If your contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time, the contract and all its riders, including this rider, will terminate without value and no benefits will be paid on account of such termination. Exception: if you are still living, and the annuitant is between 50 and 86 years old, an amount equal to the guaranteed income benefit base will be paid to you under the annuity payout plan and frequency that you select, based upon the fixed or variable annuity payouts described above. The guaranteed income benefit base will be calculated and annuitization will occur at the following times. - - If the contract value falls to zero during the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur on the valuation date after the expiration of the waiting period, or when the annuitant attains age 50 if later. - - If the contract value falls to zero after the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur immediately, or when the annuitant attains age 50 if later. Fixed annuity payouts under this rider will occur at the guaranteed annuity purchase rates based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale G and a 2.0% interest rate. These are the same rates used in Table B of the contract (see "The Annuity Payout Period -- Annuity Tables"). Your annuity payouts remain fixed for the lifetime of the annuity payout period. First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your variable annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your variable annuity payout will be unchanged from the previous variable annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous variable annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous variable annuity payout. TERMINATING THE RIDER Rider termination conditions are: - - you may terminate the rider within 30 days following the first anniversary after the effective date of the rider; - - you may terminate the rider any time after the expiration of the waiting period; - - the rider will terminate on the date you make a full withdrawal from the contract, or annuitization begins, or on the date that a death benefit is payable; and - - the rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday, however, if you exercise the Income Assurer Benefit rider before this time, your benefits will continue according to the annuity payout plan you have selected. YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW: INCOME ASSURER BENEFIT - MAV The guaranteed income benefit base for the Income Assurer Benefit - MAV is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the maximum anniversary value. MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus proportionate adjustments for partial withdrawals. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 53 Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by proportionate adjustments for partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments; or 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the MAV, less market value adjusted excluded payments. MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded purchase payment multiplied by the ratio of the current contract value over the estimated contract value on the anniversary prior to such purchase payment. The estimated contract value at such anniversary is calculated by assuming that payments, and partial withdrawals occurring in a contract year take place at the beginning of the year for that anniversary and every year after that to the current contract year. INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit - 5% Accumulation Benefit Base is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor. 5% VARIABLE ACCOUNT FLOOR -- is equal to the contract value in the excluded investment options plus the variable account floor. The Income Assurer Benefit(SM) 5% variable account floor is calculated differently and is not the same value as the death benefit 5% variable account floor. The variable account floor is zero from the effective date of this rider and until the first contract anniversary after the effective date of this rider. On the first contract anniversary after the effective date of this rider the variable account floor is: - - the total purchase payments made to the protected investment options minus adjusted partial withdrawals and transfers from the protected investment options; plus - - an amount equal to 5% of your initial purchase payment allocated to the protected investment options. On any day after the first contract anniversary following the effective date of this rider, when you allocate additional purchase payments to or withdraw or transfer amounts from the protected investment options, we adjust the variable account floor by adding the additional purchase payment and subtracting adjusted withdrawals and adjusted transfers. On each subsequent contract anniversary after the first anniversary of the effective date of this rider, prior to the earlier of your or the annuitant's 81st birthday, we increase the variable account floor by adding the amount ("roll-up amount") equal to 5% of the prior contract anniversary's variable account floor. The amount of purchase payments withdrawn from or transferred between the excluded investment options and the protected investment options is calculated as (a) times (b) where: (a) is the amount of purchase payments in the investment options being withdrawn or transferred on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount of the transfer or withdrawal to the value in the investment options being withdrawn or transferred on the date of (but prior to) the current withdrawal or transfer. The roll-up amount prior to the first anniversary is zero. Also, the roll-up amount on every anniversary after the earlier of your or the annuitant's 81st birthday is zero. Adjusted withdrawals and adjusted transfers for the variable account floor are equal to the amount of the withdrawal or transfer from the protected investment options as long as the sum of the withdrawals and transfers from the protected investment options in a contract year do not exceed the roll-up amount from the prior contract anniversary. If the current withdrawal or transfer from the protected investment options plus the sum of all prior withdrawals and transfers made from the protected investment options in the current policy year exceeds the roll-up amount from the prior contract anniversary we will calculate the adjusted withdrawal or adjusted transfer for the variable account floor as the result of (a) plus [(b) times (c)] where: (a) is the roll-up amount from the prior contract anniversary less the sum of any withdrawals and transfers made from the protected investment options in the current policy year but prior to the current withdrawal or transfer. However, (a) can not be less than zero; and - -------------------------------------------------------------------------------- 54 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS (b) is the variable account floor on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a); and (c) is the ratio of [the amount of the current withdrawal (including any withdrawal charges or MVA) or transfer from the protected investment options less the value from (a)] to [the total in the protected investment options on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a)]. This method is greater than a dollar-for-dollar reduction, and could potentially deplete the maximum benefit faster than the dollar-for-dollar reduction. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments (described above); or 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor, less 5% adjusted excluded payments. 5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment accumulated at 5% for the number of full contract years they have been in the contract. INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base is the greater of these four values: 1. the contract value; 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; 3. the MAV (described above); or 4. the 5% variable account floor (described above). IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF: 1. contract value less the market value adjusted excluded payments (described above); 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; 3. the MAV, less market value adjusted excluded payments (described above); or 4. the 5% variable account floor, less 5% Adjusted Excluded Payments (described above). For an example of how each Income Assurer Benefit rider is calculated, see Appendix I. BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit, plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 55 EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. For an example, see Appendix J. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are 70 or older at the rider effective date. It does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is available only for purchase through a transfer, exchange, or rollover from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector Rider, 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) IF YOU OR THE ANNUITANT ARE AGE 70 CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% X (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. - -------------------------------------------------------------------------------- 56 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). For an example, see Appendix K. THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below, except under annuity payout Plan E. You also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). You may reallocate this contract value to the subaccounts to provide variable annuity payouts. If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin (see "Making the Most of Your Contract -- Transfer policies"). ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payment, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. Table B shows the minimum amount of each fixed payout. We declare current payout rates that we use in determining the actual amount of your fixed payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. Your selection of these annuity payout plans is subject to the exceptions noted below. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we made only one monthly payout, we will not make any more payouts. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 57 - - PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN (under the Income Assurer Benefit rider: you may select life annuity with ten or 20 years certain): We make monthly payouts for a guaranteed payout period of five, ten, 15 or 20 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND (not available under the Income Assurer Benefit rider): We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly annuity payouts during the lifetime of the annuitant and joint annuitant. When either the annuitant or joint annuitant dies, we will continue to make monthly payouts during the lifetime of the survivor. If the survivor dies before we have made payouts for 20 years, we continue to make payouts to the named beneficiary for the remainder of the 20-year period which begins when the first annuity payout is made. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect (under the Income Assurer Benefit rider, you may elect a payout period of 20 years only). We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the payout period, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. (Exception: If you have an Income Assurer Benefit rider and elect this annuity payout plan based on the Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. The discount rate we use in the calculation will vary between 6.55% and 8.15% depending on the applicable contract option and the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes."). - - GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH THE GUARANTOR WITHDRAWAL BENEFIT RIDER): This fixed annuity payout option is an alternative to the above annuity payout plans. This option may not be available if the contract is a qualified annuity. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. Under this option, the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the total RBA at the time you begin this fixed payout option (see "Optional Benefits -- Guarantor Withdrawal Benefit Rider"). These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at the time but will be no less frequent than annually. If, at the death of the owner, total payments have been made for less than the RBA, the remaining payments will be paid to the beneficiary. ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. - -------------------------------------------------------------------------------- 58 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 59 - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; - -------------------------------------------------------------------------------- 60 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 61 VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or no longer the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource(SM) Variable Portfolio -- Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves as the principal underwriter and general distributor of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. SALES OF THE CONTRACT - - Only securities broker-dealers ("selling firms") registered with the SEC and members of the FINRA may sell the contract. - - The contracts are continuously offered to the public through authorized selling firms. We and RiverSource Distributors have a sales agreement with the selling firm to offer the contracts to the public. We agree to pay the selling firm (or an affiliated insurance agency) for contracts its investment professionals sell. The selling firm may be required to return sales commissions under certain circumstances including but not limited to when contracts are returned under the free look period. - -------------------------------------------------------------------------------- 62 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS PAYMENTS WE MAKE TO SELLING FIRMS - - We may use compensation plans which vary by selling firm. For example, some of these plans pay selling firms a commission of up to 6.0% each time a purchase payment is made for Contract Option L, and 1.0% for Contract Option C. We may also pay ongoing trail commissions of up to 1.0% of the contract value. We do not pay or withhold payment of commissions based on which investment options you select. - - We may pay selling firms a temporary additional sales commission of up to 1% of purchase payments for a period of time we select. For example, we may offer to pay a temporary additional sales commission to get selling firms to market a new or enhanced contract or to increase sales during the period. - - In addition to commissions, we may, in order to promote sales of the contracts, and as permitted by applicable laws and regulation, pay or provide selling firms with other promotional incentives in cash, credit or other compensation. We generally (but may not) offer these promotional incentives to all selling firms. The terms of such arrangements differ between selling firms. These promotional incentives may include but are not limited to: - sponsorship of marketing, educational, due diligence and compliance meetings and conferences we or the selling firm may conduct for investment professionals, including subsidy of travel, meal, lodging, entertainment and other expenses related to these meetings; - marketing support related to sales of the contract including for example, the creation of marketing materials, advertising and newsletters; - providing service to contract owners; and - funding other events sponsored by a selling firm that may encourage the selling firm's investment professionals to sell the contract. These promotional incentives or reimbursements may be calculated as a percentage of the selling firm's aggregate, net or anticipated sales and/or total assets attributable to sales of the contract, and/or may be a fixed dollar amount. As noted below this additional compensation may cause the selling firm and its investment professionals to favor the contracts. SOURCES OF PAYMENTS TO SELLING FIRMS We pay the commissions and other compensation described above from our assets. Our assets may include: - - revenues we receive from fees and expenses that you will pay when buying, owning and making a withdrawal from the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- The Funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The Funds"); and - - revenues we receive from other contracts we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part or all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including withdrawal charges; and - - fees and expenses charged by the underlying subaccount funds in which you invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. POTENTIAL CONFLICTS OF INTEREST Compensation payment arrangements with selling firms can potentially: - - give selling firms a heightened financial incentive to sell the contract offered in this prospectus over another investment with lower compensation to the selling firm. - - cause selling firms to encourage their investment professionals to sell you the contract offered in this prospectus instead of selling you other alternative investments that may result in lower compensation to the selling firm. - - cause selling firms to grant us access to its investment professionals to promote sales of the contract offered in this prospectus, while denying that access to other firms offering similar contracts or other alternative investments which may pay lower compensation to the selling firm. PAYMENTS TO INVESTMENT PROFESSIONALS - - The selling firm pays its investment professionals. The selling firm decides the compensation and benefits it will pay its investment professionals. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 63 - - To inform yourself of any potential conflicts of interest, ask the investment professional before you buy, how the selling firm and its investment professionals are being compensated and the amount of the compensation that each will receive if you buy the contract. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement and other materials we file. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- 64 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE # Appendix A: Example -- Market Value Adjustment (MVA) p. 66 Guarantee Period Accounts (GPAs) p. 21 Appendix B: Example -- Income Assurer Benefit Rider Fee p. 68 Charges -- Income Assurer Benefit Rider Fee p. 28 Appendix C: Example -- Withdrawal Charges p. 69 Charges -- Withdrawal Charges p. 26 Appendix D: Example -- Death Benefits p. 73 Benefits in Case of Death p. 41 Appendix E: Example -- Accumulation Protector Benefit Optional Benefits -- Accumulation Protector Benefit Rider p. 76 Rider p. 27 Appendix F: Guarantor Withdrawal Benefit Rider -- Optional Benefits -- Guarantor Withdrawal Benefit Rider p. 46 Rider B Disclosure p. 78 Appendix G: Example -- Guarantor Withdrawal Benefit Rider p. 83 Optional Benefits -- Guarantor Withdrawal Benefit Rider p. 46 Appendix H: Guarantor Withdrawal Benefit Rider -- Optional Benefits -- Guarantor Withdrawal Benefit Rider p. 46 Additional RMD Disclosure p. 85 Appendix I: Example -- Income Assurer Benefit Riders p. 86 Optional Benefits -- Income Assurer Benefit Riders p. 51 Appendix J: Example -- Benefit Protector Death Optional Benefits -- Benefit Protector Death Benefit Benefit Rider p. 91 Rider p. 29 Appendix K: Example -- Benefit Protector Plus Death Optional Benefits -- Benefit Protector Plus Death Benefit Rider p. 93 Benefit Rider p. 29 Appendix L: Condensed Financial Information (Unaudited) p. 95 Condensed Financial Information (Unaudited) p. 12
The purpose of these appendices is first to illustrate the operation of various contract features and riders; second, to provide additional disclosure regarding various contract features and riders; and lastly, to provide condensed financial history (unaudited) of the subaccounts. In order to demonstrate the contract features and riders, an example may show hypothetical contract values. These contract values do not represent past or future performance. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts and GPAs, and the fees and charges that apply to your contract. The examples of death benefits and optional riders in appendices D, E, G and I through K include a partial withdrawal to illustrate the effect of a partial withdrawal on the particular benefit. These examples are intended to show how the optional riders operate, and do not take into account whether the rider is part of a qualified contract. Qualified contracts are subject to required minimum distributions at certain ages which may require you to take partial withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you are considering the addition of certain death benefits and/or optional riders to a qualified contract, you should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 65 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA) As the examples below demonstrate, the application of an MVA may result in either a gain or a loss of principal. We refer to all of the transactions described below as "early withdrawals." ASSUMPTIONS: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; and - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your guarantee period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate and, so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES -- MVA Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your guarantee period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and your purchase payment is in its fourth year from receipt at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you - -------------------------------------------------------------------------------- 66 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS requested after we apply the MVA (and any applicable withdrawal charge under contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 67 APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE ASSUMPTIONS: - - You purchase the contract with a payment of $50,000 and allocate all of your payment to the Protected Investment Options and make no transfers, add-ons or withdrawals; and - - on the first contract anniversary your total contract value is $55,545; and - - on the second contract anniversary your total contract value is $53,270. WE WOULD CALCULATE THE GUARANTEED INCOME BENEFIT BASE FOR EACH INCOME ASSURER BENEFIT ON THE SECOND ANNIVERSARY AS FOLLOWS: THE INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE IS THE GREATEST OF THE FOLLOWING VALUES: Purchase Payments less adjusted partial withdrawals: $50,000 Contract value on the second anniversary: $53,270 Maximum Anniversary Value: $55,545 - ---------------------------------------------------------------------- INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS THE GREATEST OF THE FOLLOWING VALUES: Purchase Payments less adjusted partial withdrawals: $50,000 Contract value on the second anniversary: $53,270 5% Variable Account Floor = 1.05 X 1.05 X $50,000 $55,125 - ---------------------------------------------------------------------- INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,125
THE INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS THE GREATEST OF THE FOLLOWING VALUES: Purchase Payments less adjusted partial withdrawals: $50,000 Contract value on the second anniversary: $53,270 Maximum Anniversary Value: $55,545 5% Variable Account Floor = 1.05 X 1.05 X $50,000 $55,125 - ---------------------------------------------------------------------- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT FEE DEDUCTED FROM YOUR CONTRACT VALUE WOULD BE: INCOME ASSURER BENEFIT - MAV FEE = 0.30% X $55,545 = $166.64 INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE FEE = 0.60% X $55,125 = $330.75 INCOME ASSURER BENEFIT - MAV OR 5% ACCUMULATION BENEFIT BASE 0.65% X $55,545 = $361.04 FEE =
- -------------------------------------------------------------------------------- 68 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES The examples below show how the withdrawal charge for a full and partial withdrawal is calculated for a contract with a four-year withdrawal charge schedule. Each example illustrates the amount of the withdrawal charge for both a contract that experiences gains and a contract that experiences losses, given the same set of assumptions. For purposes of calculating any withdrawal charge, including the examples illustrated below, we treat amounts withdrawn from your contract value in the following order: 1. First, in each contract year, we withdraw amounts totaling up to 10% of your prior anniversary's contract value or your contract's remaining benefit payment if you elected the Guarantor Withdrawal Benefit rider and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. 2. Next, we withdraw contract earnings, if any, that are greater than the amount described in number one above. We do not assess a withdrawal charge on contract earnings. 3. Next we withdraw purchase payments received prior to the withdrawal charge period shown in your contract. We do not assess a withdrawal charge on these purchase payments. 4. Finally, if necessary, we withdraw purchase payments received that are still within the withdrawal charge period you selected and shown in your contract. We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do assess a withdrawal charge on these payments. After withdrawing earnings in numbers one and two above, we next withdraw enough additional contract value (ACV) to meet your requested withdrawal amount. If the amount described in number one above was greater than contract earnings prior to the withdrawal, the excess (XSF) will be excluded from the purchase payments being withdrawn that were received most recently when calculating the withdrawal charge. We determine the amount of purchase payments being withdrawn (PPW) in numbers three and four above as: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) If the additional contract value withdrawn is less than XSF, then PPW will equal ACV. We determine current contract earnings (CE) by looking at the entire contract value (CV), not the earnings of any particular subaccount or GPA. If the contract value is less than purchase payments received and not previously withdrawn (PPNPW) then contract earnings are zero. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 69 FULL WITHDRAWAL CHARGE CALCULATION -- FOUR YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You withdraw the contract for its total value in the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contract (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 60,000.00 40,000.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 50,000.00 40,000.00 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 50,000.00 40,000.00 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 50,000.00 50,000.00
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CONTRACT WITH GAIN CONTRACT WITH LOSS STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 50,000.00 50,000.00 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 3,000.00 2,748.00 STEP 7. The dollar amount you will receive as a result of your full withdrawal is determined as: Contract value withdrawn: 60,000.00 40,000.00 WITHDRAWAL CHARGE: (3,000.00) (2,748.00) Contract charge (assessed upon full withdrawal): (40.00) (40.00) ---------- ---------- NET FULL WITHDRAWAL PROCEEDS: 56,960.00 37,212.00
PARTIAL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You request a net partial withdrawal in the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for the net partial withdrawal proceeds to match the amount requested. We start with an estimate of the amount of contract value to withdraw and calculate the resulting withdrawal charge and net partial withdrawal proceeds as illustrated below. We then adjust our estimate and repeat until we determine the amount of contract value to withdraw that generates the desired net partial withdrawal proceeds. WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS FOLLOWS: - --------------------------------------------------------------------------------
STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contract (but not less than zero): 10,000.00 0.00
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 71
STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00
CONTRACT WITH GAIN CONTRACT WITH LOSS STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 15,319.15 15,897.93 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 5,319.15 15,897.93 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 5,319.15 15,897.93 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 5,319.15 19,165.51 STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 5,319.15 19,165.51 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 319.15 897.93 STEP 7. The dollar amount you will receive as a result of your partial withdrawal is determined as: Contract value withdrawn: 15,319.15 15,897.93 WITHDRAWAL CHARGE: (319.15) (897.93) ---------- ---------- NET PARTIAL WITHDRAWAL PROCEEDS: 15,000.00 15,000.00
- -------------------------------------------------------------------------------- 72 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX D: EXAMPLE -- DEATH BENEFITS EXAMPLE -- ROP DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $20,000. You select contract Option L; and - - on the first contract anniversary you make an additional purchase payment of $5,000; and - - during the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal, including withdrawal charge; and - - during the third contract year the contract value grows to $23,000. WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS: 1. Contract value at death: $23,000.00 ---------- 2. Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45 EXAMPLE -- MAV DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000. You select contract Option L; and - - on the first contract anniversary the contract value grows to $26,000; and - - during the second contract year the contract value falls to $22,000, at which point you take a $1,500 (including withdrawal charge) partial withdrawal, leaving a contract value of $20,500. WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $20,500.00 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- 3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH: Greatest of your contract anniversary values: $26,000.00 plus purchase payments made since the prior anniversary: +0.00 minus the death benefit adjusted partial withdrawals, calculated as: $1,500 X $26,000 ---------------- = -1,772.73 $22,000 ---------- for a death benefit of: $24,227.27 ----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE MAV: $24,227.27 - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 73 EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - on the first contract anniversary the GPA value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - during the second contract year the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a death benefit of: $23,456.79 ---------- 3. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor calculated as: 1.05 X $20,000 = $21,000.00 plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 5% variable account floor (value of the GPAs and the variable account floor): $24,642.11 ----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- 74 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE -- ENHANCED DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - on the first contract anniversary, the GPAs value is $5,200 and the subaccount value is $17,000. Total contract value is $23, 200; and - - during the second contract year, the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP Death Benefit of: $23,456.79 ---------- 3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV Death Benefit of: $23,456.79 ---------- 4. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: 1.05 x $20,000 = $21,000.00 plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 5% variable account floor (value of the GPAs and the variable account floor): $24,642.11 ----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 75 APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER AUTOMATIC STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) in the second, third and seventh contract anniversaries. These increases occur because of the automatic step up feature of the rider. The automatic step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the Benefit Date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - - you take partial withdrawals from the contract on the fifth and eighth contract anniversaries in the amounts of $2,000 and $5,000, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and - - you do not exercise the elective step up option available under the rider; and - - you do not change asset allocation models. Based on these assumptions, the waiting period expires at the end of the 10th contract year. The rider then ends. On the benefit date, the hypothetical assumed contract value is $108,118 and the MCAV is $136,513, so the contract value would be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT ADJUSTED ASSUMED ASSUMED DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 0 0 0 12.0% 140,000 125,000 2 0 0 0 15.0% 161,000 128,800(2) 3 0 0 0 3.0% 165,830 132,664(2) 4 0 0 0 -8.0% 152,564 132,664 5 0 2,000 2,046 -15.0% 127,679 130,618 6 0 0 0 20.0% 153,215 130,618 7 0 0 0 15.0% 176,197 140,958(2) 8 0 5,000 4,444 -10.0% 153,577 136,513 9 0 0 0 -20.0% 122,862 136,513 10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date. (2) These values indicate where the automatic step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. ELECTIVE STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) on the first, second, third and seventh contract anniversaries. These increases occur only if you exercise the elective step up Option within 30 days following the contract anniversary. The contract value on the date we receive your written request to step up must be greater than the MCAV on that date. The elective step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - -------------------------------------------------------------------------------- 76 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS - - you take partial withdrawals from the contract on the fifth, eighth and thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and, - - the elective step up is exercised on the first, second, third and seventh contract anniversaries; and - - you do not change asset allocation models. Based on these assumptions, the 10 year waiting period restarts each time you exercise the elective step up option (on the first, second, third and seventh contract anniversaries in this example). The waiting period expires at the end of the 10th contract year following the last exercise of the elective step up option. When the waiting period expires, the rider ends. On the benefit date the hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 10(2) 0 0 0 12.0% 140,000 140,000(3) 2 10(2) 0 0 0 15.0% 161,000 161,000(3) 3 10(2) 0 0 0 3.0% 165,830 165,830(3) 4 9 0 0 0 -8.0% 152,564 165,830 5 8 0 2,000 2,558 -15.0% 127,679 163,272 6 7 0 0 0 20.0% 153,215 163,272 7 10(2) 0 0 0 15.0% 176,197 176,197(3) 8 9 0 5,000 5,556 -10.0% 153,577 170,642 9 8 0 0 0 -20.0% 122,862 170,642 10 7 0 0 0 -12.0% 108,118 170,642 11 6 0 0 0 3.0% 111,362 170,642 12 5 0 0 0 4.0% 115,817 170,642 13 4 0 7,500 10,524 5.0% 114,107 160,117 14 3 0 0 0 6.0% 120,954 160,117 15 2 0 0 0 -5.0% 114,906 160,117 16 1 0 0 0 -11.0% 102,266 160,117 17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB benefit date. (2) The waiting period restarts when the elective step up is exercised. (3) These values indicate when the elective step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Exercising the elective step up provision may result in an increase in the charge that you pay for this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 77 APPENDIX F: GUARANTOR WITHDRAWAL BENEFIT RIDER -- RIDER B DISCLOSURE GUARANTOR WITHDRAWAL BENEFIT RIDER The Guarantor Withdrawal Benefit rider is an optional benefit that was offered for an additional annual charge if: - - you purchased your contract prior to April 29, 2005(1),(2); - - the rider was available in your state; and - - you and the annuitant were 79 or younger on the date the contract was issued. (1) The Guarantor Withdrawal Benefit is not available under an inherited qualified annuity. (2) In previous disclosure, we have referred to this rider as Rider B. This rider is no longer available for purchase. See the Guarantor Withdrawal Benefit section in this prospectus for information about currently offered version of this benefit. See the rider attached to your contract for the actual terms of the benefit you purchased. You must elect the Guarantor Withdrawal Benefit rider when you purchase your contract (original rider). This benefit may not be available in your state. The original rider you receive at contract issue offers an elective annual step-up and any withdrawal after a step up during the first three years is considered an excess withdrawal, as described below. The rider effective date of the original rider is the contract issue date. We will offer you the option of replacing the original rider with a new Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The enhanced rider offers an automatic annual step-up and a withdrawal after a step up during the first three years is not necessarily an excess withdrawal, as described below. The effective date of the enhanced rider will be the contract issue date except for the automatic step-up which will apply to contract anniversaries that occur after you accept the enhanced rider. The descriptions below apply to both the original and enhanced riders unless otherwise noted. The Guarantor Withdrawal Benefit initially provides a guaranteed minimum withdrawal benefit that gives you the right to take limited partial withdrawals in each contract year that over time will total an amount equal to your purchase payments. Certain withdrawals and step ups, as described below, can cause the initial guaranteed withdrawal benefit to change. The guarantee remains in effect if your partial withdrawals in a contract year do not exceed the allowed amount. As long as your withdrawals in each contract year do not exceed the allowed amount, you will not be assessed a withdrawal charge. Under the original rider, the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third contract anniversary, as described below). Under the enhanced rider, the allowed amount is equal to 7% of purchase payments for the first three years, and the GBP in all other years. If you withdraw an amount greater than the allowed amount in a contract year, we call this an "excess withdrawal" under the rider. If you make an excess withdrawal under the rider: - - withdrawal charges, if applicable, will apply only to the amount of the withdrawal that exceeds the allowed amount; - - the guaranteed benefit amount will be adjusted as described below; and - - the remaining benefit amount will be adjusted as described below. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Withdrawals"). Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. If you select the Guarantor Withdrawal Benefit rider, you may not select an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. If you exercise the annual step up election (see "Elective Step Up" and "Annual Step Up" below), the special spousal continuation step up election (see "Spousal Continuation and Special Spousal Continuation Step Up" below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). You should consider whether the Guarantor Withdrawal Benefit is appropriate for you because: - - USE OF ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the asset allocation program (see "Making the Most of Your Contract -- Asset Allocation Program"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006 (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts or GPAs that are available under the contract to contract owners who do not elect this rider; - -------------------------------------------------------------------------------- 78 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS - - TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income; - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD. If you make a withdrawal in any contract year to satisfy an RMD, this may constitute an excess withdrawal, as defined below, and the excess withdrawal procedures described below will apply. Under the terms of the enhanced rider, we allow you to satisfy the RMD based on the life expectancy RMD for your contract and the requirements of the Code and regulations in effect when you purchase your contract, without the withdrawal being treated as an excess withdrawal. It is our current administrative practice to make the same accommodation under the original rider, however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. See Appendix G for additional information. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor(SM) Withdrawal Benefit rider may be of limited value to you. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments. - - INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than GBP under this rider. Any amount you withdraw in a contract year under the contract's TFA provision that exceeds the GBP is subject to the excess withdrawal procedures for the GBA and RBA described below. THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION. GUARANTEED BENEFIT AMOUNT The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment, adjusted for subsequent purchase payments, partial withdrawals in excess of the GBP, and step ups. The maximum GBA is $5,000,000. The GBA is determined at the following times: - - At contract issue -- the GBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. The total GBA when an additional purchase payment is added is the sum of the individual GBAs immediately prior to the receipt of the additional purchase payment, plus the GBA associated with the additional purchase payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the GBA remains unchanged. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: c) under the original rider in a contract year after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: GBA EXCESS WITHDRAWAL PROCEDURE The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 79 REMAINING BENEFIT AMOUNT The remaining benefit amount (RBA) at any point is the total guaranteed amount available for future partial withdrawals. The maximum RBA is $5,000,000. The RBA is determined at the following times: - - At contract issue -- the RBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own RBA equal to the amount of the purchase payment. The total RBA when an additional purchase payment is added is the sum of the individual RBAs immediately prior to the receipt of the additional purchase payment, plus the RBA associated with the additional payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the RBA becomes the RBA immediately prior to the partial withdrawal, less the partial withdrawal. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; c) under the original rider after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; RBA EXCESS WITHDRAWAL PROCEDURE The RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, any reduction of the RBA will be taken out of each payment's RBA in the following manner: The withdrawal amount up to the remaining benefit payment (defined below) is taken out of each RBA bucket in proportion to its remaining benefit payment at the time of the withdrawal; and the withdrawal amount above the remaining benefit payment and any amount determined by the excess withdrawal procedure are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT Under the original rider, the GBP is the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third anniversary. Under the enhanced rider, the GBP is the withdrawal amount that you are entitled to take each contract year after the third anniversary until the RBA is depleted. Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. REMAINING BENEFIT PAYMENT Under the original rider, at the beginning of each contract year, the remaining benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA. Under the enhanced rider, at the beginning of each contract year, during the first three years and prior to any withdrawal, the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. At the beginning of any other contract year, each individual RBP is set equal to each individual GBP. Each additional purchase payment has its own RBP established equal to that payment's GBP. The total RBP is equal to the sum of the individual RBPs. Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY) You have the option to increase the RBA, the GBA, the GBP and the RBP beginning with the first contract anniversary. An annual elective step up option is available for 30 days after the contract anniversary. The elective step up option allows you to - -------------------------------------------------------------------------------- 80 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS step up the remaining benefit amount and guaranteed benefit amount to the contract value on the valuation date we receive your written request to step up. The elective step up is subject to the following rules: - - if you do not take any withdrawals during the first three contract years, you may step up annually beginning with the first contract anniversary; - - if you take any withdrawals during the first three contract years, the annual elective step up will not be available until the third contract anniversary; - - if you step up on the first or second contract anniversary but then take a withdrawal prior to the third contract anniversary, you will lose any prior step ups and the withdrawal will be considered an excess withdrawal subject to the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed Benefit Amount" and "Remaining Benefit Amount" headings above; and - - you may take withdrawals on or after the third contract anniversary without reversal of previous step ups. You may only step up if your contract anniversary value is greater than the RBA. The elective step up will be determined as follows: - - The effective date of the elective step up is the contract anniversary. - - The RBA will be increased to an amount equal to the contract anniversary value. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract anniversary value. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up. You may elect a step up only once each contract year within 30 days after the contract anniversary. Once a step up has been elected, another step up may not be elected until the next contract anniversary. ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY) Beginning with the first contract anniversary after you accept the enhanced rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A step up does not create contract value, guarantee performance of any investment options, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, and RBP, and may extend the payment period or increase allowable payment. The annual step up is subject to the following rules: - - The annual step up is available when the RBA would increase on the step up date. The applicable step up date depends on whether the annual step up is applied on an automatic or elective basis. - - If the application of the step does not increase the rider charge, the annual step up will be automatically applied to your contract and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the first three contract years, any previously applied step ups will be reversed and the annual step up will not be available until the third contract anniversary; - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. The annual step up will be determined as follows: - - The RBA will be increased to an amount equal to the contract value on the step up date. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the annual step up; or (b) the contract value on the step up date. - - The GBP will be calculated as described earlier, but based on the increased GBA and RBA. - - The RBP will be reset as follows: (c) Prior to any withdrawals during the first three years, the RBP will not be affected by the step up. (d) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made during the current contract year, but never less than zero. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 81 SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP If a surviving spouse elects to continue the contract, this rider also continues. The spousal continuation step up is in addition to the elective step up or the annual step up. When a spouse elects to continue the contract, any rider feature processing particular to the first three years of the contract as described in this prospectus no longer applies. The GBA, RBA and GBP values remain unchanged. The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. A spousal continuation step up occurs automatically when the spouse elects to continue the contract. The rider charge will not change upon this automatic step up. Under this step up, the RBA will be reset to the greater of the RBA on the valuation date we receive the spouse's written request to continue the contract and the death benefit that would otherwise have been paid; the GBA will be reset to the greater of the GBA on the valuation date we receive the spouse' written request to continue the contract and the death benefit that would otherwise have been paid. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payments have been made for less than the RBA, the remaining payments will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. IF CONTRACT VALUE REDUCES TO ZERO If the contract value reduces to zero and the RBA remains greater than zero, the following will occur: - - you will be paid according to the annuity payout option described above; - - we will no longer accept additional purchase payments; - - you will no longer be charged for the rider; - - any attached death benefit riders will terminate; and - - the death benefit becomes the remaining payments under the annuity payout option described above. If the contract value falls to zero and the RBA is depleted, the Guarantor Withdrawal Benefit rider and the contract will terminate. For an example, see Appendix G. - -------------------------------------------------------------------------------- 82 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX G: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT -- THIS EXAMPLE ILLUSTRATES BOTH RIDER A AND RIDER B (SEE "OPTIONAL BENEFITS"). ASSUMPTIONS: - - You purchase the contract with a payment of $100,000; and - - you select contract Option L. The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000 The Guaranteed Benefit Payment (GBP) equals 7% of your GBA: 0.07 X $100,000 = $ 7,000 The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000 On the first contract anniversary the contract value grows to $110,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $110,000 The GBA equals 100% of your contract value: $110,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $110,000 = $ 7,700 During the fourth contract year you decide to take a partial withdrawal of $7,700. You took a partial withdrawal equal to your GBP, so your RBA equals the prior RBA less the amount of the partial withdrawal: $110,000 - $7,700 = $102,300 The GBA equals the GBA immediately prior to the partial withdrawal: $110,000 The GBP equals 7% of your GBA: 0.07 X $110,000 = $ 7,700 On the fourth contract anniversary you make an additional purchase payment of $50,000. The new RBA for the contract is equal to your prior RBA plus 100% of the additional purchase payment: $102,300 + $50,000 = $152,300 The new GBA for the contract is equal to your prior GBA plus 100% of the additional purchase payment: $110,000 + $50,000 = $160,000 The new GBP for the contract is equal to your prior GBP plus 7% of the additional purchase payment: $7,700 + $3,500 = $ 11,200 On the fifth contract anniversary your contract value grows to $200,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $200,000 The GBA equals 100% of your contract value: $200,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $200,000 = $ 14,000 During the seventh contract year your contract value grows to $230,000. You decide to take a partial withdrawal of $20,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 OR (2) your prior RBA less the amount of the partial withdrawal. $200,000 - $20,000 = $180,000 Reset RBA = lesser of (1) or (2) = $180,000
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 83 The GBA gets reset to the lesser of: (1) your prior GBA $200,000 OR (2) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 Reset GBA = lesser of (1) or (2) = $200,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $200,000 = $ 14,000 During the eight contract year your contract value falls to $175,000. You decide to take a partial withdrawal of $25,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 OR (2) your prior RBA less the amount of the partial withdrawal. $180,000 - $25,000 = $155,000 Reset RBA = lesser of (1) or (2) = $150,000 The GBA gets reset to the lesser of: (1) your prior GBA; $200,000 OR (2) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 Reset GBA = lesser of (1) or (2) = $150,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $150,000 = $ 10,500
- -------------------------------------------------------------------------------- 84 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT RIDER -- ADDITIONAL RMD DISCLOSURE This appendix describes our current administrative practice for determining the amount of withdrawals in any contract year which an owner may take under the Guarantor Withdrawal Benefit rider (including Riders A and B) to satisfy the RMD rules under 401(a)(9) of the Code without application of the excess withdrawal procedures described in the rider. We reserve the right to modify this administrative practice at any time upon 30 days' written notice to you. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is greater than the RBP from the beginning of the current contract year, an Additional Benefit Amount (ABA) will be set equal to that portion of your ALERMDA that exceeds the RBP. (2) Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. (3) Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce any ABA. These withdrawals will not be considered excess withdrawals as long as they do not exceed the remaining ABA. (4) Once the ABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals and will initiate the excess withdrawal processing described in the Guarantor Withdrawal Benefit rider. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the Guarantor Withdrawal Benefit rider is attached as of the date we make the determination; and (3) based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable, on the effective date of this prospectus to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a Simplified Employee Pension plan (Section 408(k)); 4. a tax-sheltered annuity rollover (Section 403(b)). In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your RBP amount and may result in the reduction of your GBA and RBA as described under the excess withdrawal provision of the rider. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g. ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 85 APPENDIX I: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS The purpose of these examples is to illustrate the operation of the Income Assurer Benefit Riders. The examples compare payouts available under the contract's standard annuity payout provisions with annuity payouts available under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts (referred to in the riders as "Protected Investment Options") and the fees and charges that apply to your contract. For each of the riders, we provide two annuity payout plan comparisons based on the hypothetical contract values we have assumed. The first comparison assumes that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The second comparison assumes that you select annuity payout Plan D, Joint and Last Survivor Annuity - No Refund. Remember that the riders require you to choose a Portfolio Navigator asset allocation model portfolio. The riders are intended to offer protection against market volatility in the subaccounts (Protected Investment Options). Some Portfolio Navigator asset allocation model portfolios include Protected Investment Options and Excluded Investment Options (RiverSource Variable Portfolio - Cash Management Fund, and if available under the contract, the GPAs). Excluded Investment Options are not included in calculating the 5% variable account floor under the Income Assurer Benefit - 5% Accumulation Benefit Base rider and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider. Because the examples which follow are based on hypothetical contract values, they do not factor in differences in Portfolio Navigator asset allocation models. ASSUMPTIONS: - - You purchase the contract during the 2006 calendar year with a payment of $100,000; and - - you invest all contract value in the subaccounts (Protected Investment Options); and - - you make no additional purchase payments, partial withdrawals or changes in asset allocation model; and - - the annuitant is male and age 55 at contract issue; and - - the joint annuitant is female and age 55 at contract issue. EXAMPLE -- INCOME ASSURER BENEFIT - MAV Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
ASSUMED MAXIMUM GUARANTEED CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE(2) - --------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $108,000 $108,000 2 125,000 none 125,000 125,000 3 132,000 none 132,000 132,000 4 150,000 none 150,000 150,000 5 85,000 none 150,000 150,000 6 121,000 none 150,000 150,000 7 139,000 none 150,000 150,000 8 153,000 none 153,000 153,000 9 140,000 none 153,000 153,000 10 174,000 none 174,000 174,000 11 141,000 none 174,000 174,000 12 148,000 none 174,000 174,000 13 208,000 none 208,000 208,000 14 198,000 none 208,000 208,000 15 203,000 none 208,000 208,000 - ---------------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- 86 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS INCOME ASSURER BENEFIT - MAV CONTRACT --------------------------------------------------------------------------------- ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN* - ----------------------------------------------------------------------------------------------- 10 $174,000 $ 774.30 $174,000 $ 774.30 11 141,000 642.96 174,000 793.44 12 148,000 692.64 174,000 814.32 13 208,000 998.40 208,000 998.40 14 198,000 976.14 208,000 1,025.44 15 203,000 1,027.18 208,000 1,052.48 - -----------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS INCOME ASSURER BENEFIT - MAV CONTRACT --------------------------------------------------------------------------------- ANNIVERSARY ASSUMED PLAN D - LAST GUARANTEED INCOME PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND* BENEFIT BASE SURVIVOR NO REFUND* - ----------------------------------------------------------------------------------------------- 10 $174,000 $622.92 $174,000 $622.92 11 141,000 516.06 174,000 636.84 12 148,000 553.52 174,000 650.76 13 208,000 796.64 208,000 796.64 14 198,000 778.14 208,000 817.44 15 203,000 818.09 208,000 838.24 - -----------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 87 EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME ASSUMED BENEFIT BASE - CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2) - ------------------------------------------------------------------------------------------------ 1 $108,000 $100,000 $105,000 $108,000 2 125,000 none 110,250 125,000 3 132,000 none 115,763 132,000 4 150,000 none 121,551 150,000 5 85,000 none 127,628 127,628 6 121,000 none 134,010 134,010 7 139,000 none 140,710 140,710 8 153,000 none 147,746 153,000 9 140,000 none 155,133 155,133 10 174,000 none 162,889 174,000 11 141,000 none 171,034 171,034 12 148,000 none 179,586 179,586 13 208,000 none 188,565 208,000 14 198,000 none 197,993 198,000 15 203,000 none 207,893 207,893 - ------------------------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
INCOME ASSURER BENEFIT - STANDARD PROVISIONS 5% ACCUMULATION BENEFIT BASE CONTRACT --------------------------------------------------------------------------------- ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN* - ----------------------------------------------------------------------------------------------- 10 $174,000 $ 774.30 $174,000 $ 774.30 11 141,000 642.96 171,034 779.91 12 148,000 692.64 179,586 840.46 13 208,000 998.40 208,000 998.40 14 198,000 976.14 198,000 976.14 15 203,000 1,027.18 207,893 1,051.94 - -----------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. - -------------------------------------------------------------------------------- 88 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
INCOME ASSURER BENEFIT - STANDARD PROVISIONS 5% ACCUMULATION BENEFIT BASE CONTRACT --------------------------------------------------------------------------------- ANNIVERSARY ASSUMED PLAN D - LAST GUARANTEED INCOME PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND* BENEFIT BASE SURVIVOR NO REFUND* - ----------------------------------------------------------------------------------------------- 10 $174,000 $622.92 $174,000 $622.92 11 141,000 516.06 171,034 625.98 12 148,000 553.52 179,586 671.65 13 208,000 796.64 208,000 796.64 14 198,000 778.14 198,000 778.14 15 203,000 818.09 207,893 837.81 - -----------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th, 13th or the 14th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME BENEFIT BASE - GREATER OF ASSUMED MAXIMUM MAV OR 5% CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2) - -------------------------------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $108,000 $105,000 $108,000 2 125,000 none 125,000 110,250 125,000 3 132,000 none 132,000 115,763 132,000 4 150,000 none 150,000 121,551 150,000 5 85,000 none 150,000 127,628 150,000 6 121,000 none 150,000 134,010 150,000 7 139,000 none 150,000 140,710 150,000 8 153,000 none 153,000 147,746 153,000 9 140,000 none 153,000 155,133 155,133 10 174,000 none 174,000 162,889 174,000 11 141,000 none 174,000 171,034 174,000 12 148,000 none 174,000 179,586 179,586 13 208,000 none 208,000 188,565 208,000 14 198,000 none 208,000 197,993 208,000 15 203,000 none 208,000 207,893 208,000 - --------------------------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 89 PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
INCOME ASSURER BENEFIT - GREATER OF MAV STANDARD PROVISIONS OR 5% ACCUMULATION BENEFIT BASE CONTRACT --------------------------------------------------------------------------------- ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN* - ----------------------------------------------------------------------------------------------- 10 $174,000 $ 774.30 $174,000 $ 774.30 11 141,000 642.96 174,000 793.44 12 148,000 692.64 179,586 840.46 13 208,000 998.40 208,000 998.40 14 198,000 976.14 208,000 1,025.44 15 203,000 1,027.18 208,000 1,052.48 - -----------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
INCOME ASSURER BENEFIT - GREATER OF MAV STANDARD PROVISIONS OR 5% ACCUMULATION BENEFIT BASE CONTRACT --------------------------------------------------------------------------------- ANNIVERSARY ASSUMED PLAN D - LAST GUARANTEED INCOME PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND* BENEFIT BASE SURVIVOR NO REFUND* - ----------------------------------------------------------------------------------------------- 10 $174,000 $622.92 $174,000 $622.92 11 141,000 516.06 174,000 636.84 12 148,000 553.52 179,586 671.65 13 208,000 796.64 208,000 796.64 14 198,000 778.14 208,000 817.44 15 203,000 818.09 208,000 838.24 - -----------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- 90 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX J: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit on equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $ 57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $ 58,667 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the eight contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 91 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit on equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
- -------------------------------------------------------------------------------- 92 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX K: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR PLUS ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV Death Benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the record contract anniversary the contract value falls to $105,000. The death benefit equals: MAV Death Benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit on equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $ 57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 x $55,000 = +5,500 -------- Total death benefit of: $ 64,167 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit calculated. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 93 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit on equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
- -------------------------------------------------------------------------------- 94 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX L : CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.52 $1.42 $1.25 $0.94 $1.00 -- -- Accumulation unit value at end of period $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 -- -- Number of accumulation units outstanding at end of period (000 omitted) 133 147 153 163 29 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.60 $1.39 $1.35 $1.24 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 154 167 189 109 52 8 -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.82 $1.37 $1.20 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.82 $1.37 $1.20 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 21,915 15,378 8,725 1,580 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.05 $1.05 $1.00 -- -- -- -- Accumulation unit value at end of period $1.13 $1.05 $1.05 $1.05 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 23,568 25,472 20,290 3,919 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.01 $1.06 $1.06 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.01 $1.06 $1.06 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 8,361 23,813 6,935 1,154 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.31 $1.12 $1.09 $1.00 -- -- -- -- Accumulation unit value at end of period $1.22 $1.31 $1.12 $1.09 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 74 88 26 18 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.07 $1.05 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.07 $1.05 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,154 7,113 2,763 500 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.51 $1.25 $1.14 $1.00 -- -- -- -- Accumulation unit value at end of period $1.54 $1.51 $1.25 $1.14 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 115 87 57 9 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA CORE BOND FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.11 $1.08 $1.08 $1.06 $1.04 $1.00 -- -- Accumulation unit value at end of period $1.14 $1.11 $1.08 $1.08 $1.06 $1.04 -- -- Number of accumulation units outstanding at end of period (000 omitted) 6,935 7,300 6,145 2,108 362 59 -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA DIVERSIFIED INCOME BUILDER FUND - CLASS 2 (07/31/2002) (PREVIOUSLY EVERGREEN VA STRATEGIC INCOME FUND - CLASS 2) Accumulation unit value at beginning of period $1.33 $1.28 $1.32 $1.24 $1.08 $1.00 -- -- Accumulation unit value at end of period $1.35 $1.33 $1.28 $1.32 $1.24 $1.08 -- -- Number of accumulation units outstanding at end of period (000 omitted) 6,055 6,006 4,575 1,498 16 1 -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA FUNDAMENTAL LARGE CAP FUND - CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.55 $1.40 $1.31 $1.22 $0.96 $1.00 -- -- Accumulation unit value at end of period $1.64 $1.55 $1.40 $1.31 $1.22 $0.96 -- -- Number of accumulation units outstanding at end of period (000 omitted) 632 875 517 322 203 6 -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA GROWTH FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.70 $1.57 $1.50 $1.34 $0.98 $1.00 -- -- Accumulation unit value at end of period $1.86 $1.70 $1.57 $1.50 $1.34 $0.98 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,071 1,235 1,063 101 59 21 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 95
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA HIGH INCOME FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.36 $1.27 $1.28 $1.20 $1.03 $1.00 -- -- Accumulation unit value at end of period $1.37 $1.36 $1.27 $1.28 $1.20 $1.03 -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,608 3,863 3,171 1,002 172 19 -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.92 $1.59 $1.40 $1.20 $0.93 $1.00 -- -- Accumulation unit value at end of period $2.17 $1.92 $1.59 $1.40 $1.20 $0.93 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,770 2,013 1,419 443 326 53 -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA OMEGA FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.47 $1.41 $1.39 $1.32 $0.96 $1.00 -- -- Accumulation unit value at end of period $1.61 $1.47 $1.41 $1.39 $1.32 $0.96 -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,312 3,653 2,474 717 169 45 -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA SPECIAL VALUES FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.85 $1.55 $1.43 $1.21 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.68 $1.85 $1.55 $1.43 $1.21 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 446 503 522 391 149 24 -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.58 $1.38 $1.22 $0.97 $1.00 -- -- Accumulation unit value at end of period $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 -- -- Number of accumulation units outstanding at end of period (000 omitted) 43,300 45,089 16,531 3,067 152 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.06 $1.03 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.08 $1.06 $1.03 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 40,253 12,953 8,188 1,336 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 $1.00 -- Accumulation unit value at end of period $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 -- Number of accumulation units outstanding at end of period (000 omitted) 11,091 7,570 3,100 1,208 722 290 13 -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.28 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.71 $1.49 $1.28 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,416 4,843 4,036 1,573 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 $1.00 Accumulation unit value at end of period $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 3,051 2,743 2,554 2,119 1,118 777 413 157 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.11 $1.16 $1.00 -- -- -- -- Accumulation unit value at end of period $1.34 $1.23 $1.11 $1.16 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,814 23,082 7,734 1,493 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000) Accumulation unit value at beginning of period $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 $1.00 Accumulation unit value at end of period $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 Number of accumulation units outstanding at end of period (000 omitted) 11,638 9,377 4,128 1,284 550 386 321 60 - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.41 $1.33 $1.29 $1.24 $0.97 $1.00 -- -- Accumulation unit value at end of period $1.58 $1.41 $1.33 $1.29 $1.24 $0.97 -- -- Number of accumulation units outstanding at end of period (000 omitted) 7,383 8,562 6,720 1,419 14 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.64 $1.42 $1.27 $1.08 $0.77 $1.00 -- -- Accumulation unit value at end of period $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 -- -- Number of accumulation units outstanding at end of period (000 omitted) 831 683 680 562 136 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.92 $1.70 $1.58 $1.35 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 221 168 168 143 64 18 -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (05/01/2002) Accumulation unit value at beginning of period $1.15 $1.14 $1.02 $0.97 $0.84 $1.00 -- -- Accumulation unit value at end of period $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 -- -- Number of accumulation units outstanding at end of period (000 omitted) 136 162 175 177 188 73 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 96 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.44 $1.25 $1.18 $1.00 -- -- -- -- Accumulation unit value at end of period $1.23 $1.44 $1.25 $1.18 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 355 5,948 89 5 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.24 $1.08 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.29 $1.24 $1.08 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 7 8 8 2 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.55 $1.31 $1.26 $1.07 $0.79 $1.00 -- -- Accumulation unit value at end of period $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 -- -- Number of accumulation units outstanding at end of period (000 omitted) 11,900 10,097 9,125 1,935 72 20 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (03/01/2002) Accumulation unit value at beginning of period $1.00 $0.97 $0.96 $0.97 $0.99 $1.00 -- -- Accumulation unit value at end of period $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 -- -- Number of accumulation units outstanding at end of period (000 omitted) 5,476 2,192 1,151 399 76 -- -- -- *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.76% and 2.80%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.10 $1.07 $1.07 $1.04 $1.01 $1.00 -- -- Accumulation unit value at end of period $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 -- -- Number of accumulation units outstanding at end of period (000 omitted) 67,959 33,990 1,077 842 152 40 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 $1.00 Accumulation unit value at end of period $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 35,371 27,624 9,764 608 392 325 144 40 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- -- -- -- -- Accumulation unit value at end of period $1.09 $1.02 -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,149 26,599 -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.25 $1.14 $1.07 $1.00 -- -- -- -- Accumulation unit value at end of period $1.27 $1.25 $1.14 $1.07 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,798 -- -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (06/01/2004) Accumulation unit value at beginning of period $1.18 $1.11 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.19 $1.18 $1.11 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 20,776 8,355 8 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2000) Accumulation unit value at beginning of period $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 $1.00 Accumulation unit value at end of period $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 Number of accumulation units outstanding at end of period (000 omitted) 14,409 15,807 17,584 7,616 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP VALUE FUND (04/30/2004) Accumulation unit value at beginning of period $1.32 $1.13 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.29 $1.32 $1.13 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2 3 3 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (08/30/2002) Accumulation unit value at beginning of period $1.40 $1.42 $1.31 $1.22 $1.02 $1.00 -- -- Accumulation unit value at end of period $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 597 708 735 335 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.11 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.30 $1.26 $1.11 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 367 227 227 174 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/03/2000) Accumulation unit value at beginning of period $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 $1.00 Accumulation unit value at end of period $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 6,207 5,084 3,085 1,544 1,019 864 413 65 - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 97
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.02 $1.54 $1.17 $1.00 -- -- -- -- Accumulation unit value at end of period $2.75 $2.02 $1.54 $1.17 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10,106 9,010 5,172 1,070 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.70 $1.49 $1.45 $1.26 $0.98 $1.00 -- -- Accumulation unit value at end of period $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 -- -- Number of accumulation units outstanding at end of period (000 omitted) 36,774 36,888 18,912 3,700 73 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $2.14 $1.58 $1.37 $1.00 -- -- -- -- Accumulation unit value at end of period $1.74 $2.14 $1.58 $1.37 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 553 510 443 177 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.26 $1.15 $1.00 -- -- -- -- Accumulation unit value at end of period $1.39 $1.34 $1.26 $1.15 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13,828 7,563 5,332 946 -- -- -- -- *Effective June 1, 2008, the Fund will change its name to Wanger USA. - ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.18 $1.10 $1.00 Accumulation unit value at end of period $1.45 $1.34 $1.18 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.29 $1.26 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.80 $1.36 $1.19 $1.00 Accumulation unit value at end of period $1.85 $1.80 $1.36 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 59 67 39 6 - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.03 $1.04 $1.05 $1.00 Accumulation unit value at end of period $1.11 $1.03 $1.04 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 141 224 126 22 - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.00 $1.06 $1.06 $1.00 Accumulation unit value at end of period $1.18 $1.00 $1.06 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 91 149 50 -- - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.09 $1.00 Accumulation unit value at end of period $1.20 $1.29 $1.11 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.06 $1.04 $1.03 $1.00 Accumulation unit value at end of period $1.18 $1.06 $1.04 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 19 30 12 -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.24 $1.14 $1.00 Accumulation unit value at end of period $1.51 $1.49 $1.24 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- EVERGREEN VA CORE BOND FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.04 $1.02 $1.02 $1.00 Accumulation unit value at end of period $1.07 $1.04 $1.02 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 2 11 10 4 - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 98 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- EVERGREEN VA DIVERSIFIED INCOME BUILDER FUND - CLASS 2 (04/30/2004) (PREVIOUSLY EVERGREEN VA STRATEGIC INCOME FUND - CLASS 2) Accumulation unit value at beginning of period $1.08 $1.05 $1.08 $1.00 Accumulation unit value at end of period $1.09 $1.08 $1.05 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 2 11 11 3 - ----------------------------------------------------------------------------------------------- EVERGREEN VA FUNDAMENTAL LARGE CAP FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.27 $1.15 $1.09 $1.00 Accumulation unit value at end of period $1.34 $1.27 $1.15 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- 4 -- -- - ----------------------------------------------------------------------------------------------- EVERGREEN VA GROWTH FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.16 $1.12 $1.00 Accumulation unit value at end of period $1.36 $1.26 $1.16 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- 1 2 -- - ----------------------------------------------------------------------------------------------- EVERGREEN VA HIGH INCOME FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.10 $1.04 $1.05 $1.00 Accumulation unit value at end of period $1.11 $1.10 $1.04 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 2 6 6 3 - ----------------------------------------------------------------------------------------------- EVERGREEN VA INTERNATIONAL EQUITY FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.55 $1.29 $1.14 $1.00 Accumulation unit value at end of period $1.74 $1.55 $1.29 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- 2 1 -- - ----------------------------------------------------------------------------------------------- EVERGREEN VA OMEGA FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.09 $1.06 $1.04 $1.00 Accumulation unit value at end of period $1.19 $1.09 $1.06 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 1 6 5 2 - ----------------------------------------------------------------------------------------------- EVERGREEN VA SPECIAL VALUES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.46 $1.23 $1.14 $1.00 Accumulation unit value at end of period $1.32 $1.46 $1.23 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.37 $1.26 $1.10 $1.00 Accumulation unit value at end of period $1.58 $1.37 $1.26 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 177 296 101 8 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.04 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.06 $1.04 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 166 215 115 19 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.53 $1.40 $1.21 $1.00 Accumulation unit value at end of period $1.73 $1.53 $1.40 $1.21 Number of accumulation units outstanding at end of period (000 omitted) 38 39 16 -- - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.27 $1.10 $1.00 Accumulation unit value at end of period $1.68 $1.47 $1.27 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 2 5 6 5 - ----------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.12 $1.00 Accumulation unit value at end of period $1.30 $1.29 $1.11 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.21 $1.10 $1.16 $1.00 Accumulation unit value at end of period $1.31 $1.21 $1.10 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 64 78 39 8 - ----------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.32 $1.19 $1.00 Accumulation unit value at end of period $1.51 $1.49 $1.32 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 58 65 28 3 - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 99
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.08 $1.06 $1.00 Accumulation unit value at end of period $1.27 $1.14 $1.08 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 57 87 48 8 - ----------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.53 $1.47 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.25 $1.16 $1.00 Accumulation unit value at end of period $1.35 $1.40 $1.25 $1.16 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.14 $1.03 $1.00 Accumulation unit value at end of period $1.11 $1.14 $1.14 $1.03 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.23 $1.18 $1.00 Accumulation unit value at end of period $1.21 $1.42 $1.23 $1.18 Number of accumulation units outstanding at end of period (000 omitted) 4 12 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.22 $1.08 $1.09 $1.00 Accumulation unit value at end of period $1.26 $1.22 $1.08 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.40 $1.19 $1.15 $1.00 Accumulation unit value at end of period $1.30 $1.40 $1.19 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 56 72 43 5 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (04/30/2004) Accumulation unit value at beginning of period $1.02 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.04 $1.02 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- 7 4 -- *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.28% and 2.31%, respectively. - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.08 $1.05 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 66 40 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (04/30/2004) Accumulation unit value at beginning of period $1.50 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.58 $1.50 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 160 181 83 -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- Accumulation unit value at end of period $1.08 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 38 29 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.13 $1.07 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.13 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (06/01/2004) Accumulation unit value at beginning of period $1.17 $1.10 $1.09 $1.00 Accumulation unit value at end of period $1.17 $1.17 $1.10 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 31 14 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.09 $1.05 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.09 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 2 14 21 19 - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 100 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP VALUE FUND (04/30/2004) Accumulation unit value at beginning of period $1.31 $1.12 $1.10 $1.00 Accumulation unit value at end of period $1.27 $1.31 $1.12 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.15 $1.06 $1.00 Accumulation unit value at end of period $1.25 $1.12 $1.15 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- 1 1 1 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.24 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.28 $1.24 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (04/30/2004) Accumulation unit value at beginning of period $1.00 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.03 $1.00 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- 9 5 -- - ----------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.00 $1.52 $1.16 $1.00 Accumulation unit value at end of period $2.70 $2.00 $1.52 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 32 46 24 3 - ----------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.30 $1.15 $1.13 $1.00 Accumulation unit value at end of period $1.24 $1.30 $1.15 $1.13 Number of accumulation units outstanding at end of period (000 omitted) 192 235 119 13 - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $2.11 $1.57 $1.37 $1.00 Accumulation unit value at end of period $1.71 $2.11 $1.57 $1.37 Number of accumulation units outstanding at end of period (000 omitted) -- 3 3 3 - ----------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) (PREVIOUSLY WANGER U.S. SMALLER COMPANIES) Accumulation unit value at beginning of period $1.32 $1.25 $1.15 $1.00 Accumulation unit value at end of period $1.36 $1.32 $1.25 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 49 56 28 4 *Effective June 1, 2008, the Fund will change its name to Wanger USA. - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 101 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenue Received During Calendar Year 2007...... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- 102 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 103 (RIVERSOURCE ANNUITIES LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 45309 H (5/08) PROSPECTUS MAY 1, 2008 EVERGREEN PRIVILEGE(SM) VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/ VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT NEW EVERGREEN PRIVILEGE VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY BEING OFFERED. This prospectus contains information that you should know before investing in Evergreen Privilege Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds, Series II Shares Evergreen Variable Annuity Trust - Class 2 Fidelity(R) Variable Insurance Products - Service Class 2 Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 Oppenheimer Variable Account Funds Putnam Variable Trust - Class IB Shares RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 1 RiverSource Life offers several different annuities which your investment professional may or may not be authorized to offer to you. Each annuity has different features and benefits that may be appropriate for you based on your financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges may also be different between each annuity. TABLE OF CONTENTS KEY TERMS....................................... 3 THE CONTRACT IN BRIEF........................... 5 EXPENSE SUMMARY................................. 7 CONDENSED FINANCIAL INFORMATION (UNAUDITED)..... 10 FINANCIAL STATEMENTS............................ 10 THE VARIABLE ACCOUNT AND THE FUNDS.............. 10 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............ 15 THE ONE-YEAR FIXED ACCOUNT...................... 18 BUYING YOUR CONTRACT............................ 18 CHARGES......................................... 20 VALUING YOUR INVESTMENT......................... 23 MAKING THE MOST OF YOUR CONTRACT................ 24 WITHDRAWALS..................................... 29 TSA -- SPECIAL PROVISIONS....................... 30 CHANGING OWNERSHIP.............................. 30 BENEFITS IN CASE OF DEATH....................... 31 OPTIONAL BENEFITS............................... 34 THE ANNUITY PAYOUT PERIOD....................... 42 TAXES........................................... 44 VOTING RIGHTS................................... 47 SUBSTITUTION OF INVESTMENTS..................... 47 ABOUT THE SERVICE PROVIDERS..................... 48 ADDITIONAL INFORMATION.......................... 49 APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)....................... 50 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........... 53
- -------------------------------------------------------------------------------- 2 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of the funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you may allocate purchase payments or transfer contract value of at least $1,000. These accounts have guaranteed interest rates for Guarantee Periods we declare when you allocate purchase payments or transfer contract value to a GPA. Withdrawals and transfers from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a Guarantee Period Account is withdrawn or transferred more than 30 days before the end of its guarantee period. ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts you allocate to this account earn interest at rates that we declare periodically. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life" refer to RiverSource Life Insurance Company. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 3 VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our administrative office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our administrative office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Contract Option L offers a four year withdrawal charge schedule and investment options in the GPAs, one-year fixed account and/or the subaccounts. Contract Option C eliminates the withdrawal charge schedule in exchange for a higher mortality and expense risk fee and allows investment in the subaccounts only(1). Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to invest. PURPOSE: The purpose of these contracts is to allow you to accumulate money for retirement. You do this by making one or more purchase payments. For contract Option L, you may allocate your purchase payments to the GPAs, one-year fixed account and/or subaccounts. For contract Option C, you may allocate purchase payments to the subaccounts. These accounts, in turn, may earn returns that increase the value of a contract. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract. We will not deduct any contract charges or fees. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: Generally, you may allocate purchase payments to the GPAs, one-year fixed account, and/or the subaccounts, depending on the contract option you select. If you select contract Option L, you may allocate your purchase payments among any or all of: - - the subaccounts, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - GPAs which earn interest at rates declared when you make an allocation to that account. The required minimum investment in each GPA is $1,000. These accounts may not be available in all states. (see "The Guarantee Period Accounts (GPAs)") - - one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "The Fixed Account -- One-Year Fixed Account") If you select contract Option C, you may allocate purchase payments to the subaccounts only. BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the option of making additional purchase payments in the future. Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. (see "Buying Your Contract") TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to a MVA unless an exception applies. You may establish automated transfers among the accounts. We reserve the right to limit transfers to the GPAs and the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract. (see "Making the Most of Your Contract -- Transferring Among Accounts") (1) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs and one-year fixed account for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 5 WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount based on the death benefit selected. (see "Benefits in Case of Death") OPTIONAL BENEFITS: You can buy additional benefits with your contract. Optional benefits vary by state and may have eligibility requirements. (see "Optional Benefits") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you buy a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs are not available during the payout period. (see "The Annuity Payment Period") TAXES: Generally, income earned on your contract value grows tax deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and nonqualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. However, Roth IRAs may grow and be distributed tax free if you meet certain distribution requirements. (see "Taxes") - -------------------------------------------------------------------------------- 6 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSE THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (Contingent deferred sales charge as a percentage of the amount withdrawn) You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE CONTRACT OPTION L PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if the assumed investment rate is 5%. For contract Option C, the discount rate we use in the calculation will be 5.55% if the assumed investment rate is 3.5% and 7.05% if the assumed investment rate is 5%. The withdrawal charge equals the present value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) YOU CAN CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND THE DEATH BENEFIT GUARANTEE PROVIDED. THE COMBINATION YOU CHOOSE DETERMINES THE FEES YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES ROP death benefit 0.15% 1.25% 1.40% MAV death benefit 0.15 1.35 1.50 EDB 0.15 1.55 1.70
IF YOU SELECT CONTRACT OPTION C AND: ROP death benefit 0.15 1.35 1.50 MAV death benefit 0.15 1.45 1.60 EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the current contract anniversary.) BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER (BENEFIT 0.25%* PROTECTOR) FEE
(As a percentage of the contract value charged annually on the contract anniversary.) BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER (BENEFIT 0.40%* PROTECTOR PLUS) FEE
(As a percentage of the contract value charged annually on the contract anniversary.) GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract anniversary.) * This fee applies only if you elect this optional feature. ** For applications signed prior to May 1, 2003, the following current annual rider charges apply: GMIB - 0.30%. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 7 ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDING DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(a)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense reimbursements 0.60% 1.28%
(a) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor and/or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Basic Value Fund, Series II 0.67% 0.25% 0.29% --% 1.21% Shares Evergreen VA Balanced Fund - Class 2 0.30 0.25 0.22 0.02 0.79 (effective May 30, 2008, the Fund will change its name to Evergreen VA Diversified Capital Builder Fund - Class 2) Evergreen VA Core Bond Fund - Class 2 0.32 0.25 0.25 0.03 0.85 Evergreen VA Diversified Income 0.40 0.25 0.24 0.01 0.90 Builder Fund - Class 2 (previously Evergreen VA Strategic Income Fund - Class 2) Evergreen VA Fundamental Large Cap 0.58 0.25 0.17 -- 1.00 Fund - Class 2 Evergreen VA Growth Fund - Class 2 0.70 0.25 0.20 0.01 1.16 Evergreen VA High Income Fund - Class 0.50 0.25 0.30 0.01 1.06 2 Evergreen VA International Equity 0.39 0.25 0.24 -- 0.88 Fund - Class 2 Evergreen VA Omega Fund - Class 2 0.52 0.25 0.19 -- 0.96 Evergreen VA Special Values 0.78 0.25 0.18 0.01 1.22 Fund - Class 2 Fidelity(R) VIP Mid Cap Portfolio 0.56 0.25 0.10 -- 0.91 Service Class 2 FTVIPT Mutual Shares Securities 0.59 0.25 0.13 -- 0.97 Fund - Class 2 Oppenheimer Main Street Small Cap 0.70 0.25 0.02 -- 0.97 Fund/VA, Service Shares Putnam VT International Equity 0.73 0.25 0.11 0.01 1.10 Fund - Class IB Shares RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(1) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable 0.33 0.13 0.14 -- 0.60 Portfolio - Cash Management Fund RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund. - -------------------------------------------------------------------------------- 8 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the EDB and the GMIB. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with EDB $1,195 $1,902 $2,001 $4,198 $386 $1,178 $2,001 $4,198 Contract Option C with EDB 394 1,202 2,040 4,270 394 1,202 2,040 4,270
MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP death benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with ROP death benefit $1,035 $1,415 $1,121 $2,412 $212 $653 $1,121 $2,412 Contract Option C with ROP death benefit 220 678 1,162 2,495 220 678 1,162 2,495
(1) In these examples, the $40 contract administrative charge is approximated as a .064% charge for Option L and a .043% charge for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 9 CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and highest total annual variable account expense combinations in the Appendix. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statement date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. The contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - PRIVATE LABEL: This contract is a "private label" variable annuity. This means the contract includes funds affiliated with the distributor of this contract. Purchase payments and contract values you allocate to subaccounts investing in any of the Evergreen Variable Annuity Trust Funds available under this contract are generally more profitable for the distributor and its affiliates than allocations you make to other subaccounts. In contrast, purchase payments and contract values you allocate to subaccounts investing in any of the RiverSource Variable Series Trust funds are generally more profitable for us and our - -------------------------------------------------------------------------------- 10 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS affiliates. For example, we may receive compensation from our affiliates in connection with purchase payments and contract value you allocated to the RiverSource Variable Series Trust funds that exceeds the range disclosed below for the funds our affiliates do not manage. These relationships may influence recommendations your investment professional makes regarding whether you should invest in the contract, and whether you should allocate purchase payments or contract values to a particular subaccount. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under any asset allocation program we offer or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and upon any substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 11 - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- 12 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Basic Value Fund, Long-term growth of capital. Invests at least 65% of Invesco Aim Advisors, Inc. Series II Shares its total assets in equity securities of U.S. adviser, advisory entities issuers that have market capitalizations of greater affiliated with Invesco Aim than $500 million and are believed to be undervalued Advisors, Inc., subadvisers. in relation to long-term earning power or other factors. The Fund may invest up to 25% of its total assets in foreign securities. Evergreen VA Balanced Capital growth and current income. The Fund seeks to Evergreen Investment Fund - Class 2 achieve its goal by investing in a combination of Management Company, LLC, equity and debt securities. Under normal conditions, adviser; Tattersall Advisory (effective May 30, 2008, the the Fund will invest at least 25% of its assets in Group, Inc., subadviser. Fund will change its name to debt securities and the remainder in equity Evergreen VA Diversified securities. Capital Builder Fund - Class 2) Effective May 30, 2008: The Fund seeks to achieve its goal by investing in a combination of equity and debt securities. The Fund generally expects to invest approximately 10% to 30% of its assets in fixed income securities. Evergreen VA Core Bond Maximize total return through a combination of Evergreen Investment Fund - Class 2 current income and capital growth. The Fund invests Management Company, LLC, primarily in U.S. dollar denominated investment adviser; Tattersall Advisory grade debt securities including debt securities Group, Inc., subadviser. issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. Government, corporate bonds, mortgage-backed securities, asset-backed securities, and other income producing securities. Evergreen VA Diversified High current income from interest on debt securities Evergreen Investment Income Builder Fund - Class with a secondary objective of potential for growth Management Company, LLC, 2 of capital in selecting securities. The Fund seeks adviser; Evergreen to achieve its goal by investing primarily in International Advisors, (previously Evergreen VA domestic below investment grade bonds and other debt subadviser. Strategic Income Fund - securities (which may be denominated in U.S. dollars Class 2) or in non-U.S. currencies) of foreign governments and foreign corporations. Evergreen VA Fundamental Capital growth with the potential for current Evergreen Investment Large Cap Fund - Class 2 income. Invests primarily in common stocks of large Management Company, LLC U.S. companies whose market capitalizations measured at time of purchase fall within the market capitalization range of the companies tracked by the Russell 1000(R) Index. Evergreen VA Growth Long-term capital growth. The Fund seeks to achieve Evergreen Investment Fund - Class 2 its goal by investing at least 75% of its assets in Management Company, LLC common stocks of small- and medium-sized companies whose market capitalizations measured at time of purchase falls within the market capitalization range of the companies tracked by the Russell 2000(R) Growth Index. Evergreen VA High Income High level of current income, with capital growth as Evergreen Investment Fund - Class 2 secondary objective. The Fund seeks to achieve its Management Company, LLC goal by investing primarily in both low-rated and high-rated fixed-income securities, including debt securities, convertible securities, and preferred stocks that are consistent with its primary investment objective of high current income.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Evergreen VA International Long-term capital growth, with modest income as a Evergreen Investment Equity Fund - Class 2 secondary objective. The Fund seeks to achieve its Management Company, LLC goal by investing primarily in equity securities issued by established, quality non-U.S. companies located in countries with developed markets and may purchase securities across all market capitalizations. The Fund may also invest in emerging markets. Evergreen VA Omega Long-term capital growth. Invests primarily in Evergreen Investment Fund - Class 2 common stocks and securities convertible into common Management Company, LLC stocks of U.S. companies across all market capitalizations. Evergreen VA Special Values Capital growth in the value of its shares. The Fund Evergreen Investment Fund - Class 2 seeks to achieve its goal by investing at least 80% Management Company, LLC of its assets in common stocks of small U.S. companies whose market capitalizations measured at the time of purchase fall within the market capitalization range of the companies tracked by the Russell 2000(R) Index. Fidelity(R) VIP Mid Cap Long-term growth of capital. Normally invests Fidelity Management & Portfolio Service Class 2 primarily in common stocks. Normally invests at Research Company (FMR), least 80% of assets in securities of companies with investment manager; FMR U.K., medium market capitalizations. May invest in FMR Far East, sub- advisers. companies with smaller or larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both. FTVIPT Mutual Shares Capital appreciation, with income as a secondary Franklin Mutual Advisers, LLC Securities Fund - Class 2 goal. The Fund normally invests primarily in equity securities of companies that the manager believes are undervalued. The Fund also invests, to a lesser extent in risk arbitrage securities and distressed companies. Oppenheimer Main Street Capital appreciation. Invests mainly in common OppenheimerFunds, Inc. Small Cap Fund/VA, Service stocks of small-capitalization U.S. companies that Shares the fund's investment manager believes have favorable business trends or prospects. Putnam VT International Capital appreciation. The fund pursues its goal by Putnam Investment Management, Equity Fund - Class IB investing mainly in common stocks of companies LLC Shares outside the United States that Putnam Management believes have favorable investment potential. Under normal circumstances, the fund invests at least 80% of its net assets in equity investments. RVST RiverSource Partners Long-term capital appreciation. Under normal market RiverSource Investments, LLC, Variable Portfolio - Small conditions, at least 80% of the Fund's net assets adviser; River Road Asset Cap Value Fund will be invested in small cap companies with market Management, LLC, Donald Smith capitalization, at the time of investment, of up to & Co., Inc., Franklin (previously RiverSource $2.5 billion or that fall within the range of the Portfolio Associates LLC, Variable Portfolio - Small Russell 2000(R) Value Index. The Fund may invest up Barrow, Hanley, Mewhinney & Cap Value Fund) to 25% of its net assets in foreign investments. Strauss, Inc. and Denver Investment Advisors LLC, subadvisers. RVST RiverSource Variable Maximum current income consistent with liquidity and RiverSource Investments, LLC Portfolio - Cash Management stability of principal. Invests primarily in money Fund market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable High level of current income while attempting to RiverSource Investments, LLC Portfolio - Diversified Bond conserve the value of the investment for the longest Fund period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage- and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets. RVST RiverSource Variable High level of current income and, as a secondary RiverSource Investments, LLC Portfolio - Diversified goal, steady growth of capital. Under normal market Equity Income Fund conditions, the Fund invests at least 80% of its net assets in dividend-paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Capital appreciation. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Equity conditions, the Fund invests at least 80% of its net Fund assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments.
THE GUARANTEE PERIOD ACCOUNTS (GPAS) The GPAs may not be available in some states. Investment in the GPAs is not available under contract Option C(1). For contract Option L, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The minimum required investment in each GPA is $1,000. There are restrictions on the amount you can allocate to these accounts as well as on transfers from these accounts (see "Buying Your Contract" and "Transfer policies"). These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the Guarantee Period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion ("Future Rates"). We will determine Future Rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. (1) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. You may transfer or withdraw contract value out of the GPAs within 30 days before the end of the Guarantee Period without receiving a MVA (see "Market Value Adjustment (MVA)" below). During this 30 day window you may choose to start a new Guarantee Period of the same length, transfer the contract value to another GPA, transfer the contract value to any of the subaccounts, or withdraw the contract value from the contract (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your Guarantee Period our current practice is to automatically transfer the contract value into the one-year fixed account. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 15 the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable Guarantee Periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly Duff & Phelp's) -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We guarantee the contract value allocated to your GPA, including the interest credited, if you do not make any transfers or withdrawals from that GPA prior to 30 days before the end of the Guarantee Period. However, we will apply a MVA if a transfer or withdrawal occurs prior to this time, unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. The MVA also affects amounts withdrawn from a GPA prior to 30 days before the end of the Guarantee Period that are used to purchase payouts under an annuity payout plan. We will refer to all of these transactions as "early withdrawals" in the discussion below. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your Guarantee Period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES As the examples below demonstrate, the application of an MVA may result in either a gain or loss of principal. We refer to all of the transactions described below as "early withdrawals." ASSUME: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. - -------------------------------------------------------------------------------- 16 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and you have begun your fourth contract year at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges on contract Option L, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you requested after we apply the MVA (and any applicable withdrawal charge for contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. We will not apply MVAs to amounts withdrawn for annual contract charges, to amounts we pay as death claims or to automatic transfers from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep Strategy. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 17 THE FIXED ACCOUNT The fixed account is our general account. Amounts allocated to the fixed account become part of our general account. The fixed account includes the one-year fixed account. We credit interest on amounts you allocate to the fixed account at rates we determine from time to time in our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns we earn on our general account investments, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed minimum interest rate on amounts invested in the fixed account may vary by state but will not be lower than state law allows. We back the principal and interest guarantees relating to the fixed account. These guarantees are based on the continued claims-paying ability of RiverSource Life. The fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the fixed account, however, disclosures regarding the fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. THE ONE-YEAR FIXED ACCOUNT Investment in the one-year fixed account is not available under contract Option C(1). For contract Option L, you may allocate purchase payments or transfer accumulated value to the one-year fixed account. Some states may restrict the amount you can allocate to this account. We back the principal and interest guarantees relating to the one-year fixed account. These guarantees are based on the continued claims-paying ability of the company. The value of the one-year fixed account increases as we credit interest to the account. Purchase payments and transfers to the one-year fixed account become part of our general account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. The interest rate we apply to each purchase payment and transfer to the one-year fixed account is guaranteed for one year. There are restrictions on the amount you can allocate to this account as well as on transfers from this account. (see "Making the Most of Your Contract -- Transfer policies") Interest in the one-year fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the one-year fixed account, however, disclosures regarding the one-year fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. (1) For applications dated May 1, 2003 or after. Restriction of investment in the one-year fixed account for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. BUYING YOUR CONTRACT New contracts are not currently being offered. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. As the owner, you have all rights and may receive all benefits under the contract. You can own a qualified or nonqualified annuity. Generally, you may be able to buy different contracts with the same underlying funds. These contracts have different mortality and expense risk fees, withdrawal charges and may offer purchase payment credits. For information on these contracts, please call us at the telephone number listed on the first page of this prospectus or ask your investment professional. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 90 or younger. (The age limit may be younger for qualified annuities in some states.) When you applied, you selected (if available in your state): - - contract Option L or Option C; - - a death benefit option(1); - - the optional Benefit Protector Death Benefit Rider(2); - - the optional Benefit Protector Plus Death Benefit Rider(2); - - the optional Guaranteed Minimum Income Benefit Rider(3); - - the GPAs, the one-year fixed account and/or subaccounts in which you want to invest(4); - - how you want to make purchase payments; and - - a beneficiary. - -------------------------------------------------------------------------------- 18 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS (1) If you and the annuitant are 79 or younger at contract issue, you may select from either the ROP death benefit, MAV death benefit or EDB. If you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. EDB may not be available in all states. (2) Not available with the EDB. May not be available in all states. (3) Available at the time you purchase your contract if the annuitant is 75 or younger at contract issue and you also select the EDB. May not be available in all states. (4) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs and one-year fixed account under contract Option C has been filed in the various states in which the contract is offered. Please check with your sales representative to determine whether this restriction applies to your state. Some states restrict the amount you can allocate to the GPAs and the one-year fixed account. GPAs are not available under contracts issued in Maryland, Oregon, Pennsylvania or Washington and may not be available in other states. The contract provides for allocation of purchase payments to the subaccounts of the variable account, to the GPAs and/or to the one-year fixed account in even 1% increments subject to the $1,000 minimum required investment for the GPAs. For contracts with applications signed on or after June 16, 2003, the amount of any purchase payment allocated to the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish an automated dollar cost averaging arrangement with respect to the purchase payment according to procedures currently in effect, or you are participating according to the rules of an asset allocation model portfolio program available under the contract, if any. We applied your initial purchase payment to the GPAs, one-year fixed account and subaccounts you selected within two business days after we received it at our corporate office. We will credit additional purchase payments you make to your accounts on the valuation date we receive them. If we receive an additional purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our administrative office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a SIP. To begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts are scheduled to begin on the retirement date. When we processed your application, we established the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. You can also select a date within the maximum limits. Your selected date can align with your actual retirement from a job, or it can be a different future date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75, or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the retirement date generally must be: - - for IRAs, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 85th birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, then the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 19 PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM PURCHASE PAYMENTS If paying by SIP: $50 initial payment. $50 for additional payments. If paying by any other method: $10,000 initial payment. $100 for additional payments. MAXIMUM ALLOWABLE PURCHASE PAYMENTS* $1,000,000 for issue ages up to 85. $100,000 for issue ages 86 to 90.
* This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waiver or increase the maximum limit. For qualified annuities, the tax-deferred retirement plan's or the Code's limits on annual contributions also apply. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to our corporate office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including, but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values or to satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers, withdrawals or death benefits until instructions are received from the appropriate governmental authority or a court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary, or earlier if the contract is withdrawn. We prorate this charge among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. Some states limit the amount of any contract charge allocated to the GPAs and the one-year fixed account. We will waive this charge when your contract value is $100,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct the charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the one-year fixed account. We cannot - -------------------------------------------------------------------------------- 20 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS increase these fees. These fees are based on the contract you select (either Option L or Option C) and the death benefit that applies to your contract:
CONTRACT OPTION L CONTRACT OPTION C ROP death benefit: 1.25% 1.35% MAV death benefit: 1.35 1.45 EDB: 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the annuity payout period even if the annuity payout plan does not involve a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L discussed below will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts. If you select contract Option L and you withdraw all or part of your contract, you may be subject to a withdrawal charge. A withdrawal charge applies if you make a withdrawal in the first four contract years. You may withdraw amounts totaling up to 10% of your prior anniversary's contract value free of charge during the first four years of your contract. (We consider your initial purchase payment to be the prior anniversary's contract value during the first contract year.) We do not assess a withdrawal charge on this amount. The withdrawal charge percentages that apply to you are shown below and are stated in your contract. In addition, amounts withdrawn from a GPA more than 30 days before the end of the applicable Guarantee Period are generally subject to a MVA. (See "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR WITHDRAWAL CHARGE CONTRACT OPTION L PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. The withdrawal charge percentage is applied to this total amount. We pay you the amount you requested. EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal charge of 7%. The total amount we actually deduct from your contract is $1,075.27. We determine this amount as follows: AMOUNT REQUESTED $1,000 ---------------------------- OR ------ = $1,075.27 1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is $75.27. We pay you the $1,000 you requested. If you make a full withdrawal of your contract, we also will deduct the applicable contract administrative charge. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if the assumed investment rate is 5%. For contract Option C, the discount rate we use in the calculation will be 5.55% if the assumed investment rate is 3.5% and 7.05% if the assumed investment rate is 5%. The withdrawal charge equals the present - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 21 value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. WAIVER OF WITHDRAWAL CHARGES We do not assess withdrawal charges for: - - withdrawals of amounts totaling up to 10% of your prior contract anniversary's contract value; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required minimum distribution amount calculated under your specific contract currently in force; - - contracts settled using an annuity payout plan; - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. - - Withdrawals you make if you or the annuitant become disabled within the meaning of the Code Section 72(m)(7) after contract issue. The disabled person must also be receiving Social Security disability or state long term disability benefits. The disabled person must be age 70 or younger at the time of withdrawal. You must provide us with a signed letter from the disabled person stating that he or she meets the above criteria, a legible photocopy of Social Security disability or state long term disability benefit payments and the application for such payments. POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. OPTIONAL DEATH BENEFIT CHARGES BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the subaccounts, the GPAs and one-year fixed account in the same proportion your interest in each account bears to your total contract value. - -------------------------------------------------------------------------------- 22 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. OPTIONAL LIVING BENEFIT CHARGES GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE* We charge a fee (currently 0.70%) based on the GMIB benefit base for this optional feature only if you select it. If selected, we deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate the GMIB fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the GMIB fee from the proceeds payable adjusted for the number of calendar days coverage was in place. We cannot increase the GMIB fee after the rider effective date and it does not apply after annuity payouts begin. * For applications signed prior to May 1, 2003, the following current annual rider charges apply: GMIB - 0.30%. VALUING YOUR INVESTMENT We value your accounts as follows: GPAS AND ONE-YEAR FIXED ACCOUNT We value the amounts you allocated to the GPAs and the one-year fixed account directly in dollars. The value of these accounts equals: - - the sum of your purchase payments and transfer amounts allocated to the one-year fixed account and the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after the MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Benefit Protector rider; - Benefit Protector Plus rider; and/or - Guaranteed Minimum Income Benefit rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: to calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 23 - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and the deduction of a prorated portion of: - - the fee for any of the following optional benefits you have selected: - Benefit Protector rider; - Benefit Protector Plus rider; and/or - Guaranteed Minimum Income Benefit rider. Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten year GPAs are not available for automated transfers. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from either the one-year fixed account or the two-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low .... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
- -------------------------------------------------------------------------------- 24 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY If you select contract Option L and your net contract value(1) is at least $10,000, you can choose to participate in the Special DCA program. There is no charge for the Special DCA program. Under the Special DCA program, you can allocate a new purchase payment to a six-month or twelve-month Special DCA account. (1) "Net contract value" equals your current contract value plus any new purchase payment. If this is a new contract funded by purchase payments from multiple sources, we determine your net contract value based on the purchase payments, withdrawal requests and exchange requests submitted with your application. You may only allocate a new purchase payment of at least $1,000 to a Special DCA account. You cannot transfer existing contract values into a Special DCA account. Each Special DCA account lasts for either six or twelve months (depending on the time period you select) from the time we receive your first purchase payment. We make monthly transfers of your total Special DCA account value into the GPAs, one-year fixed account and/or subaccount you select over the time period you select (either six or twelve months). If you elect to transfer into a GPA, you must meet the $1,000 minimum required investment limitation for each transfer. We reserve the right to credit a lower interest rate to each Special DCA account if you select the GPAs or the one-year fixed account as part of your Special DCA transfers. We will change the interest rate on each Special DCA account from time to time at our discretion. We base these rates on competition and on the interest rate we are crediting to the one-year fixed account at the time of the change. Once we credit interest to a particular purchase payment that rate does not change even if we change the rate we credit on new purchase payments or if your net contract value changes. We credit each Special DCA account with current guaranteed annual rate that is in effect on the date we receive your purchase payment. However, we credit this annual rate over the six or twelve-month period on the balance remaining in your Special DCA account. Therefore, the net effective interest rate you receive is less than the stated annual rate. We do not credit this interest after we transfer the value out of the Special DCA account into the accounts you selected. Once you establish a Special DCA account, you cannot allocate additional purchase payments to it. However, you may establish another new Special DCA account and allocate new purchase payments to it when we change the interest rates we offer on these accounts. If you are funding a Special DCA account from multiple sources, we apply each purchase payment to the account and credit interest on that purchase payment on the date we receive it. This means that all purchase payments may not be in the Special DCA account at the beginning of the six or twelve-month period. Therefore, you may receive less total interest than you would have if all your purchase payments were in the Special DCA account from the beginning. If we receive any of your multiple payments after the six or twelve-month period ends, you can either allocate those payments to a new Special DCA account (if available) or to any other accounts available under your contract. You cannot participate in the Special DCA program if you are making payments under a Systematic Investment Plan. You may simultaneously participate in the Special DCA program and the asset-rebalancing program as long as your subaccount allocation is the same under both programs. If you elect to change your subaccount allocation under one program, we automatically will change it under the other program so they match. If you participate in more than one Special DCA account, the asset allocation for each account may be different as long as you are not also participating in the asset-rebalancing program. You may terminate your participation in the Special DCA program at any time. If you do, we will not credit the current guaranteed annual interest rate on any remaining Special DCA account balance. We will transfer the remaining balance from your Special DCA account to the other accounts you selected for your DCA transfers or we will allocate it in any manner you specify. Similarly, if we cannot accept any additional purchase payments into the Special DCA program, we will allocate the purchase payments to the other accounts you selected for your DCA transfers or in any other manner you specify. We can modify the terms or discontinue the Special DCA program at any time. Any modifications will not affect any purchase payments that are already in a Special DCA account. For more information on the Special DCA program, contact your investment professional. The special DCA program does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon you willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 25 ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed account. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. If you are also participating in the Special DCA program and you change your subaccount asset allocation for the asset-rebalancing program, we will change your subaccount asset allocation under the Special DCA program to match. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. TRANSFERRING AMONG ACCOUNTS You may transfer contract value from any one subaccount, GPAs or the one-year fixed account, to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. We reserve the right to limit transfers to the GPAs and the one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - It is our general policy to allow you to transfer contract values from the one-year fixed account to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to a MVA. For contracts issued before June 16, 2003, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at any time. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. For contracts with applications signed on or after June 16, 2003, the amount of contract value transferred to the GPAs and the one-year fixed account cannot result in the value of the GPAs and the one-year fixed account in total being greater than 30% of the contract value. The time limitations on transfers from the GPAs and one-year fixed account will be enforced, and transfers out of the GPAs and one-year fixed account are limited to 30% of the GPA and one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the Guarantee Period will receive a MVA*, which may result in a gain or loss of contract value. - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - If you select a variable payout, once annuity payouts begin, you may make transfers once per contract year among the subaccounts and we reserve the right to limit the number of subaccounts in which you may invest. - -------------------------------------------------------------------------------- 26 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS - - Once annuity payouts begin, you may not make any transfers to the GPAs. * Unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under an automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 27 activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund, may require us to reject your transfer request. For example, while we disregard transfers permitted under an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our corporate office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers or partial withdrawals among your subaccounts, GPAs or the one-year fixed account. You can start or stop this service by written request or other method acceptable to us. - -------------------------------------------------------------------------------- 28 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS You must allow 30 days for us to change any instructions that are currently in place. - - Automated transfers from the one-year fixed account to any one of the subaccounts may not exceed an amount that, if continued, would deplete the one-year fixed account within 12 months. Until further notice, however, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at any time. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly; $250 quarterly, semiannually or annually 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our corporate office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our corporate office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay withdrawal charges if you selected contract Option L, contract charges or any applicable optional rider charges (see "Charges"). Additionally, IRS taxes and penalties may apply (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Plan E (see "The Annuity Payout Period -- Annuity Payout Plans"). Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will withdraw money from all your subaccounts, GPAs and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless you request otherwise. After executing a partial withdrawal, the value in each subaccount, GPA and one-year fixed account must be either zero or at least $50. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 29 NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the - -------------------------------------------------------------------------------- 30 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS rider will terminate upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are three death benefit options under your contract: RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT; - - Maximum Anniversary Value (MAV) death benefit; and - - Enhanced Death Benefit Rider (EDB). If it is available in your state and if both you and the annuitant 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. If you select the GMIB you must elect the EDB. Once you elect a death benefit, you cannot change it. We show the option that applies in your contract. The combination of the contract and death benefit option you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under all options, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you selected when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. RETURN OF PURCHASE PAYMENTS DEATH BENEFIT The ROP is intended to help protect your beneficiaries financially in that they will never receive less than your purchase payments adjusted for withdrawals. If you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greater of: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH = PW X DB BENEFIT ------------ CV
PW = the partial withdrawal including any applicable MVA or withdrawal charge (contract Option L only). DB = the death benefit on the date of (but prior to) the partial withdrawal. CV = contract value on the date of (but prior to) the partial withdrawal. EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary you make an additional purchase payment of $5,000. - - During the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal. - - During the third contract year the contract value grows to $23,000. We calculate the ROP death benefit as follows: Contract value at death: $23,000.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- ROP death benefit, calculated as the greatest of these two values: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT The MAV death benefit is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. The MAV death benefit does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not the MAV death benefit is appropriate for your situation. If it is available in your state and if both you and the annuitant are age 79 or younger at contract issue, you may choose to add the MAV death benefit to your contract at the time of purchase. Once you select the MAV death benefit, you may not cancel it. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 31 The MAV death benefit provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of the following: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary. MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each contract anniversary through age 80. There is no MAV prior to the first contract anniversary. On the first contract anniversary we set the MAV equal to the greater of: (a) your current contract value, or (b) total purchase payments minus adjusted partial withdrawals. Every contract anniversary after that, through age 80, we compare the previous anniversary's MAV (plus any purchase payments since that anniversary minus adjusted partial withdrawals since that anniversary) to the current contract value and we reset the MAV to the higher value. We stop resetting the MAV after you or the annuitant reach age 81. However, we continue to add subsequent purchase payments and subtract adjusted partial withdrawals from the MAV. EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary the contract value grows to $29,000. - - During the second contract year the contract value falls to $22,000, at which point you take a $1,500 partial withdrawal, leaving a contract value of $20,500. We calculate the MAV death benefit as follows: Contract value at death: $20,500.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments $20,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $20,000 ---------------- = -1,363.64 $22,000 ---------- for a return of purchase payment death benefit of: $18,636.36 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $29,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 x $29,000 ---------------- = -1,977.27 $22,000 ---------- for a MAV death benefit of: $27,022.73 ---------- The MAV death benefit, calculated as the greatest of these three values: $27,022.73
ENHANCED DEATH BENEFIT RIDER The EDB is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. The EDB does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not the EDB is appropriate for your situation. If it is available in your state and both you and the annuitant are 79 or younger at contract issue, you may choose to add the EDB to your contract at the time you purchase your contract. If you select the GMIB you must elect the EDB. The EDB provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. - -------------------------------------------------------------------------------- 32 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts at issue increased by 5%, - - plus any subsequent amounts allocated to the subaccounts, - - minus adjusted transfers and partial withdrawals from the subaccounts. Thereafter, we continue to add subsequent amounts allocated to the subaccounts and subtract adjusted transfers and partial withdrawals from the subaccounts. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. PWT X VAF 5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ------------- SV
PWT = the amount transferred from the subaccounts or the amount of the partial withdrawal (including MVA and any applicable withdrawal charge for contract Option L) from the subaccounts. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts on the date of (but prior to) the transfer or partial withdrawal.
EXAMPLE - - You purchase contract Option L with a payment of $25,000 with $5,000 allocated to the one-year fixed account and $20,000 allocated to the subaccounts. - - On the first contract anniversary, the one-year fixed account value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200. - - During the second contract year, the one-year fixed account value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal all from the subaccounts, leaving the contract value at $22,800. The death benefit is calculated as follows: Contract value at death: $22,800.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP death benefit of: $23,456.79 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV death benefit of: $23,456.79 ---------- The 5% rising floor: The variable account floor on the first contract anniversary, calculated as: 1.05 $21,000.00 x $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% rising floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the one-year fixed account value: +5,300.00 5% rising floor (value of the GPAs, one-year fixed account and the variable $24,642.11 account floor): ---------- EDB, calculated as the greatest of these three values: $24,642.11
- -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 33 IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. If requested, we will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and Benefit Protector Plus rider, if selected, will terminate. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the IRS; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and the Benefit Protector Plus rider, if selected, will terminate. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year pay out or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan, which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS OPTIONAL DEATH BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus or the EDB. We reserve the right to discontinue offering the Benefit Protector for new contracts. - -------------------------------------------------------------------------------- 34 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit (see "Benefits in Case of Death), plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR: - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with the MAV death benefit. - - During the first contract year the contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 - - On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 - - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $58,667
- -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 35 - - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000 - - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000 - - During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. NOTE: For special tax considerations associated with the Benefit Protector, see "Taxes." BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is available only for purchases through a transfer, exchange or rollover from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector or the EDB. We reserve the right to discontinue offering the Benefit Protector Plus for new contracts. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking required minimum distributions. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. - -------------------------------------------------------------------------------- 36 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus: - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU OR THE ANNUITANT ARE PERCENTAGE IF YOU AND THE ANNUITANT ARE CONTRACT YEAR 70 OR OLDER ON THE RIDER EFFECTIVE DATE UNDER AGE 70 ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER AGE 70 CONTRACT YEAR ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) IF YOU OR THE ANNUITANT ARE AGE 70 CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% X (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR PLUS - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with the MAV death benefit. - - During the first contract year contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000
- -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 37 - - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 -------- Total death benefit of: $64,167 - - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit on equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000 - - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000 - - During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). NOTE: For special tax considerations associated with the Benefit Protector Plus, see "Taxes." - -------------------------------------------------------------------------------- 38 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS OPTIONAL LIVING BENEFITS GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) The GMIB is intended to provide you with a guaranteed minimum lifetime income regardless of the volatility inherent in the investments in the subaccounts. If the annuitant is between age 70 and age 75 at contract issue, you should consider whether the GMIB is appropriate for your situation because: - - you must hold the GMIB for 10 years*; - - the GMIB terminates** on the contract anniversary after the annuitant's 86th birthday; - - you can only exercise the GMIB within 30 days after a contract anniversary*; - - the MAV and the 5% rising floor values we use in the GMIB benefit base to calculate annuity payouts under the GMIB are limited after age 81; and - - there are additional costs associated with the rider. Be sure to discuss whether or not the GMIB is appropriate for your situation with your investment professional. * Unless the annuitant qualifies for a contingent event (see "Charges - Contingent events"). ** The rider and annual fee terminate on the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. If you are purchasing the contract as a qualified annuity, such as an IRA, and you are planning to begin annuity payouts after the date on which minimum distributions required by the IRS must begin, you should consider whether the GMIB is appropriate for you. Partial withdrawals you take from the contract, including those taken to satisfy RMDs, will reduce the GMIB benefit base (defined below), which in turn may reduce or eliminate the amount of any annuity payments available under the rider (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Consult a tax advisor before you purchase any GMIB with a qualified annuity, such as an IRA. If this rider is available in your state and the annuitant is 75 or younger at contract issue, you may choose to add this optional benefit to your contract for an additional annual charge which we describe below. If you select the GMIB, you must elect the EDB at the time you purchase your contract. Your rider effective date will be the contract issue date. In some instances, we may allow you to add the GMIB to your contract at a later date if it was not available when you initially purchased your contract. In these instances, we would add the GMIB on the next contract anniversary and this would become the rider effective date. For purposes of calculating the GMIB benefit base under these circumstances, we consider the contract value on the rider effective date to be the initial purchase payment; we disregard all previous purchase payments, transfers and withdrawals in the GMIB calculations. INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate your purchase payments or transfers to any of the subaccounts, GPAs or the one-year fixed account. For contract Option C, you may allocate purchase payments to the subaccounts. We reserve the right to limit the amount you allocate to subaccounts investing in the RiverSource Variable Portfolio -- Cash Management Fund to 10% of the total amount in the subaccounts. If we are required to activate this restriction, and you have more than 10% of your subaccount value in this fund, we will send you a notice and ask that you reallocate your contract value so that the 10% limitation is satisfied within 60 days. We will terminate the GMIB if you have not satisfied the limitation after 60 days. GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit base is the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the maximum anniversary value at the last contract anniversary plus any payments made since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. Keep in mind that the MAV and the 5% rising floor values are limited after age 81. We reserve the right to exclude from the GMIB benefit base any purchase payments you make in the five years before you exercise the GMIB. We would do so only if such payments total $50,000 or more or if they are 25% or more of total contract payments. If we exercise this right, we: - - subtract each payment adjusted for market value from the contract value and the MAV. - - subtract each payment from the 5% rising floor. We adjust the payments made to the GPAs and the one-year fixed account for market value. We increase payments allocated to the subaccounts by 5% for the number of full contract years they have been in the contract before we subtract them from the 5% rising floor. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 39 For each payment, we calculate the market value adjustment to the contract value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor as: PMT X CVG --------- ECV
PMT = each purchase payment made in the five years before you exercise the GMIB. CVG = current contract value at the time you exercise the GMIB. ECV = the estimated contract value on the anniversary prior to the payment in question. We assume that all payments and partial withdrawals occur at the beginning of a contract year. For each payment, we calculate the 5% increase of payments allocated to the subaccounts as: PMT X (1.05)(CY) CY = the full number of contract years the payment has been in the contract. EXERCISING THE GMIB: - - you may only exercise the GMIB within 30 days after any contract anniversary following the expiration of a ten-year waiting period from the rider effective date. However, there is an exception if at any time the annuitant experiences a "contingent event" (disability, terminal illness or confinement to a nursing home or hospital, see "Charges -- Contingent events" for more details.) - - the annuitant on the retirement date must be between 50 and 86 years old. - - you can only take an annuity payout under one of the following annuity payout plans: - Plan A -- Life Annuity -- no refund - Plan B -- Life Annuity with ten years certain - Plan D -- Joint and last survivor life annuity -- no refund - - you may change the annuitant for the payouts. When you exercise your GMIB, you may select a fixed or variable annuity payout plan. Fixed annuity payouts are calculated using the annuity purchase rates based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale G. Your annuity payouts remain fixed for the lifetime of the annuity payout period. First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. If you exercise the GMIB under a contingent event, you can take up to 50% of the benefit base in cash. You can use the balance of the GMIB benefit base for annuity payouts calculated using the guaranteed annuity purchase rates under any one of the payout plans listed above as long as the annuitant is between 50 and 86 years old on the retirement date. The GMIB benchmarks the contract growth at each anniversary against several comparison values and sets the GMIB benefit base equal to the largest value. The GMIB benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the GMIB. If the GMIB benefit base is greater than the contract value, the GMIB may provide a higher annuity payout level than is otherwise available. However, the GMIB uses guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we will apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the GMIB may be less than the income the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the GMIB, - -------------------------------------------------------------------------------- 40 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS you will receive the higher standard payout option. The GMIB does not create contract value or guarantee the performance of any investment option. TERMINATING THE GMIB - - You may terminate the rider within 30 days after the first and fifth rider anniversaries. - - You may terminate the rider any time after the tenth rider anniversary. - - The rider will terminate on the date: - you make a full withdrawal from the contract; - a death benefit is payable; or - you choose to begin taking annuity payouts under the regular contract provisions. - - The rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. EXAMPLE - - You purchase the contract during the 2006 calendar year with a payment of $100,000 and you allocate all your purchase payments to the subaccounts. - - There are no additional purchase payments and no partial withdrawals. - - Assume the annuitant is male and age 55 at contract issue. For the joint and last survivor option (annuity payout Plan D), the joint annuitant is female and age 55 at contract issue. Taking into account fluctuations in contract value due to market conditions, we calculate the GMIB benefit base as:
CONTRACT GMIB ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE 1 $107,000 $107,000 $105,000 2 125,000 125,000 110,250 3 132,000 132,000 115,763 4 150,000 150,000 121,551 5 85,000 150,000 127,628 6 120,000 150,000 134,010 7 138,000 150,000 140,710 8 152,000 152,000 147,746 9 139,000 152,000 155,133 10 126,000 152,000 162,889 $162,889 11 138,000 152,000 171,034 171,034 12 147,000 152,000 179,586 179,586 13 163,000 163,000 188,565 188,565 14 159,000 163,000 197,993 197,993 15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally, the GMIB benefit base may increase if the contract value increases. However, you should keep in mind that you are always entitled to annuitize using the contract value without exercising the GMIB. If you annuitize the contract within 30 days after a contract anniversary, the payout under a fixed annuity option (which is the same as the minimum payout for the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND 10 $162,889 (5% rising floor) $ 840.51 $ 817.70 $672.73 15 212,000 (MAV) 1,250.80 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates of 3% stated in Table B of the contract. Payouts under the standard provisions of this contract will be based on our annuity rates in effect at annuitization and are guaranteed to be greater than or - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 41 equal to the guaranteed annuity rates stated in Table B of the contract. The fixed annuity payout available under the standard provisions of this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND 10 $126,000 $ 650.16 $ 632.52 $520.38 15 212,000 1,250.80 1,193.56 968.84
At the 15th contract anniversary you would not experience a benefit from the GMIB as the payout available to you is equal to or less than the payout available under the standard provisions of the contract. When the GMIB payout is less than the payout available under the standard provisions of the contract, you will receive the higher standard payout. Remember that after the first year, lifetime income payouts under a variable annuity payout option will depend on the investment performance of the subaccounts you select. If your subaccount performance is 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. This fee currently costs 0.70% of the GMIB benefit base annually and it is taken in a lump sum from the contract value on each contract anniversary at the end of each contract year. If the contract is terminated or if annuity payouts begin, we will deduct the fee at that time adjusted for the number of calendar days coverage was in place. We cannot increase the GMIB fee after the rider effective date and it does not apply after annuity payouts begin. We calculate the fee as follows: BB + AT - FAV
BB = the GMIB benefit base. AT = adjusted transfers from the subaccounts to the GPAs or the one-year fixed account made in the six months before the contract anniversary calculated as: PT X VAT -------- SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-year fixed account within six months of the contract anniversary VAT = variable account floor on the date of (but prior to) the transfer SVT = value of the subaccounts on the date of (but prior to) the transfer FAV = the value of your GPAs and the one-year fixed account. The result of AT - FAV will never be greater than zero. This allows us to base the GMIB fee largely on the subaccounts. EXAMPLE - - You purchase the contract with a payment of $100,000 and allocate all of your payment to the subaccounts. - - You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU 1 $ 80,000 0.70% 5% rising floor = $100,000 X 1.05 $ 735 2 150,000 0.70% Contract value = $150,000 1,050 3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below except under annuity Payout Plan E. Under both contract Option L and Option C, you also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - -------------------------------------------------------------------------------- 42 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin, see "Making the Most of Your Contract -- Transfer policies." ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payouts for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payment, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we have made only one monthly payout, we will not make any more payouts. - - PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly payouts for a guaranteed payout period of five, ten or 15 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect. We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the annuity payout period, you may make full and partial withdrawals. If you make a full withdrawal, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. If the original contract was an Option L contract, the discount rate we use in the calculation will vary between 5.45% and 6.95% depending on the applicable assumed investment rate. If the original contract was an Option C contract, the discount rate we use in the calculation will vary between 5.55% and 7.05% depending on the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes.") ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 43 contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. - -------------------------------------------------------------------------------- 44 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 45 If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial - -------------------------------------------------------------------------------- 46 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or are not the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource(R) Variable Portfolio -- Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 47 ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate, serves as the principal underwriter of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. Although we no longer offer the contract for sale, you may continue to make purchase payments if permitted under the terms of your contract. We pay commissions to an affiliated selling firm of up to 4.25% of purchase payments on the contract as well as service/trail commissions of up to 1.00% based on annual total contract value for as long as the contract remains in effect. We also may pay a temporary additional sales commission of up to 1.00% of purchase payments for a period of time we select. These commissions do not change depending on which subaccounts you choose to allocate your purchase payments. From time to time and in accordance with applicable laws and regulations, we may also pay or provide the selling firm with various cash and non-cash promotional incentives including, but not limited to bonuses, short-term sales incentive payments, marketing allowances, costs associated with sales conferences and educational seminars and sales recognition awards. A portion of the payments made to the selling firm may be passed on to its sales representatives in accordance with its internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. Ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your contract. We pay the commissions and other compensation described above from our assets. Our assets include: - - revenues we receive from fees and expenses that you will pay when buying, owning and surrendering the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- the funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The funds"); and - - revenues we receive from other contracts and policies we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part of all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including surrender charges; and - - fees and expenses charged by the underlying funds in which the subaccounts you select invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. - -------------------------------------------------------------------------------- 48 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement and other materials we file. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 49 APPENDIX: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (07/31/2002) Accumulation unit value at beginning of period $1.58 $1.42 $1.37 $1.25 $0.95 $1.00 -- -- -- -- Accumulation unit value at end of period $1.58 $1.58 $1.42 $1.37 $1.25 $0.95 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 677 773 870 898 614 11 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA BALANCED FUND - CLASS 2* (07/31/2002) Accumulation unit value at beginning of period $1.33 $1.23 $1.19 $1.14 $1.00 $1.00 -- -- -- -- Accumulation unit value at end of period $1.40 $1.33 $1.23 $1.19 $1.14 $1.00 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 114 115 114 103 76 -- -- -- -- -- *Effective May 30, 2008, the Fund will change its name to Evergreen VA Diversified Capital Builder Fund - Class 2. - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA CORE BOND FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.12 $1.09 $1.08 $1.06 $1.04 $1.00 -- -- -- -- Accumulation unit value at end of period $1.16 $1.12 $1.09 $1.08 $1.06 $1.04 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,185 2,483 2,472 2,284 1,363 106 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA DIVERSIFIED INCOME BUILDER FUND - CLASS 2 (07/31/2002) (PREVIOUSLY EVERGREEN VA STRATEGIC INCOME FUND - CLASS 2) Accumulation unit value at beginning of period $1.35 $1.29 $1.33 $1.24 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.38 $1.35 $1.29 $1.33 $1.24 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,996 2,405 2,518 2,479 927 4 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA FUNDAMENTAL LARGE CAP FUND - CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.57 $1.41 $1.32 $1.23 $0.96 $1.00 -- -- -- -- Accumulation unit value at end of period $1.67 $1.57 $1.41 $1.32 $1.23 $0.96 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 770 872 1,000 624 458 -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA GROWTH FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.73 $1.58 $1.51 $1.35 $0.99 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.73 $1.58 $1.51 $1.35 $0.99 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 230 250 267 205 138 4 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA HIGH INCOME FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.38 $1.29 $1.29 $1.21 $1.04 $1.00 -- -- -- -- Accumulation unit value at end of period $1.39 $1.38 $1.29 $1.29 $1.21 $1.04 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 665 708 763 952 751 103 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.95 $1.61 $1.41 $1.20 $0.93 $1.00 -- -- -- -- Accumulation unit value at end of period $2.20 $1.95 $1.61 $1.41 $1.20 $0.93 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 679 717 623 663 493 12 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA OMEGA FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.49 $1.43 $1.40 $1.33 $0.96 $1.00 -- -- -- -- Accumulation unit value at end of period $1.64 $1.49 $1.43 $1.40 $1.33 $0.96 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 464 531 573 580 441 13 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VA SPECIAL VALUES FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.87 $1.57 $1.44 $1.21 $0.95 $1.00 -- -- -- -- Accumulation unit value at end of period $1.70 $1.87 $1.57 $1.44 $1.21 $0.95 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,130 1,328 1,360 1,273 460 7 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 $1.00 -- -- -- Accumulation unit value at end of period $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,308 3,045 2,336 1,901 1,151 250 94 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999) Accumulation unit value at beginning of period $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 $1.00 -- Accumulation unit value at end of period $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 -- Number of accumulation units outstanding at end of period (000 omitted) 9,245 10,913 11,340 11,643 4,692 966 546 170 31 -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 50 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.95 $1.72 $1.59 $1.35 $0.95 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.95 $1.72 $1.59 $1.35 $0.95 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 307 330 355 322 247 4 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999) Accumulation unit value at beginning of period $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 $1.00 -- Accumulation unit value at end of period $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 -- Number of accumulation units outstanding at end of period (000 omitted) 1,885 2,110 2,185 2,258 2,177 1,856 1,775 2,192 347 -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.57 $1.33 $1.27 $1.07 $0.79 $1.00 -- -- -- -- Accumulation unit value at end of period $1.47 $1.57 $1.33 $1.27 $1.07 $0.79 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,297 2,129 2,323 692 192 35 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (02/21/1995) Accumulation unit value at beginning of period $1.29 $1.26 $1.24 $1.25 $1.26 $1.26 $1.24 $1.18 $1.15 $1.11 Accumulation unit value at end of period $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26 $1.24 $1.18 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 3,976 3,923 6,630 7,059 5,254 8,572 8,409 4,421 941 749 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 3.03% and 3.08%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (02/21/1995) Accumulation unit value at beginning of period $1.68 $1.63 $1.62 $1.58 $1.53 $1.47 $1.38 $1.33 $1.33 $1.33 Accumulation unit value at end of period $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47 $1.38 $1.33 $1.33 Number of accumulation units outstanding at end of period (000 omitted) 12,248 8,733 8,279 9,515 7,119 7,272 8,923 9,498 8,127 5,689 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 $1.00 -- -- Accumulation unit value at end of period $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 -- -- Number of accumulation units outstanding at end of period (000 omitted) 6,387 5,210 2,698 1,026 605 238 115 7 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (02/21/1995) Accumulation unit value at beginning of period $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 $1.56 Accumulation unit value at end of period $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 Number of accumulation units outstanding at end of period (000 omitted) 4,871 5,898 4,590 4,708 4,663 5,116 6,019 6,358 5,864 5,163 - ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND, SERIES II SHARES (07/31/2002) Accumulation unit value at beginning of period $1.55 $1.40 $1.35 $1.24 $0.95 $1.00 Accumulation unit value at end of period $1.55 $1.55 $1.40 $1.35 $1.24 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 38 52 63 48 -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA BALANCED FUND - CLASS 2* (07/31/2002) Accumulation unit value at beginning of period $1.31 $1.22 $1.18 $1.13 $1.00 $1.00 Accumulation unit value at end of period $1.37 $1.31 $1.22 $1.18 $1.13 $1.00 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- *Effective May 30, 2008, the Fund will change its name to Evergreen VA Diversified Capital Builder Fund - Class 2. - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA CORE BOND FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.10 $1.08 $1.07 $1.05 $1.04 $1.00 Accumulation unit value at end of period $1.13 $1.10 $1.08 $1.07 $1.05 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 58 84 60 7 -- 118 - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA DIVERSIFIED INCOME BUILDER FUND - CLASS 2 (07/31/2002) (PREVIOUSLY EVERGREEN VA STRATEGIC INCOME FUND - CLASS 2) Accumulation unit value at beginning of period $1.32 $1.27 $1.31 $1.23 $1.08 $1.00 Accumulation unit value at end of period $1.34 $1.32 $1.27 $1.31 $1.23 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 41 59 45 4 -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA FUNDAMENTAL LARGE CAP FUND - CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.54 $1.39 $1.30 $1.22 $0.96 $1.00 Accumulation unit value at end of period $1.63 $1.54 $1.39 $1.30 $1.22 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 16 18 9 9 -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA GROWTH FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.69 $1.56 $1.49 $1.34 $0.98 $1.00 Accumulation unit value at end of period $1.85 $1.69 $1.56 $1.49 $1.34 $0.98 Number of accumulation units outstanding at end of period (000 omitted) 6 10 11 -- -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 51
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA HIGH INCOME FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.36 $1.27 $1.28 $1.20 $1.03 $1.00 Accumulation unit value at end of period $1.36 $1.36 $1.27 $1.28 $1.20 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 36 51 35 4 32 32 - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.91 $1.58 $1.39 $1.19 $0.93 $1.00 Accumulation unit value at end of period $2.15 $1.91 $1.58 $1.39 $1.19 $0.93 Number of accumulation units outstanding at end of period (000 omitted) 25 31 25 -- -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA OMEGA FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.46 $1.41 $1.38 $1.32 $0.96 $1.00 Accumulation unit value at end of period $1.60 $1.46 $1.41 $1.38 $1.32 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 23 32 31 2 -- -- - ----------------------------------------------------------------------------------------------------------------- EVERGREEN VA SPECIAL VALUES FUND - CLASS 2 (07/31/2002) Accumulation unit value at beginning of period $1.84 $1.55 $1.42 $1.21 $0.95 $1.00 Accumulation unit value at end of period $1.67 $1.84 $1.55 $1.42 $1.21 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 44 45 43 43 -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.90 $1.72 $1.48 $1.21 $0.89 $1.00 Accumulation unit value at end of period $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 Number of accumulation units outstanding at end of period (000 omitted) 458 374 196 54 19 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.50 $1.29 $1.19 $1.07 $0.87 $1.00 Accumulation unit value at end of period $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 94 154 -- 138 153 -- - ----------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.91 $1.70 $1.58 $1.35 $0.95 $1.00 Accumulation unit value at end of period $1.85 $1.91 $1.70 $1.58 $1.35 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 16 17 19 -- -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.33 $1.20 $1.06 $0.84 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 Number of accumulation units outstanding at end of period (000 omitted) 12 12 14 14 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (07/31/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.87 $1.58 $1.52 $1.29 $0.96 $1.00 Accumulation unit value at end of period $1.75 $1.87 $1.58 $1.52 $1.29 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 794 763 746 325 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (03/01/2002) Accumulation unit value at beginning of period $1.00 $0.97 $0.96 $0.97 $0.99 $1.00 Accumulation unit value at end of period $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 472 174 48 24 21 132 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.65% and 2.68%, respectively. - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.07 $1.04 $1.04 $1.01 $1.01 $1.00 Accumulation unit value at end of period $1.10 $1.07 $1.04 $1.04 $1.01 $1.01 Number of accumulation units outstanding at end of period (000 omitted) 1,965 638 -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.42 $1.27 $1.10 $0.80 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 Number of accumulation units outstanding at end of period (000 omitted) 1,539 1,423 623 -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2003) Accumulation unit value at beginning of period $1.60 $1.42 $1.36 $1.31 $1.00 -- Accumulation unit value at end of period $1.62 $1.60 $1.42 $1.36 $1.31 -- Number of accumulation units outstanding at end of period (000 omitted) 647 681 810 502 -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 52 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 53 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 54 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 55 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 56 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 57 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 58 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 59 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 45277 J (5/08) PROSPECTUS MAY 1, 2008 WELLS FARGO ADVANTAGE CHOICE(SM) VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT NEW WELLS FARGO ADVANTAGE CHOICE(SM) VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY BEING OFFERED. This prospectus contains information that you should know before investing in Wells Fargo Advantage Choice Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: - - AIM Variable Insurance Funds, Series I Shares - - The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares - - Fidelity(R) Variable Insurance Products Service Class 2 - - Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 - - Goldman Sachs Variable Insurance Trust - - MFS(R) Variable Insurance Trust(SM) - Initial Class - - Oppenheimer Variable Account Funds - Service Shares - - Putnam Variable Trust - Class IB Shares - - RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds - - Wells Fargo Variable Trust Funds Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. RiverSource Life offers several different annuities which your investment professional may or may not be authorized to offer to you. Each annuity has different features and benefits that may be appropriate for you based on your financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges may also be different between each annuity. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 1 TABLE OF CONTENTS KEY TERMS........................................ 3 THE CONTRACT IN BRIEF............................ 4 EXPENSE SUMMARY.................................. 6 CONDENSED FINANCIAL INFORMATION (UNAUDITED)...... 10 FINANCIAL STATEMENTS............................. 10 THE VARIABLE ACCOUNT AND THE FUNDS............... 10 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............. 18 THE ONE-YEAR FIXED ACCOUNT....................... 21 BUYING YOUR CONTRACT............................. 21 CHARGES.......................................... 23 VALUING YOUR INVESTMENT.......................... 26 MAKING THE MOST OF YOUR CONTRACT................. 27 WITHDRAWALS...................................... 32 TSA -- SPECIAL PROVISIONS........................ 33 CHANGING OWNERSHIP............................... 34 BENEFITS IN CASE OF DEATH........................ 34 OPTIONAL BENEFITS................................ 38 THE ANNUITY PAYOUT PERIOD........................ 46 TAXES............................................ 48 VOTING RIGHTS.................................... 50 SUBSTITUTION OF INVESTMENTS...................... 51 ABOUT THE SERVICE PROVIDERS...................... 51 ADDITIONAL INFORMATION........................... 52 APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED).................................... 54 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............ 60
- -------------------------------------------------------------------------------- 2 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of the funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you may allocate purchase payments or transfer contract value of at least $1,000. These accounts have guaranteed interest rates for Guarantee Periods we declare when you allocate purchase payments or transfer contract value to a GPA. Withdrawals and transfers from the GPAs done 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 principal. The GPAs may not be available in some states. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a Guarantee Period Account is withdrawn or transferred more than 30 days before the end of its guarantee period. ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts you allocate to this account earn interest at rates that we declare periodically. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and RiverSource Life refer to RiverSource Life Insurance Company. VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 3 valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our administrative office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our administrative office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. THE CONTRACT IN BRIEF This prospectus describes two contracts. Contract Option L offers a four year withdrawal charge schedule and investment options in the GPAs, one-year fixed account and/or the subaccounts. Contract Option C eliminates the withdrawal charge schedule in exchange for a higher mortality and expense risk fee and allows investment in the subaccounts only(1). Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to invest. PURPOSE: The purpose of these contracts is to allow you to accumulate money for retirement. You do this by making one or more purchase payments. For contract Option L, you may allocate your purchase payments to the GPAs, one-year fixed account and/or subaccounts. For contract Option C, you may allocate purchase payments to the subaccounts. These accounts, in turn, may earn returns that increase the value of a contract. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). It may not be advantageous for you to purchase these contracts as a replacement for, or in addition to, an existing annuity or life insurance contract. (1) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract and receive a full refund of the contract value. We will not deduct any charges. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: You may allocate purchase payments to the GPAs, one-year fixed account and/or the subaccounts depending on the contract option you select. - -------------------------------------------------------------------------------- 4 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS If you select contract Option L, you may allocate your purchase payments among any or all of: - - the subaccounts, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - the GPAs which earn interest at rates that we declare when you allocate purchase payments or transfer contract value to these accounts. The required minimum investment in a GPA is $1,000. These accounts may not be available in all states. (see "The Guarantee Period Accounts (GPAs)" and "The One-Year Fixed Account") - - the one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "Buying Your Contract" and "Transfer policies"). If you select contract Option C, you may allocate purchase payments to the subaccounts only. BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the option of making additional purchase payments. (see "Buying Your Contract") TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to a MVA unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. You may establish automated transfers among the accounts. (We reserve the right to limit transfers to the GPAs and the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract.) (see "Making the Most of Your Contract -- Transferring Among Accounts") WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including an IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount at least equal to the contract value. (see "Benefits in Case of Death") OPTIONAL BENEFITS: These contracts offer optional features that are available for additional charges if you meet certain criteria. (see "Optional Benefits") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you purchased a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs are not available during the payout period. (see "The Annuity Payout Period") TAXES: Generally, income earned on your contract value grows tax deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and nonqualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. (see "Taxes") - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 5 EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSE THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (Contingent deferred sales charge as a percentage of the amount withdrawn) You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE CONTRACT OPTION L PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if the assumed investment rate is 5%. The withdrawal charge equals the present value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) You can choose either contract Option L or Option C and the death benefit guarantee provided. The combination you choose determines the fees you pay. The table below shows the combinations available to you and their cost.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES ROP death benefit 0.15% 1.25% 1.40% MAV death benefit 0.15 1.35 1.50 EDB 0.15 1.55 1.70 IF YOU SELECT CONTRACT OPTION C AND: ROP death benefit 0.15 1.35 1.50 MAV death benefit 0.15 1.45 1.60 EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the current contract anniversary.) BENEFIT PROTECTOR(R) Death Benefit Rider (Benefit 0.25%* Protector) fee
(As a percentage of the contract value charged annually on the contract anniversary.) BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER (BENEFIT 0.40%* PROTECTOR PLUS) FEE
(As a percentage of the contract value charged annually on the contract anniversary.) GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract anniversary.) * This fee applies only if you elect this optional feature. ** For applications signed prior to May 1, 2003, the following annual rider charges apply: GMIB - 0.30%. - -------------------------------------------------------------------------------- 6 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDING DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(a)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense 0.72% 1.43% reimbursements
(a) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor and/or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Capital Appreciation Fund, 0.61% --% 0.27% --% 0.88% Series I Shares AIM V.I. Core Equity Fund, Series I 0.60 -- 0.28 0.02 0.90(1) Shares The Dreyfus Socially Responsible 0.75 -- 0.07 -- 0.82 Growth Fund, Inc., Initial Shares Fidelity(R) VIP Dynamic Capital 0.56 0.25 0.23 -- 1.04 Appreciation Portfolio Service Class 2 Fidelity(R) VIP High Income Portfolio 0.57 0.25 0.11 -- 0.93 Service Class 2 Fidelity(R) VIP Mid Cap Portfolio 0.56 0.25 0.10 -- 0.91 Service Class 2 FTVIPT Franklin Global Real Estate 0.75 0.25 0.31 -- 1.31(2) Securities Fund - Class 2 FTVIPT Franklin Income Securities 0.45 0.25 0.02 -- 0.72 Fund - Class 2 FTVIPT Franklin Small Cap Value 0.51 0.25 0.15 0.02 0.93(3) Securities Fund - Class 2 FTVIPT Franklin Small-Mid Cap Growth 0.47 0.25 0.28 0.01 1.01(3) Securities Fund - Class 2 FTVIPT Mutual Shares Securities 0.59 0.25 0.13 -- 0.97 Fund - Class 2 Goldman Sachs VIT Mid Cap Value 0.80 -- 0.07 -- 0.87 Fund - Institutional Shares Goldman Sachs VIT Structured U.S. 0.65 -- 0.07 -- 0.72(4) Equity Fund - Institutional Shares MFS(R) Investors Trust 0.75 -- 0.10 -- 0.85 Series - Initial Class MFS(R) Utilities Series - Initial 0.75 -- 0.10 -- 0.85(5) Class Oppenheimer Global Securities 0.62 0.25 0.02 -- 0.89 Fund/VA, Service Shares Oppenheimer Strategic Bond Fund/VA, 0.57 0.25 0.02 0.02 0.86(6) Service Shares Putnam VT Health Sciences 0.70 0.25 0.13 -- 1.08 Fund - Class IB Shares Putnam VT International Equity 0.73 0.25 0.11 0.01 1.10 Fund - Class IB Shares Putnam VT Vista Fund - Class IB 0.65 0.25 0.11 -- 1.01 Shares RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(7) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.59 0.13 0.15 -- 0.87 Portfolio - High Yield Bond Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund RVST RiverSource(R) Variable 0.48 0.13 0.18 -- 0.79 Portfolio - Short Duration U.S. Government Fund RVST RiverSource(R) Variable 0.68 0.13 0.20 -- 1.01(7) Portfolio - Small Cap Advantage Fund Wells Fargo Advantage VT Asset 0.55 0.25 0.22 -- 1.02(8) Allocation Fund Wells Fargo Advantage VT C&B Large 0.55 0.25 0.37 -- 1.17(8) Cap Value Fund Wells Fargo Advantage VT Equity 0.55 0.25 0.24 -- 1.04(8) Income Fund
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 7
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES Wells Fargo Advantage VT 0.75% 0.25% 0.43% --% 1.43%(8) International Core Fund Wells Fargo Advantage VT Large 0.55 0.25 0.39 -- 1.19(8) Company Core Fund Wells Fargo Advantage VT Large 0.55 0.25 0.24 -- 1.04(8) Company Growth Fund Wells Fargo Advantage VT Money Market 0.30 0.25 0.27 -- 0.82(8) Fund Wells Fargo Advantage VT Small Cap 0.75 0.25 0.23 -- 1.23(8) Growth Fund Wells Fargo Advantage VT Total Return 0.45 0.25 0.25 -- 0.95(8) Bond Fund
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series I shares to 1.30% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 0.89% for AIM V.I. Core Equity Fund, Series I Shares. (2) The investment manager and administrator have contractually agreed to waive or limit their respective fees so that the increase in investment management and fund administration fees paid by the Fund is phased in over a five year period, starting on May 1, 2007, with there being no increase in the rate of such fees for the first year ending April 30, 2008. For each of four years thereafter through April 30, 2012, the investment manager and administrator will receive one-fifth of the increase in the rate of fees. After fee waivers net expenses would be 0.89% for FTVIPT Franklin Global Real Estate Securities Fund - Class 2. (3) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the acquired fund) to the extent that the Fund's fees and expenses are due to those of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. After fee reductions net expenses would be 0.91% for FTVIPT Franklin Small Cap Value Securities Fund - Class 2 and 1.00% for FTVIPT Franklin Small-Mid Cap Growth Securities Fund - Class 2. (4) The Investment Adviser has voluntarily agreed to reduce or limit "Other expenses" (subject to certain exclusions) equal on an annualized basis to 0.044% of the Fund's average daily net assets. The expense reduction may be terminated at any time at the option of the Investment Adviser. After expense reductions net expenses would be 0.71% for Goldman Sachs VIT Structured U.S. Equity Fund - Institutional Shares. (5) MFS has agreed in writing to reduce its management fee to 0.70% for MFS Utilities Series annually on average daily net assets in excess of $1 billion. After fee reductions net expenses would be 0.82% for MFS Utilities Series - Initial Class. (6) The "Other expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year. That undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended Dec. 31, 2007, the transfer agent fees did not exceed this expense limitation. The Manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the acquired fund fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund and OFI Master Loan Fund LLC. After fee waivers and expense reimbursements, the net expenses would be 0.82% for Oppenheimer Strategic Bond Fund/VA, Service Shares. (7) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed: 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund and 1.13% for RVST RiverSource(R) Variable Portfolio - Small Cap Advantage Fund. (8) The adviser has contractually agreed through April 30, 2009 to waive fees and/or reimburse the expenses to the extent necessary to maintain the Fund's net operating expense ratio. After fee waivers and expense reimbursements, net expenses would be 1.00% for Wells Fargo Advantage VT Asset Allocation Fund, 1.00% for Wells Fargo Advantage VT C&B Large Cap Value Fund, 1.00% for Wells Fargo Advantage VT Equity Income Fund, 1.00% for Wells Fargo Advantage VT International Core Fund, 1.00% for Wells Fargo Advantage VT Large Company Core Fund, 1.00% for Wells Fargo Advantage VT Large Company Growth Fund, 0.75% for Wells Fargo Advantage VT Money Market Fund, 1.20% for Wells Fargo Advantage VT Small Cap Growth Fund and 0.90% for Wells Fargo Advantage VT Total Return Bond Fund. - -------------------------------------------------------------------------------- 8 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES*, VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the EDB and the GMIB. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR IF YOU WITHDRAW YOUR CONTRACT AT IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with EDB $1,205 $1,932 $2,054 $4,297 $397 $1,211 $2,054 $4,297 Contract Option C with EDB 408 1,243 2,107 4,395 408 1,243 2,107 4,395
MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP death benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR IF YOU WITHDRAW YOUR CONTRACT AT IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L with ROP death benefit $1,042 $1,438 $1,161 $2,494 $220 $677 $1,161 $2,494 Contract Option C with ROP death benefit 231 711 1,217 2,607 231 711 1,217 2,607
* In these examples, the $40 contract administrative charge is approximated as a .022% charge for Option L and a .030% charge for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 9 CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and highest total annual variable account expense combinations in the Appendix. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statement date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. The contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - PRIVATE LABEL: This contract is a "private label" variable annuity. This means the contract includes funds affiliated with the distributor of this contract. Purchase payments and contract values you allocate to subaccounts investing in any of the Wells Fargo Variable Trust Funds available under this contract are generally more profitable for the distributor and its affiliates than allocations you make to other subaccounts. In contrast, purchase payments and contract values you allocate to subaccounts investing in any of the RiverSource Variable Series Trust funds are generally more profitable for us and our affiliates. For example, we may receive compensation from our affiliates in connection with purchase payments and contract value you allocate to the RiverSource Variable Series Trust funds that exceeds the range disclosed below for the funds our affiliates do not manage. These relationships may influence recommendations your investment professional makes regarding whether you should invest in the contract, and whether you should allocate purchase payments or contract values to a particular subaccount. - -------------------------------------------------------------------------------- 10 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under any asset allocation program we offer or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and when there is substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue including, but not limited to, expense payments and non-cash compensation a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue, including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 11 - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- 12 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Capital Growth of capital. Invests principally in common Invesco Aim Advisors, Inc. adviser, Appreciation Fund, Series I stocks of companies likely to benefit from new advisory entities affiliated with Shares or innovative products, services or processes as Invesco Aim Advisors, Inc., well as those with above-average growth and subadvisers. excellent prospects for future growth. The Fund may also invest up to 25% of its total assets in foreign securities that involve risks not associated with investing solely in the United States. AIM V.I. Core Equity Fund, Growth of capital. Invests normally at least 80% Invesco Aim Advisors, Inc. adviser, Series I Shares of its net assets, plus the amount of any advisory entities affiliated with borrowings for investment purposes, in equity Invesco Aim Advisors, Inc., securities, including convertible securities of subadvisers. established companies that have long-term above-average growth in earnings and dividends and growth companies that are believed to have the potential for above-average growth in earnings and dividends. The Fund may invest up to 25% of its total assets in foreign securities. The Dreyfus Socially Capital growth, with current income as a The Dreyfus Corporation Responsible Growth Fund, secondary goal. To pursue these goals, the fund, Inc., Initial Shares under normal circumstances, invests at least 80% of its assets in the common stocks of companies that, in the opinion of the fund's management, meet traditional investment standards and conduct their business in a manner that contributes to the enhancement of the quality of life in America. Fidelity(R) VIP Dynamic Capital appreciation. Normally invests primarily Fidelity Management & Research Company Capital Appreciation in common stocks. Invests in domestic and (FMR), investment manager; FMR U.K., Portfolio Service Class 2 foreign issuers. The Fund invests in either FMR Far East, Fidelity Investments "growth" or "value" stocks or both. Japan Limited (FIJ) and FMR Co. Inc. (FMRC), sub-advisers. Fidelity(R) VIP High Income High level of current income, while also Fidelity Management & Research Company Portfolio Service Class 2 considering growth of capital. Normally invests (FMR), investment manager; FMR U.K., primarily in income- producing debt securities, FMR Far East, sub- advisers. preferred stocks and convertible securities, with an emphasis on lower-quality debt securities. May invest in non-income producing securities, including defaulted securities and common stocks. Invests in companies in troubled or uncertain financial condition. The Fund invests in domestic and foreign issuers. Fidelity(R) VIP Mid Cap Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Normally invests at (FMR), investment manager; FMR U.K., least 80% of assets in securities of companies FMR Far East, sub- advisers. with medium market capitalizations. May invest in companies with smaller or larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both. FTVIPT Franklin Global Real High total return. The Fund normally invests at Franklin Templeton Institutional, LLC Estate Securities least 80% of its net assets in investments of Fund - Class 2 companies located anywhere in the world that operate in the real estate sector and normally invests predominantly in equity securities.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER FTVIPT Franklin Income Maximize income while maintaining prospects for Franklin Advisers, Inc. Securities Fund - Class 2 capital appreciation. The Fund normally invests in both equity and debt securities. The Fund seeks income by investing in corporate, foreign, and U.S. Treasury bonds as well as stocks with dividend yields the manager believes are attractive. FTVIPT Franklin Small Cap Long-term total return. The Fund normally Franklin Advisory Services, LLC Value Securities invests at least 80% of its net assets in Fund - Class 2 investments of small capitalization companies, and normally invests predominantly in equity securities. The Fund invests mainly in equity securities of companies that the manager believes are undervalued. FTVIPT Franklin Small-Mid Long-term capital growth. The Fund normally Franklin Advisers, Inc. Cap Growth Securities invests at least 80% of its net assets in Fund - Class 2 investments of small capitalization and mid capitalization companies and normally invests predominantly in equity securities. FTVIPT Mutual Shares Capital appreciation, with income as a secondary Franklin Mutual Advisers, LLC Securities Fund - Class 2 goal. The Fund normally invests primarily in equity securities of companies that the manager believes are undervalued. The Fund also invests, to a lesser extent in risk arbitrage securities and distressed companies. Goldman Sachs VIT Mid Cap Long-term capital appreciation. The Fund Goldman Sachs Asset Management, L.P. Value Fund - Institutional invests, under normal circumstances, at least Shares 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase) ("Net Assets") in a diversified portfolio of equity investments in mid-cap issuers with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constituting the Russell Midcap(R) Value Index at the time of investment. If the market capitalization of a company held by the Fund moves outside this range, the Fund may, but is not required to, sell the securities. The capitalization range of the Russell Midcap(R) Value Index is currently between $1.1 billion and $21 billion. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its Net Assets in foreign securities, including securities of issuers in countries with emerging markets or economies ("emerging countries") and securities quoted in foreign currencies. The Fund may invest in the aggregate up to 20% of its Net Assets in companies with public stock market capitalizations outside the range of companies constituting the Russell Midcap(R) Value Index at the time of investment and in fixed-income securities, such as government, corporate and bank debt obligations.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Goldman Sachs VIT Structured Long-term growth of capital and dividend income. Goldman Sachs Asset Management, L.P. U.S. Equity The Fund invests, under normal circumstances, at Fund - Institutional Shares least 80% of its net assets plus any borrowings for investment purposes (measured at the time of purchase) ("Net Assets") in a diversified portfolio of equity investments in U.S. issuers, including foreign companies that are traded in the United States. However, it is currently anticipated that, under normal circumstances, the Fund will invest at least 95% of its Net Assets in such equity investments. The Fund's investments are selected using a variety of quantitative techniques, derived from fundamental research including but not limited to valuation, momentum, profitability and earnings quality, in seeking to maximize the Fund's expected returns. The Fund maintains risk, style, capitalization and industry characteristics similar to the S&P 500 Index. The S&P 500 Index is an index of large-cap stocks designed to reflect a broad representation of the U.S. economy. The Fund seeks to maximize expected return while maintaining these and other characteristics similar to the benchmark. The Fund is not required to limit its investments to securities in the S&P 500 Index. MFS(R) Investors Trust Capital appreciation. Normally invests in equity MFS Investment Management(R) Series - Initial Class securities of companies MFS believes to have above average earnings growth potential compared to other companies (growth companies), in the stocks of companies it believes are undervalued compared to their perceived worth (value companies), or in a combination of growth and value companies. Generally focuses on companies with large capitalizations. MFS(R) Utilities Series - Total return. Normally invests at least 80% of MFS Investment Management(R) Initial Class the fund's net assets in securities of issuers in the utilities industry. The Fund's assets may be invested in companies of any size. Oppenheimer Global Long-term capital appreciation. Invests mainly OppenheimerFunds, Inc. Securities Fund/VA, Service in common stocks of U.S. and foreign issuers Shares that are "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. Oppenheimer Strategic Bond High level of current income principally derived OppenheimerFunds, Inc. Fund/VA, Service Shares from interest on debt securities. Invests mainly in three market sectors: debt securities of foreign governments and companies, U.S. government securities and lower-rated high yield securities of U.S. and foreign companies.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Putnam VT Health Sciences Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Fund - Class IB Shares by investing mainly in common stocks of companies in the health sciences industries, with a focus on growth stocks. Under normal circumstances, the fund invests at least 80% of its net assets in securities of (a) companies that derive at least 50% of their assets, revenues or profits from the pharmaceutical, health care services, applied research and development and medical equipment and supplies industries, or (b) companies Putnam Management thinks have the potential for growth as a result of their particular products, technology, patents or other market advantages in the health sciences industries. Putnam VT International Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Equity Fund - Class IB by investing mainly in common stocks of Shares companies outside the United States that Putnam Management believes have favorable investment potential. Under normal circumstances, the fund invests at least 80% of its net assets in equity investments. Putnam VT Vista Fund - Class Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC IB Shares by investing mainly in common stocks of U.S. companies, with a focus on growth stocks. RVST RiverSource Partners Long-term capital appreciation. Under normal RiverSource Investments, LLC, adviser; Variable Portfolio - Small market conditions, at least 80% of the Fund's River Road Asset Management, LLC, Cap Value Fund net assets will be invested in small cap Donald Smith & Co., Inc., Franklin companies with market capitalization, at the Portfolio Associates LLC, Barrow, (previously RiverSource time of investment, of up to $2.5 billion or Hanley, Mewhinney & Strauss, Inc. and Variable Portfolio - Small that fall within the range of the Russell Denver Investment Advisors LLC, Cap Value Fund) 2000(R) Value Index. The Fund may invest up to subadvisers. 25% of its net assets in foreign investments. RVST RiverSource Variable High level of current income and, as a secondary RiverSource Investments, LLC Portfolio - Diversified goal, steady growth of capital. Under normal Equity Income Fund market conditions, the Fund invests at least 80% of its net assets in dividend- paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable High current income, with capital growth as a RiverSource Investments, LLC Portfolio - High Yield Bond secondary objective. Under normal market Fund conditions, the Fund invests at least 80% of its net assets in high-yield debt instruments (commonly referred to as "junk") including corporate debt securities as well as bank loans rated below investment grade by a nationally recognized statistical rating organization, or if unrated, determined to be of comparable quality. Up to 25% of the Fund may be invested in high yield debt instruments of foreign issuers. RVST RiverSource Variable Capital appreciation. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Equity conditions, the Fund invests at least 80% of its Fund net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable High level of current income and safety of RiverSource Investments, LLC Portfolio - Short Duration principal consistent with investment in U.S. U.S. Government Fund government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. RVST RiverSource Variable Long-term capital growth. Under normal market RiverSource Investments, LLC, adviser; Portfolio - Small Cap conditions, at least 80% of the Fund's net Kenwood Capital Management LLC, Advantage Fund assets are invested in equity securities of sub-adviser. companies with market capitalization of up to $2 billion or that fall within the range of the Russell 2000(R) Index at the time of investment. Wells Fargo Advantage VT Long-term total return, consisting of capital Wells Fargo Funds Management, LLC, Asset Allocation Fund appreciation and current income. We seek to adviser; Wells Capital Management achieve the Portfolio's investment objective by Incorporated, sub-adviser. allocating 60% of its assets to equity securities and 40% of its assets to fixed income securities. Wells Fargo Advantage VT C&B Maximum long-term total return (current income Wells Fargo Funds Management, LLC, Large Cap Value Fund and capital appreciation) consistent with adviser; Cooke & Bieler, L.P., sub- minimizing risk to principal. Invests adviser. principally in equity securities of large- capitalization companies, which they define as companies with market capitalizations of $3 billion or more. We manage a relatively focused portfolio of 30 to 50 companies that enables them to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. Wells Fargo Advantage VT Long-term capital appreciation and dividend Wells Fargo Funds Management, LLC, Equity Income Fund income. Invests principally in equity securities adviser; Wells Capital Management of large-capitalization companies, which we Incorporated, sub-adviser. define as companies with market capitalizations of $3 billion or more. Wells Fargo Advantage VT Long-term capital appreciation. Invests in Wells Fargo Funds Management, LLC, International Core Fund equity securities of non-U.S. companies that we adviser; Wells Capital Management believe have strong growth potential and offer Incorporated, sub-adviser. good value relative to similar investments. We invest primarily in developed countries, but may invest in emerging markets.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Wells Fargo Advantage VT Total return comprised of long-term capital Wells Fargo Funds Management, LLC, Large Company Core Fund appreciation and current income. Invests adviser; Matrix Asset Advisors, Inc., principally in equity securities of sub-adviser. approximately 30 to 50 large-capitalization companies, the majority of which pay dividends. Large-capitalization companies are defined as those with market capitalizations of $3 billion or more. We may also invest in equity securities of foreign issuers through ADRs and similar investments. Wells Fargo Advantage VT Long-term capital appreciation. Invests Wells Fargo Funds Management, LLC, Large Company Growth Fund principally in equity securities, focusing on adviser; Peregrine Capital Management, approximately 30 to 50 large capitalization Inc., sub-adviser. companies that we believe have favorable growth potential. However, we normally do not invest more than 10% of the Fund's total assets in the securities of a single issuer. We define large-capitalization companies as those with market capitalizations of $3 billion or more. Wells Fargo Advantage VT Current income, while preserving capital and Wells Fargo Funds Management, LLC, Money Market Fund liquidity. We actively manage a portfolio of adviser; Wells Capital Management high-quality, short-term U.S. dollar-denominated Incorporated, sub-adviser. money market instruments. We will only purchase First Tier securities. These investments may have fixed, floating, or variable rates of interest and may be obligations of U.S. or foreign issuers. We may invest more than 25% of the Fund's total assets in U.S. dollar-denominated obligations of U.S. banks. Our security selection is based on several factors, including credit quality, yield and maturity, while taking into account the Fund's overall level of liquidity and average maturity. Wells Fargo Advantage VT Long-term capital appreciation. Invests Wells Fargo Funds Management, LLC, Small Cap Growth Fund principally in equity securities of adviser; Wells Capital Management small-capitalization companies that we believe Incorporated, sub-adviser. have above-average growth potential. We define small-capitalization companies as those with market capitalizations at the time of purchase of less than $2 billion. Wells Fargo Advantage VT Total return consisting of income and capital Wells Fargo Funds Management, LLC, Total Return Bond Fund appreciation. Invests principally in adviser; Wells Capital Management investment-grade debt securities, including U.S. Incorporated, sub-adviser. Government obligations, corporate bonds and mortgage-and asset-backed securities. Under normal circumstances, we expect to maintain an overall dollar-weighted average effective duration range between 4 and 5 1/2 years.
THE GUARANTEE PERIOD ACCOUNTS (GPAS) The GPAs may not be available in some states. Investment in the GPAs is not available under contract Option C(1). (1) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs for contract Option C has been filed in the various states in which the contract is offered. Please check with your sales representative to determine if this restriction applies to your states. For contract Option L, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The minimum required investment in each GPA is $1,000. There are restrictions on the amount you can allocate to these accounts as well as on transfers from these accounts (see "Buying Your Contract" and "Transfer policies"). These accounts are not available in all states and are not offered after annuity payouts begin. - -------------------------------------------------------------------------------- 18 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the Guarantee Period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion ("Future Rates"). We will determine Future Rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. You may transfer or withdraw contract value out of the GPAs within 30 days before the end of the Guarantee Period without receiving a MVA (see "Market Value Adjustment (MVA)" below). During this 30 day window you may choose to start a new Guarantee Period of the same length, transfer the contract value to another GPA, transfer the contract value to any of the subaccounts, or withdraw the contract value from the contract (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your Guarantee Period our current practice is to automatically transfer the contract value into the one-year fixed account. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable Guarantee Periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly Duff & Phelp's) -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We guarantee the contract value allocated to your GPA, including the interest credited, if you do not make any transfers or withdrawals from that GPA prior to 30 days before the end of the Guarantee Period. However, we will apply a MVA if a transfer or withdrawal occurs prior to this time, unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. The MVA also affects amounts withdrawn from a GPA prior to 30 days before the end of the Guarantee Period that are used to purchase payouts under an annuity payout plan. We will refer to all of these transactions as "early withdrawals" in the discussion below. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 19 The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your Guarantee Period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES Assume: As the examples below demonstrate, the application of an MVA may result in either a gain or loss of principal. We refer to all of the transactions described below as "early withdrawals." Assume: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA. - - We guarantee an interest rate of 3.0% annually for your ten-year Guarantee Period. - - After three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your Guarantee Period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. - -------------------------------------------------------------------------------- 20 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and you have begun your fourth contract year at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L and there is no withdrawal charge if you choose contract Option C. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges on contract Option L, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you requested after we apply the MVA (and any applicable withdrawal charge for contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. We will not apply MVAs to amounts withdrawn for annual contract charges, to amounts we pay as death claims or to automatic transfers from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep Strategy. THE ONE-YEAR FIXED ACCOUNT Investment in the one-year fixed account is not available for contract Option C(1). (1) For applications dated May 1, 2003 or after. Restriction of investment in the one-year fixed account for contract Option C has been filed in the various states in which the contract is offered. Please check with your investment professional to determine if this restriction applies to your state. For contract Option L, you may allocate purchase payments or transfer accumulated value to the one-year fixed account. Some states may restrict the amount you can allocate to this account. We back the principal and interest guarantees relating to the one-year fixed account. These guarantees are based on the continued claims-paying ability of the company. The value of the one-year fixed account increases as we credit interest to the account. Purchase payments and transfers to the one-year fixed account become part of our general account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. The interest rate we apply to each purchase payment or transfer to the one-year fixed account is guaranteed for one year. Thereafter we will change the rates from time-to-time at our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns earned on investments backing these annuities, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed minimum interest rate offered may vary by state but will not be lower than state law allows. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "Buying Your Contract" and "Making the Most of Your Contract -- Transfer policies"). Interest in the one-year fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the one-year fixed account, however, disclosures regarding the one-year fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. BUYING YOUR CONTRACT New contracts are not currently being offered. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. As the owner, you have all rights and may receive all benefits under the contract. You can own a qualified or nonqualified annuity. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 90 or younger. (The age limit may be younger for qualified annuities in some states.) - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 21 When you applied, you selected (if available in your state): - - contract Option L or Option C; - - a death benefit option(1); - - the optional Benefit Protector Death Benefit Rider(2); - - the optional Benefit Protector Plus Death Benefit Rider(2); - - the optional Guaranteed Minimum Income Benefit Rider(3); - - the GPAs, the one-year fixed account and/or subaccounts in which you want to invest(4); - - how you want to make purchase payments; and - - a beneficiary. (1) If you and the annuitant are 79 or younger at contract issue, you may select from either the ROP death benefit, MAV death benefit or EDB. If you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. EDB may not be available in all states. (2) Not available with the EDB. May not be available in all states. (3) Available at the time you purchase your contract if the annuitant is 75 or younger at contract issue and you also select the EDB. May not be available in all states. (4) For applications dated May 1, 2003 or after. Restriction of investment in the GPAs have been filed in the various states in which the contract is offered. Please check with your investment professional to determine whether this restriction applies to your state. Some states restrict the amount you can allocate to the GPAs and the one-year fixed account. GPAs may not be available in some states. The contract provides for allocation of purchase payments to the subaccounts of the variable account, to the GPAs and/or to the one-year fixed account in even 1% increments subject to the $1,000 minimum required investment for the GPAs. The contract provides for allocation of purchase payments to the GPAs, the one-year fixed account and/or the subaccounts of the variable account in even 1% increments subject to the $1,000 minimum for the GPAs. For contracts with applications signed on or after June 16, 2003, the amount of any purchase payment allocated to the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish a dollar cost averaging arrangement with respect to the purchase payment according to procedures currently in effect, or you are participating according to the rules of an asset allocation model portfolio program available under the contract, if any. We applied your initial purchase payment to the GPAs, one-year fixed account and subaccounts you selected within two business days after we received it at our corporate office. We will credit additional purchase payments you make to your accounts on the valuation date we receive them. If we receive an additional purchase payment at our administrative office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our corporate office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a SIP. To begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts are scheduled to begin on the retirement date. When we processed your application, we established the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. You can also select a date within the maximum limits. Your selected date can align with your actual retirement from a job, or it can be a different future date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75, or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the retirement date generally must be: - - for IRAs, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from this contract, annuity payouts can start as late as the annuitant's 85th birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. - -------------------------------------------------------------------------------- 22 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, then the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM PURCHASE PAYMENTS If paying by SIP: $50 initial payment. $50 for additional payments. If paying by any other method: $10,000 initial payment. $100 for additional payments. MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS* $1,000,000 for issue ages up to 85. $100,000 for issue ages 86 to 90. * This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the tax-deferred retirement plan's or the Code's limits on annual contributions also apply. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values and satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers,withdrawals or death benefits until instructions are received from the appropriate governmental authority or court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary, or earlier if the contract is withdrawn. We prorate this charge among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. Some states limit the amount of any contract charge allocated to the one-year fixed account. We will waive this charge when your contract value is $100,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct this charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 23 VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the one-year fixed account. We cannot increase these fees. These fees are based on the contract you select (either Option L or Option C) and the death benefit that applies to your contract:
CONTRACT OPTION L CONTRACT OPTION C ROP death benefit: 1.25% 1.35% MAV death benefit: 1.35 1.45 EDB: 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the payout period even if the annuity payout plan does not include a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L discussed below will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Option C contracts have no withdrawal charge schedule but they carry higher mortality and expense risk fees than Option L contracts. If you select contract Option L and you withdraw all or part of your contract, you may be subject to a withdrawal charge. A withdrawal charge applies if you make a withdrawal in the first four contract years. You may withdraw amounts totaling up to 10% of your prior anniversary's contract value free of charge during the first four years of your contract. (We consider your initial purchase payment to be the prior anniversary's contract value during the first contract year.) We do not assess a withdrawal charge on this amount. The withdrawal charge percentages that apply to you are shown below and are stated in your contract. In addition, amounts withdrawn from a GPA more than 30 days before the end of the applicable Guarantee Period are generally subject to a MVA. (See "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR CONTRACT OPTION L WITHDRAWAL CHARGE PERCENTAGE 1-2 8% 3 7 4 6 5 and later 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. The withdrawal charge percentage is applied to this total amount. We pay you the amount you requested. - -------------------------------------------------------------------------------- 24 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal charge of 7%. The total amount we actually deduct from your contract is $1,075.27. We determine this amount as follows: AMOUNT REQUESTED $1,000 ------------------------ OR ------ = $1,075.27 1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is $75.27. We pay you the $1,000 you requested. If you make a full withdrawal of your contract, we also will deduct the applicable contract administrative charge. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: Under this annuity payout plan, you can choose to take a withdrawal. The amount that you can withdraw is the present value of any remaining variable payouts. For Contract Option L, the discount rate we use in the calculation will be 5.45% if the assumed investment rate is 3.5% and 6.95% if the assumed investment rate is 5%. For contract Option C, the discount rate we use in the calculation will be 5.55% if the assumed investment rate is 3.5% and 7.05% if the assumed investment rate is 5%. The withdrawal charge equals the present value of the remaining payouts using the assumed investment rate minus the present value of the remaining payouts using the discount rate. WAIVER OF WITHDRAWAL CHARGES We do not assess withdrawal charges for: - - withdrawals of amounts totaling up to 10% of your prior contract anniversary's contract value; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required minimum distribution amount calculated under your specific contract currently in force; - - contracts settled using an annuity payout plan; - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. - - Withdrawals you make if you or the annuitant become disabled within the meaning of the Code Section 72(m)(7) after contract issue. The disabled person must also be receiving Social Security disability or state long term disability benefits. The disabled person must be age 70 or younger at the time of withdrawal. You must provide us with a signed letter from the disabled person stating that he or she meets the above criteria, a legible photocopy of Social Security disability or state long term disability benefit payments and the application for such payments. POSSIBLE GROUP REDUCTIONS: In some cases, we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 25 OPTIONAL DEATH BENEFIT CHARGES BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the subaccounts, the GPAs and one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual fee after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. OPTIONAL LIVING BENEFIT CHARGES GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE* We charge a fee (currently 0.70%) based on the GMIB benefit base for this optional feature only if you select it. If selected, we deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate the GMIB fee among the subaccounts, the GPAs and the one-year fixed account in the same proportion your interest in each account bears to your total contract value. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the GMIB fee from the proceeds payable adjusted for the number of calendar days coverage was in place. We cannot increase the GMIB fee after the rider effective date and it does not apply after annuity payouts begin. * For applications signed prior to May 1, 2003, the following annual rider charges apply: GMIB - 0.30%. VALUING YOUR INVESTMENT We value your accounts as follows: GPAS AND ONE-YEAR FIXED ACCOUNT We value the amounts you allocated to the GPAs and the one-year fixed account directly in dollars. The value of these accounts equals: - - the sum of your purchase payments and transfer amounts allocated to the one-year fixed account and the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after the MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Benefit Protector rider - Benefit Protector Plus rider - Guaranteed Minimum Income Benefit rider SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. - -------------------------------------------------------------------------------- 26 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS Here is how we calculate accumulation unit values: NUMBER OF UNITS: to calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and the deduction of a prorated portion of: - - the contract administrative charge; - - the fee for any of the following optional benefits you have selected: - Benefit Protector rider - Benefit Protector Plus rider - Guaranteed Minimum Income Benefit rider Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten year GPAs are not available for automated transfers. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from either the one-year fixed account or the two-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 27 HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low .... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high ... ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY If you select contract Option L and your net contract value(1) is at least $10,000, you can choose to participate in the Special DCA program. There is no charge for the Special DCA program. Under the Special DCA program, you can allocate a new purchase payment to a six-month or twelve-month Special DCA account. (1) "Net contract value" equals your current contract value plus any new purchase payment. If this is a new contract funded by purchase payments from multiple sources, we determine your net contract value based on the purchase payments, withdrawal requests and exchange requests submitted with your application. You may only allocate a new purchase payment of at least $1,000 to a Special DCA account. You cannot transfer existing contract values into a Special DCA account. Each Special DCA account lasts for either six or twelve months (depending on the time period you select) from the time we receive your first purchase payment. We make monthly transfers of your total Special DCA account value into the GPAs, one-year fixed account and/or subaccounts you select over the time period you select (either six or twelve months). If you elect to transfer into a GPA, you must meet the $1,000 minimum required investment limitation for each transfer. We reserve the right to credit a lower interest rate to each Special DCA account if you select the GPAs or the one-year fixed account as part of your Special DCA transfers. We will change the interest rate on each Special DCA account from time to time at our discretion. We base these rates on competition and on the interest rate we are crediting to the one-year fixed account at the time of the change. Once we credit interest to a particular purchase payment that rate does not change even if we change the rate we credit on new purchase payments or if your net contract value changes. We credit each Special DCA account with current guaranteed annual rate that is in effect on the date we receive your purchase payment. However, we credit this annual rate over the six or twelve-month period on the balance remaining in your Special DCA account. Therefore, the net effective interest rate you receive is less than the stated annual rate. We do not credit this interest after we transfer the value out of the Special DCA account into the accounts you selected. Once you establish a Special DCA account, you cannot allocate additional purchase payments to it. However, you may establish another new Special DCA account and allocate new purchase payments to it when we change the interest rates we offer on these accounts. If you are funding a Special DCA account from multiple sources, we apply each purchase payment to the account and credit interest on that purchase payment on the date we receive it. This means that all purchase payments may not be in the Special DCA account at the beginning of the six or twelve-month period. Therefore, you may receive less total interest than you would have if all your purchase payments were in the Special DCA account from the beginning. If we receive any of your multiple payments after the six or twelve-month period ends, you can either allocate those payments to a new Special DCA account (if available) or to any other accounts available under your contract. You cannot participate in the Special DCA program if you are making payments under a Systematic Investment Plan. You may simultaneously participate in the Special DCA program and the asset-rebalancing program as long as your subaccount allocation is the same under both programs. If you elect to change your subaccount allocation under one program, we automatically will change it under the other program so they match. If you participate in more than one Special DCA account, the asset allocation for each account may be different as long as you are not also participating in the asset-rebalancing program. - -------------------------------------------------------------------------------- 28 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS You may terminate your participation in the Special DCA program at any time. If you do, we will not credit the current guaranteed annual interest rate on any remaining Special DCA account balance. We will transfer the remaining balance from your Special DCA account to the other accounts you selected for your DCA transfers or we will allocate it in any manner you specify. Similarly, if we cannot accept any additional purchase payments into the Special DCA program, we will allocate the purchase payments to the other accounts you selected for your DCA transfers or in any other manner you specify. We can modify the terms or discontinue the Special DCA program at any time. Any modifications will not affect any purchase payments that are already in a Special DCA account. For more information on the Special DCA program, contact your investment professional. The Special DCA program does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon you willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed account. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. If you are also participating in the Special DCA program and you change your subaccount asset allocation for the asset-rebalancing program, we will change your subaccount asset allocation under the Special DCA program to match. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. TRANSFERRING AMONG ACCOUNTS You may transfer contract value from any one subaccount, GPAs or the one-year fixed account, to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. We may suspend or modify transfer privileges at any time. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. - - We reserve the right to limit transfers to the GPAs and one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - It is our general policy to allow you to transfer contract values from the one-year fixed account to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to a MVA. For contracts issued before June 16, 2003, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at any time. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. For contracts with applications signed on or after June 16, 2003, the amount of contract value transferred to the GPAs and the one-year fixed account cannot result in the value of the GPAs and the one-year - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 29 fixed account in total being greater than 30% of the contract value. The time limitations on transfers from the GPAs and one-year fixed account will be enforced, and transfers out of the GPAs and one-year fixed account are limited to 30% of the GPA and one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the Guarantee Period will receive a MVA*, which may result in a gain or loss of contract value. - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - If you select a variable payout, once annuity payouts begin, you may make transfers once per contract year among the subaccounts and we reserve the right to limit the number of subaccounts in which you may invest. - - Once annuity payouts begin, you may not make any transfers to the GPAs. * Unless the transfer is an automated transfer from the two-year GPA as part of a dollar-cost averaging program or an Interest Sweep strategy. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - -------------------------------------------------------------------------------- 30 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS - - suspending the transfer privilege; or - - modifying instructions under an automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund, may require us to reject your transfer request. For example, while we disregard transfers permitted under an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 31 HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our administrative office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers or partial withdrawals among your subaccounts, GPAs or the one-year fixed account. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated transfers from the one-year fixed account to any one of the subaccounts may not exceed an amount that, if continued, would deplete the one-year fixed account within 12 months. Until further notice, however, we have removed this restriction, and you may transfer contract values from the one-year fixed account to the subaccounts at anytime. We will inform you at least 30 days in advance of the day we intend to reimpose this restriction. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly; $250 quarterly, semiannually or annually 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our administrative office before the close of business, we will process your - -------------------------------------------------------------------------------- 32 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our administrative office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay contract charges or any applicable optional rider charges (see "Charges"). You may have to pay withdrawal charges if you selected contract Option L (see "Charges -- Withdrawal Charge"). Additionally, IRS taxes and penalties may apply (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Plan E (see "The Annuity Payout Period -- Annuity Payout Plans"). Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy required minimum distributions under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will withdraw money from all your subaccounts, GPAs and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless you request otherwise. After executing a partial withdrawal, the value in each subaccount, GPA and one-year fixed account must be either zero or at least $50. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 33 - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have a GMIB rider and/or Benefit Protector Plus Death Benefit rider, the rider will terminate upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are three death benefit options under your contract: - - Return of Purchase Payments (ROP) death benefit; - - Maximum Anniversary Value (MAV) death benefit; and - - Enhanced Death Benefit Rider (EDB). If it is available in your state and if both you and the annuitant are 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP death benefit will apply. If you select the GMIB, you must elect the EDB. Once you select a death benefit, you cannot change it. We show the option that applies in your contract. The combination of the contract and death benefit option you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under all options, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you chose when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. RETURN OF PURCHASE PAYMENTS DEATH BENEFIT The ROP death benefit is intended to help protect your beneficiaries financially in that they will never receive less than your purchase payments adjusted for withdrawals. If you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greater of: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. PW X DB ADJUSTED PARTIAL WITHDRAWALS FOR ROP AND MAV DEATH BENEFIT = ------------ CV
PW = the partial withdrawal including any applicable MVA or withdrawal charge (contract Option L only). DB = the death benefit on the date of (but prior to) the partial withdrawal. CV = contract value on the date of (but prior to) the partial withdrawal. - -------------------------------------------------------------------------------- 34 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary you make an additional purchase payment of $5,000. - - During the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal. - - During the third contract year the contract value grows to $23,000. We calculate the ROP death benefit as follows: Contract value at death: $23,000.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- ROP death benefit, calculated as the greatest of these two values: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT The MAV death benefit is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. MAV Death Benefit does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not MAV death benefit is appropriate for your situation. If it is available in your state and if both you and the annuitant are age 79 or younger at contract issue, you may choose to add the MAV death benefit to your contract. MAV death benefit provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of the following: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary. MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each contract anniversary through age 80. There is no MAV prior to the first contract anniversary. On the first contract anniversary, we set the MAV equal to the greater of: (a) your current contract value, or (b) total purchase payments minus adjusted partial withdrawals. Every contract anniversary after that, through age 80, we compare the previous anniversary's MAV (plus any purchase payments since that anniversary minus adjusted partial withdrawals since that anniversary) to the current contract value and we reset the MAV to the higher value. We stop resetting the MAV after you or the annuitant reach age 81. However, we continue to add subsequent purchase payments and subtract adjusted partial withdrawals from the MAV. EXAMPLE - - You purchase the contract with a payment of $20,000. - - On the first contract anniversary the contract value grows to $29,000. - - During the second contract year the contract value falls to $22,000, at which point you take a $1,500 partial withdrawal, leaving a contract value of $20,500. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 35 We calculate MAV death benefit as follows: Contract value at death: $20,500.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments $20,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $20,000 ---------------- = -1,363.64 $22,000 ---------- for a ROP death benefit of: $18,636.36 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $29,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $29,000 ---------------- = -1,977.27 $22,000 ---------- for a MAV death benefit of: $27,022.73 ---------- The MAV death benefit, calculated as the greatest of these three values, which is the $27,022.73 MAV:
ENHANCED DEATH BENEFIT RIDER The EDB is intended to help protect your beneficiaries financially while your investments have the opportunity to grow. The EDB does not provide any additional benefit before the first contract anniversary and it may not be appropriate for issue ages 75 to 79 because the benefit values may be limited after age 81. Be sure to discuss with your investment professional whether or not EDB is appropriate for your situation. If it is available in your state and if both you and the annuitant are 79 or younger at contract issue, you may choose to add the EDB to your contract at the time you purchase your contract. If you select the GMIB, you must elect the EDB. EDB provides that if you or the annuitant die before annuity payouts begin while this contract is in force, we will pay the beneficiary the greatest of: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the maximum anniversary value on the anniversary immediately preceding the date of death plus any payments since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. 5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts at issue increased by 5%; - - plus any subsequent amounts allocated to the subaccounts; - - minus adjusted transfers and partial withdrawals from the subaccounts. Thereafter, we continue to add subsequent amounts allocated to the subaccounts and subtract adjusted transfers and partial withdrawals from the subaccounts. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. PWT X VAF 5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = --------------- SV
PWT = the amount transferred from the subaccounts or the amount of the partial withdrawal (including any applicable MVA and any applicable withdrawal charge for contract Option L) from the subaccounts. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts on the date of (but prior to) the transfer or partial withdrawal.
- -------------------------------------------------------------------------------- 36 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS EXAMPLE - - You purchase contract Option L with a payment of $25,000 with $5,000 allocated to the one-year fixed account and $20,000 allocated to the subaccounts. - - On the first contract anniversary, the one-year fixed account value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200. - - During the second contract year the one-year fixed account value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal all from the subaccounts, leaving the contract value at $22,800. The death benefit is calculated as follows: Contract value at death: $22,800.00 ---------- Purchase payments minus adjusted partial withdrawals: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP death benefit of: $23,456.79 ---------- The MAV on the anniversary immediately preceding the date of death plus any purchase payments made since that anniversary minus adjusted partial withdrawals made since that anniversary: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV death benefit of: $23,456.79 ---------- The 5% rising floor: The variable account floor on the first contract anniversary, calculated as: 1.05 $21,000.00 X $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% rising floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 ---------- plus the one-year fixed account value: +5,300.00 ---------- 5% rising floor (value of the GPAs, one-year fixed account and the variable $24,642.11 account floor): ---------- EDB calculated as the greatest of these three values, which is the 5% rising floor: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. If requested, we will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and Benefit Protector Plus rider, if selected, will terminate. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 37 If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the IRS; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The GMIB rider and Benefit Protector Plus rider, if selected, will terminate. Continuance of the Benefit Protector rider is optional. (See "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout, or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus or EDB. We reserve the right to discontinue offering the Benefit Protector for new contracts. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking required minimum distributions (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit (see "Benefits in Case of Death), plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. - -------------------------------------------------------------------------------- 38 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS TERMINATING THE BENEFIT PROTECTOR: - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with a MAV death benefit. - - During the first contract year the contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000
- - On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit: $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000
- - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 ------- Total death benefit of: $58,667
- - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000
- - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 39 - - During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. NOTE: For special tax considerations associated with the Benefit Protector, see "Taxes." BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is available only for purchase through a transfer, exchange or rollover from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector or the EDB. We reserve the right to discontinue offering the Benefit Protector Plus for new contracts. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract. Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking required minimum distributions (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus: - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") plus
IF YOU AND THE ANNUITANT ARE UNDER CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% x earnings at death (see above) Three and Four 40% x (earnings at death + 25% of initial purchase payment*) Five or more 40% x (earnings at death + 50% of initial purchase payment*) IF YOU OR THE ANNUITANT ARE AGE 70 CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% x earnings at death Three and Four 15% x (earnings at death + 25% of initial purchase payment*) Five or more 15% x (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. - -------------------------------------------------------------------------------- 40 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. EXAMPLE OF THE BENEFIT PROTECTOR PLUS - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70. You select an Option L contract with the MAV death benefit. - - During the first contract year the contract value grows to $105,000. The MAV death benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. - - On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000
- - On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000
- - During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your contract is in its third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV death benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 ------- Total death benefit of: $64,167
- - On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. - - On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV death benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 41 - - During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000
- - During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV death benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). NOTE: For special tax considerations associated with the Benefit Protector Plus, see "Taxes." GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) The GMIB is intended to provide you with a guaranteed minimum lifetime income regardless of the volatility inherent in the investments in the subaccounts. If the annuitant is between age 70 and age 75 at contract issue, you should consider whether the GMIB is appropriate for your situation because: - - you must hold the GMIB for 10 years*; - - the GMIB terminates** on the contract anniversary after the annuitant's 86th birthday; - - you can only exercise the GMIB within 30 days after a contract anniversary*; - - the MAV and the 5% rising floor values we use in the GMIB benefit base to calculate annuity payouts under the GMIB are limited after age 81; and - - there are additional costs associated with the rider. Be sure to discuss whether or not the GMIB is appropriate for your situation with your sales representative. * Unless the annuitant qualifies for a contingent event (see "Charges -- Contingent events"). ** The rider and annual fee terminate on the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. If you are purchasing the contract as a qualified annuity, such as an IRA, and you are planning to begin annuity payouts after the date on which minimum distributions required by the IRS must begin, you should consider whether the GMIB is appropriate for you. Partial withdrawals you take from the contract, including those taken to satisfy minimum required distributions, will reduce the GMIB benefit base (defined below), which in turn may reduce or eliminate the amount of any annuity payments available under the rider (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Consult a tax advisor before you purchase any GMIB with a qualified annuity, such as an IRA. If this rider is available in your state and the annuitant is 75 or younger at contract issue, you may choose to add this optional benefit to your contract for an additional annual charge which we describe below. If you select the GMIB, you must elect the EDB at the time you purchase your contract. Your rider effective date will be the contract issue date. In some instances, we may allow you to add the GMIB to your contract at a later date if it was not available when you initially purchased your contract. In these instances, we would add the GMIB on the next contract anniversary and this would become the rider effective date. For purposes of calculating the GMIB benefit base under these circumstances, we consider the contract value on the rider effective date to be the initial purchase payment; we disregard all previous purchase payments, transfers and withdrawals in the GMIB calculations. - -------------------------------------------------------------------------------- 42 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate your purchase payments or transfers to any of the subaccounts, GPAs or the one-year fixed account. For contract Option C, you may allocate purchase payments to the subaccounts. However, we reserve the right to limit the amount you allocate to subaccounts investing in the RiverSource Variable Portfolio - Cash Management Fund to 10% of the total amount in the subaccounts. If we are required to activate this restriction, and you have more than 10% of your subaccount value in this fund, we will send you a notice and ask that you reallocate your contract value so that the 10% limitation is satisfied within 60 days. We will terminate the GMIB if you have not satisfied the limitation after 60 days. GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit base is the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the maximum anniversary value at the last contract anniversary plus any payments made since that anniversary minus adjusted partial withdrawals since that anniversary; or 4. the 5% rising floor. Keep in mind that the MAV and the 5% rising floor values are limited after age 81. We reserve the right to exclude from the GMIB benefit base any purchase payments you make in the five years before you exercise the GMIB. We would do so only if such payments total $50,000 or more or if they are 25% or more of total contract payments. If we exercise this right, we: - - subtract each payment adjusted for market value from the contract value and the MAV. - - subtract each payment from the 5% rising floor. We adjust the payments made to the GPAs and the one-year fixed account for market value. We increase payments allocated to the subaccounts by 5% for the number of full contract years they have been in the contract before we subtract them from the 5% rising floor. For each payment, we calculate the market value adjustment to the contract value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor as: PMT X CVG -------------- ECV
PMT = each purchase payment made in the five years before you exercise the GMIB. CVG = current contract value at the time you exercise the GMIB. ECV = the estimated contract value on the anniversary prior to the payment in question. We assume that all payments and partial withdrawals occur at the beginning of a contract year. For each payment, we calculate the 5% increase of payments allocated to the subaccounts as: PMT X (1.05)(CY) CY = the full number of contract years the payment has been in the contract. EXERCISING THE GMIB - - you may only exercise the GMIB within 30 days after any contract anniversary following the expiration of a ten-year waiting period from the rider effective date. However, there is an exception if at any time the annuitant experiences a "contingent event" (disability, terminal illness or confinement to a nursing home or hospital, see "Charges -- Contingent events" for more details.) - - the annuitant on the retirement date must be between 50 and 86 years old. - - you can only take an annuity payout under one of the following annuity payout plans: - Plan A - Life Annuity -- no refund; - Plan B - Life Annuity with ten years certain; - Plan D - Joint and last survivor life annuity -- no refund. - - you may change the annuitant for the payouts. When you exercise your GMIB, you may select a fixed or variable annuity payout plan. Fixed annuity payouts are calculated using the annuity purchase rates based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale G. Your annuity payouts remain fixed for the lifetime of the annuity payout period. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 43 First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. If you exercise the GMIB under a contingent event, you can take up to 50% of the benefit base in cash. You can use the balance of the GMIB benefit base for annuity payouts calculated using the guaranteed annuity purchase rates under any one of the payout plans listed above as long as the annuitant is between 50 and 86 years old on the retirement date. The GMIB benchmarks the contract growth at each anniversary against several comparison values and sets the GMIB benefit base equal to the largest value. The GMIB benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the GMIB. If the GMIB benefit base is greater than the contract value, the GMIB may provide a higher annuity payout level than is otherwise available. However, the GMIB uses guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we will apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the GMIB may be less than the income the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the GMIB, you will receive the higher standard payout option. The GMIB does not create contract value or guarantee the performance of any investment option. TERMINATING THE GMIB - - You may terminate the rider within 30 days after the first and fifth rider anniversaries. - - You may terminate the rider any time after the tenth rider anniversary. - - The rider will terminate on the date: - you make a full withdrawal from the contract; - a death benefit is payable; or - you choose to begin taking annuity payouts under the regular contract provisions. - - The rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday; however, if you exercise the GMIB rider before this time, your benefits will continue according to the annuity payout plan you have selected. EXAMPLE - - You purchase the contract during the 2006 calendar year with a payment of $100,000 and you allocate all your purchase payments to the subaccounts. - - There are no additional purchase payments and no partial withdrawals. - - Assume the annuitant is male and age 55 at contract issue. For the joint and last survivor option (annuity payout Plan D), the joint annuitant is female and age 55 at contract issue. - -------------------------------------------------------------------------------- 44 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS Taking into account fluctuations in contract value due to market conditions, we calculate the GMIB benefit base as:
CONTRACT CONTRACT GMIB ANNIVERSARY VALUE MAV 5% RISING FLOOR BENEFIT BASE - ----------------------------------------------------------------------- 1 $107,000 $107,000 $105,000 2 125,000 125,000 110,250 3 132,000 132,000 115,763 4 150,000 150,000 121,551 5 85,000 150,000 127,628 6 120,000 150,000 134,010 7 138,000 150,000 140,710 8 152,000 152,000 147,746 9 139,000 152,000 155,133 10 126,000 152,000 162,889 $162,889 11 138,000 152,000 171,034 171,034 12 147,000 152,000 179,586 179,586 13 163,000 163,000 188,565 188,565 14 159,000 163,000 197,993 197,993 15 212,000 212,000 207,893 212,000 - -----------------------------------------------------------------------
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally, the GMIB benefit base may increase if the contract value increases. However, you should keep in mind that you are always entitled to annuitize using the contract value without exercising the GMIB. If you annuitize the contract within 30 days after a contract anniversary, the payout under a fixed annuity option (which is the same as the minimum payout for the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME ---------------------------------------- CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE AT EXERCISE BENEFIT BASE NO REFUND 10 YEARS CERTAIN ANNUITY -- NO REFUND - ---------------------------------------------------------------------------------------------------- 10 $162,889 (5% rising floor) $ 840.51 $ 817.70 $672.73 15 212,000 (MAV) 1,250.80 1,193.56 968.84 - ----------------------------------------------------------------------------------------------------
The payouts above are shown at guaranteed annuity rates of 3% stated in Table B of the contract. Payouts under the standard provisions of this contract will be based on our annuity rates in effect at annuitization and are guaranteed to be greater than or equal to the guaranteed annuity rates stated in Table B of the contract. The fixed annuity payout available under the standard provisions of this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND ANNIVERSARY CONTRACT LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE AT EXERCISE VALUE NO REFUND 10 YEARS CERTAIN ANNUITY -- NO REFUND - ---------------------------------------------------------------------------------- 10 $126,000 $ 650.16 $ 632.52 $520.38 15 212,000 1,250.80 1,193.68 968.84 - ----------------------------------------------------------------------------------
At the 15th contract anniversary you would not experience a benefit from the GMIB as the payout available to you is equal to or less than the payout available under the standard provisions of the contract. When the GMIB payout is less than the payout available under the standard provisions of the contract, you will receive the higher standard payout. Remember that after the first year, lifetime income payouts under a variable annuity payout option will depend on the investment performance of the subaccounts you select. If your subaccount performance is 5%, your annuity payout will be unchanged from the previous annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous annuity payout. This fee currently costs 0.70% of the GMIB benefit base annually and it is taken in a lump sum from the contract value on each contract anniversary at the end of each contract year. If the contract is terminated or if annuity payouts begin, we will deduct the - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 45 fee at that time adjusted for the number of calendar days coverage was in place. We cannot increase the GMIB fee after the rider effective date and it does not apply after annuity payouts begin. We calculate the fee as follows: BB + AT - FAV BB = the GMIB benefit base. AT = adjusted transfers from the subaccounts to the GPAs or the one-year fixed account made in the six months before the contract anniversary calculated as:
PT X VAT -------- SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-year fixed account within six months of the contract anniversary VAT = variable account floor on the date of (but prior to) the transfer SVT = value of the subaccounts on the date of (but prior to) the transfer FAV = the value of your GPAs and the one-year fixed account.
The result of AT - FAV will never be greater than zero. This allows us to base the GMIB fee largely on the subaccounts. EXAMPLE - - You purchase the contract with a payment of $100,000 and allocate all of your payment to the subaccounts. - - You make no transfers or partial withdrawals.
CONTRACT CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE ANNIVERSARY VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU - ------------------------------------------------------------------------------------------------- 1 $ 80,000 0.70% 5% rising floor = $100,000 x 1.05 $ 735 2 150,000 0.70% Contract value = $150,000 1,050 3 102,000 0.70% MAV = $150,000 1,050 - -------------------------------------------------------------------------------------------------
THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below except under annuity payout plan E. Under both contract Option L and Option C, you also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin, see "Making the Most of Your Contract -- Transfer policies." ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment - -------------------------------------------------------------------------------- 46 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payment, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose any one of these annuity payout plans by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we have made only one monthly payout, we will not make any more payouts. - - PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly payouts for a guaranteed payout period of five, ten or 15 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect. We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the annuity payout period, you may make full and partial withdrawals. If you make a full withdrawal, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. If the original contract was an Option L contract, the discount rate we use in the calculation will vary between 5.45% and 6.95% depending on the applicable assumed investment rate. If the original contract was an Option C contract, the discount rate we use in the calculation will vary between 5.55% and 7.05% depending on the applicable assumed investment rate. (See "Charges - Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes.") ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 47 DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. - -------------------------------------------------------------------------------- 48 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 49 - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the - -------------------------------------------------------------------------------- 50 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or are not the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource(R) Variable Portfolio - Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate, serves as the principal underwriter of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. Although we no longer offer the contract for sale, you may continue to make purchase payments if permitted under the terms of your contract. We pay commissions to an affiliated selling firm of up to 6.50% of purchase payments on the contract as well as service/trail commissions of up to 1.00% based on annual total contract value for as long as the contract remains in effect. We also may pay a temporary additional sales commission of up to 1.00% of purchase payments for a period of time we select. These commissions do not change depending on which subaccounts you choose to allocate your purchase payments. From time to time and in accordance with applicable laws and regulations, we may also pay or provide the selling firm with various cash and non-cash promotional incentives including, but not limited to bonuses, short-term sales incentive payments, marketing allowances, costs associated with sales conferences and educational seminars and sales recognition awards. A portion of the payments made to the selling firm may be passed on to its sales representatives in accordance with its internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 51 Ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your contract. We pay the commissions and other compensation described above from our assets. Our assets include: - - revenues we receive from fees and expenses that you will pay when buying, owning and surrendering the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- The funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The funds"); and - - revenues we receive from other contracts and policies we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part of all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including surrender charges; and - - fees and expenses charged by the underlying funds in which the subaccounts you select invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement and other materials we file. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of - -------------------------------------------------------------------------------- 52 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 53 APPENDIX: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES (08/26/1999) Accumulation unit value at beginning of period $1.07 $1.02 $0.95 $0.91 $0.71 $0.95 $1.26 $1.43 $1.00 -- Accumulation unit value at end of period $1.18 $1.07 $1.02 $0.95 $0.91 $0.71 $0.95 $1.26 $1.43 -- Number of accumulation units outstanding at end of period (000 omitted) 1,646 1,879 2,133 2,822 2,936 3,287 4,269 3,037 57 -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CORE EQUITY FUND, SERIES I SHARES (10/30/1997) Accumulation unit value at beginning of period $1.45 $1.26 $1.21 $1.13 $0.92 $1.10 $1.45 $1.72 $1.30 $1.03 Accumulation unit value at end of period $1.54 $1.45 $1.26 $1.21 $1.13 $0.92 $1.10 $1.45 $1.72 $1.30 Number of accumulation units outstanding at end of period (000 omitted) 5,535 7,315 3,274 4,188 4,903 5,619 6,927 7,597 5,343 2,495 - --------------------------------------------------------------------------------------------------------------------------------- THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (08/26/1999) Accumulation unit value at beginning of period $0.83 $0.77 $0.75 $0.72 $0.58 $0.82 $1.08 $1.23 $1.00 -- Accumulation unit value at end of period $0.88 $0.83 $0.77 $0.75 $0.72 $0.58 $0.82 $1.08 $1.23 -- Number of accumulation units outstanding at end of period (000 omitted) 372 374 419 461 433 431 434 423 123 -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $1.43 $1.27 $1.07 $1.07 $0.87 $0.95 $1.00 -- -- -- Accumulation unit value at end of period $1.50 $1.43 $1.27 $1.07 $1.07 $0.87 $0.95 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 103 95 91 75 59 7 1 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $1.38 $1.26 $1.25 $1.16 $0.93 $0.91 $1.00 -- -- -- Accumulation unit value at end of period $1.40 $1.38 $1.26 $1.25 $1.16 $0.93 $0.91 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 212 221 208 190 108 24 3 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 $1.00 -- -- -- Accumulation unit value at end of period $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,308 3,045 2,336 1,901 1,151 250 94 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (09/22/1999) Accumulation unit value at beginning of period $3.11 $2.61 $2.34 $1.80 $1.34 $1.33 $1.25 $0.97 $1.00 -- Accumulation unit value at end of period $2.43 $3.11 $2.61 $2.34 $1.80 $1.34 $1.33 $1.25 $0.97 -- Number of accumulation units outstanding at end of period (000 omitted) 605 706 734 760 676 542 325 202 1 -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $1.65 $1.41 $1.41 $1.26 $0.97 $0.99 $0.99 $1.00 -- -- Accumulation unit value at end of period $1.69 $1.65 $1.41 $1.41 $1.26 $0.97 $0.99 $0.99 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,317 1,595 1,286 1,054 597 224 101 34 -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.73 $1.50 $1.40 $1.14 $0.88 $1.00 -- -- -- -- Accumulation unit value at end of period $1.66 $1.73 $1.50 $1.40 $1.14 $0.88 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 771 847 873 749 442 55 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $0.59 $0.55 $0.53 $0.48 $0.36 $0.51 $0.61 $1.00 -- -- Accumulation unit value at end of period $0.64 $0.59 $0.55 $0.53 $0.48 $0.36 $0.51 $0.61 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,786 2,054 2,089 2,279 1,928 967 723 260 -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999) Accumulation unit value at beginning of period $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 $1.00 -- Accumulation unit value at end of period $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23 $1.17 $1.05 -- Number of accumulation units outstanding at end of period (000 omitted) 9,245 10,913 11,340 11,643 4,692 966 546 170 31 -- - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (10/04/1999) Accumulation unit value at beginning of period $2.63 $2.30 $2.06 $1.66 $1.31 $1.40 $1.26 $0.98 $1.00 -- Accumulation unit value at end of period $2.68 $2.63 $2.30 $2.06 $1.66 $1.31 $1.40 $1.26 $0.98 -- Number of accumulation units outstanding at end of period (000 omitted) 2,403 2,113 1,230 591 432 423 280 64 79 -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 54 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (09/22/1999) Accumulation unit value at beginning of period $1.13 $1.02 $0.97 $0.85 $0.67 $0.87 $1.00 $1.12 $1.00 -- Accumulation unit value at end of period $1.10 $1.13 $1.02 $0.97 $0.85 $0.67 $0.87 $1.00 $1.12 -- Number of accumulation units outstanding at end of period (000 omitted) 1,109 1,487 1,581 1,430 1,449 1,109 1,183 1,247 480 -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (03/03/2000) Accumulation unit value at beginning of period $1.03 $0.92 $0.87 $0.79 $0.66 $0.84 $1.02 $1.00 -- -- Accumulation unit value at end of period $1.12 $1.03 $0.92 $0.87 $0.79 $0.66 $0.84 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 527 652 657 588 505 346 219 67 -- -- - --------------------------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - INITIAL CLASS (09/22/1999) Accumulation unit value at beginning of period $1.85 $1.43 $1.24 $0.97 $0.72 $0.95 $1.27 $1.20 $1.00 -- Accumulation unit value at end of period $2.34 $1.85 $1.43 $1.24 $0.97 $0.72 $0.95 $1.27 $1.20 -- Number of accumulation units outstanding at end of period (000 omitted) 1,393 1,751 1,748 1,935 1,996 2,205 2,550 1,939 30 -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.66 $1.43 $1.28 $1.09 $0.77 $1.00 -- -- -- -- Accumulation unit value at end of period $1.74 $1.66 $1.43 $1.28 $1.09 $0.77 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 864 940 833 690 347 12 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.36 $1.29 $1.27 $1.19 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.47 $1.36 $1.29 $1.27 $1.19 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 9,868 6,464 4,642 2,922 1,544 10 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (05/01/2002) Accumulation unit value at beginning of period $1.17 $1.15 $1.03 $0.98 $0.84 $1.00 -- -- -- -- Accumulation unit value at end of period $1.14 $1.17 $1.15 $1.03 $0.98 $0.84 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 185 196 167 147 87 12 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999) Accumulation unit value at beginning of period $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 $1.00 -- Accumulation unit value at end of period $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93 $1.19 $1.33 -- Number of accumulation units outstanding at end of period (000 omitted) 1,885 2,110 2,185 2,258 2,177 1,856 1,775 2,192 347 -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (08/26/1999) Accumulation unit value at beginning of period $1.11 $1.07 $0.96 $0.82 $0.63 $0.92 $1.40 $1.48 $1.00 -- Accumulation unit value at end of period $1.14 $1.11 $1.07 $0.96 $0.82 $0.63 $0.92 $1.40 $1.48 -- Number of accumulation units outstanding at end of period (000 omitted) 709 822 851 922 951 888 782 403 1 -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.57 $1.33 $1.27 $1.07 $0.79 $1.00 -- -- -- -- Accumulation unit value at end of period $1.47 $1.57 $1.33 $1.27 $1.07 $0.79 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,297 2,129 2,323 692 192 35 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 $1.00 -- -- Accumulation unit value at end of period $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09 $1.08 -- -- Number of accumulation units outstanding at end of period (000 omitted) 6,387 5,210 2,698 1,026 605 238 115 7 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (08/26/1999) Accumulation unit value at beginning of period $1.30 $1.19 $1.16 $1.05 $0.85 $0.93 $0.90 $1.00 $1.00 -- Accumulation unit value at end of period $1.30 $1.30 $1.19 $1.16 $1.05 $0.85 $0.93 $0.90 $1.00 -- Number of accumulation units outstanding at end of period (000 omitted) 3,017 4,475 3,380 3,074 2,699 2,403 5,449 556 8 -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (02/21/1995) Accumulation unit value at beginning of period $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 $1.56 Accumulation unit value at end of period $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53 $1.89 $2.33 $1.91 Number of accumulation units outstanding at end of period (000 omitted) 4,871 5,898 4,590 4,708 4,663 5,116 6,019 6,358 5,864 5,163 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/03/2000) Accumulation unit value at beginning of period $1.18 $1.15 $1.15 $1.16 $1.16 $1.11 $1.06 $1.00 -- -- Accumulation unit value at end of period $1.23 $1.18 $1.15 $1.15 $1.16 $1.16 $1.11 $1.06 -- -- Number of accumulation units outstanding at end of period (000 omitted) 2,176 2,281 2,359 2,330 1,256 248 117 39 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND (03/03/2000) Accumulation unit value at beginning of period $1.31 $1.19 $1.15 $0.99 $0.68 $0.83 $0.90 $1.00 -- -- Accumulation unit value at end of period $1.24 $1.31 $1.19 $1.15 $0.99 $0.68 $0.83 $0.90 -- -- Number of accumulation units outstanding at end of period (000 omitted) 215 290 323 274 197 173 89 16 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 55
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (03/03/2000) Accumulation unit value at beginning of period $1.15 $1.04 $1.01 $0.94 $0.78 $0.90 $0.99 $1.00 -- -- Accumulation unit value at end of period $1.23 $1.15 $1.04 $1.01 $0.94 $0.78 $0.90 $0.99 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,532 1,765 1,736 1,457 1,313 1,043 580 201 -- -- - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (03/03/2000) Accumulation unit value at beginning of period $1.25 $1.04 $1.02 $0.93 $0.75 $1.01 $1.09 $1.00 -- -- Accumulation unit value at end of period $1.22 $1.25 $1.04 $1.02 $0.93 $0.75 $1.01 $1.09 -- -- Number of accumulation units outstanding at end of period (000 omitted) 305 171 148 155 156 158 119 14 -- -- - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.39 $1.19 $1.14 $1.04 $0.84 $1.05 $1.13 $1.00 -- -- Accumulation unit value at end of period $1.41 $1.39 $1.19 $1.14 $1.04 $0.84 $1.05 $1.13 -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,750 1,970 2,186 1,526 1,128 922 553 180 -- -- - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (07/03/2000) Accumulation unit value at beginning of period $1.01 $0.85 $0.78 $0.72 $0.56 $0.73 $0.89 $1.00 -- -- Accumulation unit value at end of period $1.12 $1.01 $0.85 $0.78 $0.72 $0.56 $0.73 $0.89 -- -- Number of accumulation units outstanding at end of period (000 omitted) 253 240 203 177 116 89 60 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (03/03/2000) Accumulation unit value at beginning of period $0.73 $0.64 $0.66 $0.62 $0.51 $0.69 $0.87 $1.00 -- -- Accumulation unit value at end of period $0.73 $0.73 $0.64 $0.66 $0.62 $0.51 $0.69 $0.87 -- -- Number of accumulation units outstanding at end of period (000 omitted) 252 250 299 306 285 233 190 151 -- -- - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (03/03/2000) Accumulation unit value at beginning of period $0.70 $0.69 $0.67 $0.65 $0.53 $0.74 $0.95 $1.00 -- -- Accumulation unit value at end of period $0.74 $0.70 $0.69 $0.67 $0.65 $0.53 $0.74 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 7,311 8,064 7,601 2,854 2,456 2,281 2,046 887 -- -- - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT MONEY MARKET FUND* (03/03/2000) Accumulation unit value at beginning of period $1.07 $1.04 $1.03 $1.04 $1.05 $1.05 $1.03 $1.00 -- -- Accumulation unit value at end of period $1.11 $1.07 $1.04 $1.03 $1.04 $1.05 $1.05 $1.03 -- -- Number of accumulation units outstanding at end of period (000 omitted) 456 480 755 718 616 596 712 309 -- -- *The 7-day simple and compound yields for Wells Fargo Advantage VT Money Market Fund at Dec. 31, 2007 were 2.32% and 2.34%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (03/03/2000) Accumulation unit value at beginning of period $0.50 $0.42 $0.40 $0.35 $0.25 $0.42 $0.56 $1.00 -- -- Accumulation unit value at end of period $0.57 $0.50 $0.42 $0.40 $0.35 $0.25 $0.42 $0.56 -- -- Number of accumulation units outstanding at end of period (000 omitted) 992 1,281 1,363 1,351 1,424 1,243 1,146 278 -- -- - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (03/03/2000) Accumulation unit value at beginning of period $1.35 $1.32 $1.31 $1.28 $1.19 $1.12 $1.06 $1.00 -- -- Accumulation unit value at end of period $1.42 $1.35 $1.32 $1.31 $1.28 $1.19 $1.12 $1.06 -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,965 5,543 2,193 622 225 167 155 54 -- -- - ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES (03/03/2003) Accumulation unit value at beginning of period $1.54 $1.47 $1.38 $1.32 $1.00 -- Accumulation unit value at end of period $1.69 $1.54 $1.47 $1.38 $1.32 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- 59 -- -- - ----------------------------------------------------------------------------------------------------------------- AIM V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006) Accumulation unit value at beginning of period $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.15 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 12 12 -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (03/03/2003) Accumulation unit value at beginning of period $1.46 $1.36 $1.34 $1.28 $1.00 -- Accumulation unit value at end of period $1.55 $1.46 $1.36 $1.34 $1.28 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (03/03/2003) Accumulation unit value at beginning of period $1.68 $1.50 $1.26 $1.27 $1.00 -- Accumulation unit value at end of period $1.76 $1.68 $1.50 $1.26 $1.27 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (03/03/2003) Accumulation unit value at beginning of period $1.42 $1.30 $1.29 $1.20 $1.00 -- Accumulation unit value at end of period $1.43 $1.42 $1.30 $1.29 $1.20 -- Number of accumulation units outstanding at end of period (000 omitted) 11 11 11 42 33 -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 56 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.90 $1.72 $1.48 $1.21 $0.89 $1.00 Accumulation unit value at end of period $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 Number of accumulation units outstanding at end of period (000 omitted) 458 374 196 54 19 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2003) Accumulation unit value at beginning of period $2.25 $1.90 $1.70 $1.32 $1.00 -- Accumulation unit value at end of period $1.75 $2.25 $1.90 $1.70 $1.32 -- Number of accumulation units outstanding at end of period (000 omitted) 63 49 58 102 -- -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2003) Accumulation unit value at beginning of period $1.69 $1.45 $1.46 $1.30 $1.00 -- Accumulation unit value at end of period $1.72 $1.69 $1.45 $1.46 $1.30 -- Number of accumulation units outstanding at end of period (000 omitted) 384 323 299 191 95 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.69 $1.47 $1.38 $1.14 $0.88 $1.00 Accumulation unit value at end of period $1.62 $1.69 $1.47 $1.38 $1.14 $0.88 Number of accumulation units outstanding at end of period (000 omitted) 15 22 22 23 20 -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.22 $1.14 $1.11 $1.01 $0.75 $1.00 Accumulation unit value at end of period $1.33 $1.22 $1.14 $1.11 $1.01 $0.75 Number of accumulation units outstanding at end of period (000 omitted) 8 -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002) Accumulation unit value at beginning of period $1.50 $1.29 $1.19 $1.07 $0.87 $1.00 Accumulation unit value at end of period $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 94 154 -- 138 153 -- - ----------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2003) Accumulation unit value at beginning of period $2.07 $1.82 $1.64 $1.33 $1.00 -- Accumulation unit value at end of period $2.10 $2.07 $1.82 $1.64 $1.33 -- Number of accumulation units outstanding at end of period (000 omitted) 751 676 425 165 -- -- - ----------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2003) Accumulation unit value at beginning of period $1.75 $1.57 $1.51 $1.33 $1.00 -- Accumulation unit value at end of period $1.69 $1.75 $1.57 $1.51 $1.33 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- 54 -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (03/03/2003) Accumulation unit value at beginning of period $1.60 $1.44 $1.37 $1.25 $1.00 -- Accumulation unit value at end of period $1.73 $1.60 $1.44 $1.37 $1.25 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - INITIAL CLASS (03/03/2003) Accumulation unit value at beginning of period $2.51 $1.95 $1.70 $1.33 $1.00 -- Accumulation unit value at end of period $3.16 $2.51 $1.95 $1.70 $1.33 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.96 $1.70 $1.51 $1.30 $0.92 $1.00 Accumulation unit value at end of period $2.04 $1.96 $1.70 $1.51 $1.30 $0.92 Number of accumulation units outstanding at end of period (000 omitted) 76 62 54 101 83 -- - ----------------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (08/30/2002) Accumulation unit value at beginning of period $1.26 $1.20 $1.19 $1.12 $1.04 $1.00 Accumulation unit value at end of period $1.36 $1.26 $1.20 $1.19 $1.12 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 2,174 1,584 1,042 417 -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (08/30/2002) Accumulation unit value at beginning of period $1.33 $1.32 $1.18 $1.12 $0.97 $1.00 Accumulation unit value at end of period $1.30 $1.33 $1.32 $1.18 $1.12 $0.97 Number of accumulation units outstanding at end of period (000 omitted) 5 5 5 -- -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.33 $1.20 $1.06 $0.84 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 Number of accumulation units outstanding at end of period (000 omitted) 12 12 14 14 -- -- - ----------------------------------------------------------------------------------------------------------------- PUTNAM VT VISTA FUND - CLASS IB SHARES (03/01/2002) Accumulation unit value at beginning of period $1.29 $1.24 $1.13 $0.97 $0.74 $1.00 Accumulation unit value at end of period $1.31 $1.29 $1.24 $1.13 $0.97 $0.74 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (07/31/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.87 $1.58 $1.52 $1.29 $0.96 $1.00 Accumulation unit value at end of period $1.75 $1.87 $1.58 $1.52 $1.29 $0.96 Number of accumulation units outstanding at end of period (000 omitted) 794 763 746 325 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/01/2002) Accumulation unit value at beginning of period $1.67 $1.42 $1.27 $1.10 $0.80 $1.00 Accumulation unit value at end of period $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 Number of accumulation units outstanding at end of period (000 omitted) 1,539 1,423 623 -- -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.32 $1.21 $1.19 $1.08 $0.92 $1.00 Accumulation unit value at end of period $1.32 $1.32 $1.21 $1.19 $1.08 $0.92 Number of accumulation units outstanding at end of period (000 omitted) 665 974 531 170 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2003) Accumulation unit value at beginning of period $1.60 $1.42 $1.36 $1.31 $1.00 -- Accumulation unit value at end of period $1.62 $1.60 $1.42 $1.36 $1.31 -- Number of accumulation units outstanding at end of period (000 omitted) 647 681 810 502 -- -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/01/2002) Accumulation unit value at beginning of period $1.02 $1.00 $1.00 $1.01 $1.02 $1.00 Accumulation unit value at end of period $1.05 $1.02 $1.00 $1.00 $1.01 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 419 519 197 31 39 -- - ----------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND (03/01/2002) Accumulation unit value at beginning of period $1.61 $1.47 $1.42 $1.22 $0.84 $1.00 Accumulation unit value at end of period $1.51 $1.61 $1.47 $1.42 $1.22 $0.84 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (03/03/2003) Accumulation unit value at beginning of period $1.51 $1.37 $1.33 $1.24 $1.00 -- Accumulation unit value at end of period $1.60 $1.51 $1.37 $1.33 $1.24 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- 166 -- - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (03/03/2003) Accumulation unit value at beginning of period $1.73 $1.44 $1.42 $1.30 $1.00 -- Accumulation unit value at end of period $1.68 $1.73 $1.44 $1.42 $1.30 -- Number of accumulation units outstanding at end of period (000 omitted) 39 19 -- -- -- -- - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (03/03/2003) Accumulation unit value at beginning of period $1.67 $1.44 $1.39 $1.27 $1.00 -- Accumulation unit value at end of period $1.69 $1.67 $1.44 $1.39 $1.27 -- Number of accumulation units outstanding at end of period (000 omitted) 411 409 465 288 -- -- - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (03/03/2003) Accumulation unit value at beginning of period $1.91 $1.61 $1.49 $1.39 $1.00 -- Accumulation unit value at end of period $2.11 $1.91 $1.61 $1.49 $1.39 -- Number of accumulation units outstanding at end of period (000 omitted) 4 4 4 4 -- -- - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (03/03/2003) Accumulation unit value at beginning of period $1.45 $1.27 $1.33 $1.24 $1.00 -- Accumulation unit value at end of period $1.45 $1.45 $1.27 $1.33 $1.24 -- Number of accumulation units outstanding at end of period (000 omitted) 12 12 12 9 -- -- - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (03/03/2003) Accumulation unit value at beginning of period $1.37 $1.37 $1.32 $1.30 $1.00 -- Accumulation unit value at end of period $1.45 $1.37 $1.37 $1.32 $1.30 -- Number of accumulation units outstanding at end of period (000 omitted) 995 1,018 753 275 127 -- - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT MONEY MARKET FUND* (03/03/2003) Accumulation unit value at beginning of period $1.01 $0.98 $0.98 $0.99 $1.00 -- Accumulation unit value at end of period $1.04 $1.01 $0.98 $0.98 $0.99 -- Number of accumulation units outstanding at end of period (000 omitted) 43 50 31 -- -- -- *The 7-day simple and compound yields for Wells Fargo Advantage VT Money Market Fund at Dec. 31, 2007 were 1.90% and 1.92%, respectively. - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (03/03/2003) Accumulation unit value at beginning of period $2.10 $1.74 $1.67 $1.49 $1.00 -- Accumulation unit value at end of period $2.34 $2.10 $1.74 $1.67 $1.49 -- Number of accumulation units outstanding at end of period (000 omitted) 4 5 5 5 -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 58 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (03/03/2003) Accumulation unit value at beginning of period $1.06 $1.04 $1.04 $1.01 $1.00 -- Accumulation unit value at end of period $1.10 $1.06 $1.04 $1.04 $1.01 -- Number of accumulation units outstanding at end of period (000 omitted) 1,137 1,856 658 206 -- -- - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 59 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- 60 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 61 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 62 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 63 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 64 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 65 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 66 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 67 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 45270 J (5/08) PROSPECTUS MAY 1, 2008 WELLS FARGO ADVANTAGE CHOICE(SM) SELECT VARIABLE ANNUITY CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT NEW WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY BEING OFFERED. This prospectus contains information that you should know before investing in Wells Fargo Advantage Choice Select Variable Annuity Contract Option L and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds, Series II Shares AllianceBernstein Variable Products Series Fund, Inc. (Class B) American Century(R) Variable Portfolios, Inc., Class II Dreyfus Variable Investment Fund, Service Share Class Fidelity(R) Variable Insurance Products Service Class 2 Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 Goldman Sachs Variable Insurance Trust (VIT) Oppenheimer Variable Account Funds, Service Shares Putnam Variable Trust - Class IB Shares RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds Van Kampen Life Investment Trust Class II Shares Wanger Advisors Trust Wells Fargo Variable Trust Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 1 RiverSource Life offers other variable annuity contracts in addition to the contract described in this prospectus which your investment professional may or may not be authorized to offer to you. Each annuity has different features and optional benefits that may be appropriate for you based on your individual financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges you will pay when buying, owning and withdrawing money from the contract we describe in this prospectus may be more or less than the fees and charges of other variable annuities we issue. A securities broker dealer authorized to sell the contract described in this prospectus (selling firm) may not offer all the variable annuities we issue. In addition, some selling firms may not permit their investment professionals to sell the contract and/or optional benefits described in this prospectus to persons over a certain age (which may be lower than age limits we set), or may otherwise restrict the sale of the optional benefits described in this prospectus by their investment professionals. You should ask your investment professional about his or her selling firm's ability to offer you other variable annuities we issue (which might have lower fees and charges than the contract described in this prospectus), and any limits the selling firm has placed on your investment professional's ability to offer you the contract and/or optional riders described in this prospectus. TABLE OF CONTENTS KEY TERMS....................................... 3 THE CONTRACT IN BRIEF........................... 5 EXPENSE SUMMARY................................. 7 CONDENSED FINANCIAL INFORMATION (UNAUDITED)..... 12 FINANCIAL STATEMENTS............................ 12 THE VARIABLE ACCOUNT AND THE FUNDS.............. 12 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............ 22 THE FIXED ACCOUNT............................... 23 BUYING YOUR CONTRACT............................ 25 CHARGES......................................... 27 VALUING YOUR INVESTMENT......................... 33 MAKING THE MOST OF YOUR CONTRACT................ 34 WITHDRAWALS..................................... 44 TSA -- SPECIAL PROVISIONS....................... 45 CHANGING OWNERSHIP.............................. 45 BENEFITS IN CASE OF DEATH....................... 45 OPTIONAL BENEFITS............................... 48 THE ANNUITY PAYOUT PERIOD....................... 71 TAXES........................................... 73 VOTING RIGHTS................................... 76 SUBSTITUTION OF INVESTMENTS..................... 76 ABOUT THE SERVICE PROVIDERS..................... 76 ADDITIONAL INFORMATION.......................... 78 APPENDICES TABLE OF CONTENT AND CROSS-REFERENCE TABLE......................................... 79 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)................. 80 APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE.............. 82 APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L...... 83 APPENDIX D: EXAMPLE -- DEATH BENEFITS........... 88 APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER.......... 91 APPENDIX F: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER........................ 93 APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER -- ADDITIONAL RMD DISCLOSURE....... 95 APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT -- RIDER B DISCLOSURE............................ 97 APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT RIDER -- ADDITIONAL RMD DISCLOSURE..................... 102 APPENDIX J: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER............ 103 APPENDIX K: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS................. 105 APPENDIX L: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER......... 110 APPENDIX M: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER.... 112 APPENDIX N: CONDENSED FINANCIAL INFORMATION (UNAUDITED)................................... 114 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION................................... 121
- -------------------------------------------------------------------------------- 2 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FIXED ACCOUNT: Our general account which includes the one-year fixed account and the DCA fixed account. Amounts you allocate to the fixed account earn interest rates we declare periodically. For Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of these funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you may allocate purchase payments or transfer contract value of at least $1,000. These accounts have guaranteed interest rates for guarantee periods we declare when you allocate purchase payments or transfer contract value to a GPA. These guaranteed rates and periods of time may vary by state. Unless an exception applies, transfers or withdrawals from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a Guarantee Period Account is withdrawn or transferred more than 30 days before the end of its guarantee period. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life" refer to RiverSource Life Insurance Company. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 3 VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our administrative office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our administrative office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Each contract has different expenses. Contract Option L has lower expenses than Contract Option C. Contract Option L has a four-year withdrawal charge schedule that applies to each purchase payment you make. Contract Option C eliminates the purchase payment withdrawal charge schedule, but has a higher mortality and expense risk fee than Contract Option L. Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to keep your contract. PURPOSE: These contracts allow you to accumulate money for retirement or similar long term goal. You do this by making one or more purchase payments. You may allocate your purchase payments to the one-year fixed account, the DCA fixed account, GPAs and/or subaccounts of the variable account under the contract; however you risk losing amounts you invest in the subaccounts of the variable account. These accounts, in turn, may earn returns that increase the value of a contract. You may be able to purchase an optional benefit to reduce the investment risk you assume. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract and receive a full refund of the contract value. We will not deduct any contract charges or fees. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the option of making additional purchase payments in the future, subject to certain limitations. Purchase payment amounts and purchase payment timing may be limited under the terms of your contract and/or pursuant to state requirements. (see "Buying Your Contract") ACCOUNTS: Generally, you may allocate purchase payments among any or all of: - - the subaccounts of the variable account, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - the GPAs which earn interest at rates that we declare when you allocate purchase payments or transfer contract value to these accounts. The required minimum investment in a GPA is $1,000. These accounts may not be available in all states. (see "The Guarantee Period Accounts (GPAs)" and "The One-Year Fixed Account") - - the one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "Buying Your Contract" and "Transfer policies"). - - the DCA fixed account, which earns interest at rates that we adjust periodically. There are restrictions on how long contract value can remain in this account. (see "DCA Fixed Account") TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the Guarantee Period will be subject to an MVA, unless an exception applies. You may establish automated transfers among the accounts. Transfers into the DCA fixed account are not permitted. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract. (see "Making the Most of Your Contract -- Transferring Among Accounts") - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 5 WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") OPTIONAL BENEFITS: This contract offers features that are available for additional charges if you meet certain criteria. Optional benefits may require the use of a model portfolio which may limit transfers and allocations; may limit the timing, amount and allocation of purchase payments; and may limit the amount of partial withdrawals that can be taken under the optional benefit during a contract year. (see "Optional Benefits") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount based on the death benefit selected. (see "Benefits in Case of Death") TAXES: Generally, income earned on your contract value grows tax-deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. (see "Taxes") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you purchased a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs and the DCA fixed account are not available during the payout period. (see "The Annuity Payout Period") - -------------------------------------------------------------------------------- 6 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSE THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (contingent deferred sales charge as a percentage of purchase payment withdrawn) You select either contract Option L or Option C at the time of application. Option C has no withdrawal charge schedule but carries a higher mortality and expense risk fee than Option L.
CONTRACT OPTION L YEARS FROM PURCHASE WITHDRAWAL CHARGE PAYMENT RECEIPT PERCENTAGE 1-2 8% 3 7 4 6 Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal we impose a withdrawal charge. This charge will vary based on the contract option shown below and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in the table below. (See "Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout Plans.")
IF YOUR AIR IS 3.5%, THEN YOUR IF YOUR AIR IS 5%, THEN YOUR DISCOUNT RATE PERCENT (%) IS: DISCOUNT RATE PERCENT (%) IS: CONTRACT OPTION L 6.55% 8.05% CONTRACT OPTION C 6.65% 8.15%
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE FOUR DEATH BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE ROP Death Benefit 1.55% 0.15% 1.70% MAV Death Benefit 1.75 0.15 1.90 5% Accumulation Death Benefit 1.90 0.15 2.05 Enhanced Death Benefit 1.95 0.15 2.10 IF YOU SELECT CONTRACT OPTION C AND: ROP Death Benefit 1.65% 0.15% 1.80% MAV Death Benefit 1.85 0.15 2.00 5% Accumulation Death Benefit 2.00 0.15 2.15 Enhanced Death Benefit 2.05 0.15 2.20
OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the current contract anniversary.) - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 7 OPTIONAL DEATH BENEFITS If eligible, you may select an optional death benefit in addition to the ROP and MAV Death Benefits. The fees apply only if you select one of these benefits. BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25% BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract anniversary.) OPTIONAL LIVING BENEFITS If eligible, you may select one of the following optional living benefits if available in your state. Each optional living benefit requires the use of an asset allocation model. The fees apply only if you elect one of these benefits. ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract value or the Minimum Contract Accumulation Value, whichever is greater.) GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract value or the total Remaining Benefit Amount, whichever is greater.) GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract anniversary.) INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1) INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE MAXIMUM: 1.75% CURRENT: 0.60%(1) RIDER FEE INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% MAXIMUM: 2.00% CURRENT: 0.65%(1) ACCUMULATION BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the contract anniversary.) (1) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. - -------------------------------------------------------------------------------- 8 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDING DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses)(a)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense reimbursements 0.52% 2.09%
(a) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor and/or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Capital Appreciation Fund, 0.61% 0.25% 0.27% --% 1.13% Series II Shares AIM V.I. Capital Development Fund, 0.75 0.25 0.31 -- 1.31(1) Series II Shares AllianceBernstein VPS Growth and 0.55 0.25 0.04 -- 0.84 Income Portfolio (Class B) AllianceBernstein VPS International 0.75 0.25 0.06 -- 1.06 Value Portfolio (Class B) American Century VP Inflation 0.49 0.25 0.01 -- 0.75 Protection, Class II American Century VP Value, Class II 0.83 0.25 0.01 -- 1.09 Dreyfus Investment Portfolios 0.75 0.25 0.09 0.01 1.10 Technology Growth Portfolio, Service Shares Dreyfus Variable Investment Fund 0.75 0.25 0.05 -- 1.05 Appreciation Portfolio, Service Shares Fidelity(R) VIP Contrafund(R) 0.56 0.25 0.09 -- 0.90 Portfolio Service Class 2 Fidelity(R) VIP Mid Cap Portfolio 0.56 0.25 0.10 -- 0.91 Service Class 2 Fidelity(R) VIP Overseas Portfolio 0.71 0.25 0.14 -- 1.10 Service Class 2 FTVIPT Franklin Global Real Estate 0.75 0.25 0.31 -- 1.31(2) Securities Fund - Class 2 FTVIPT Franklin Income Securities 0.45 0.25 0.02 -- 0.72 Fund - Class 2 FTVIPT Templeton Global Income 0.50 0.25 0.14 -- 0.89 Securities Fund - Class 2 Goldman Sachs VIT Mid Cap Value 0.80 -- 0.07 -- 0.87 Fund - Institutional Shares Oppenheimer Global Securities 0.62 0.25 0.02 -- 0.89 Fund/VA, Service Shares Oppenheimer Main Street Small Cap 0.70 0.25 0.02 -- 0.97 Fund/VA, Service Shares Oppenheimer Strategic Bond Fund/VA, 0.57 0.25 0.02 0.02 0.86(3) Service Shares Putnam VT Health Sciences 0.70 0.25 0.13 -- 1.08 Fund - Class IB Shares Putnam VT Small Cap Value 0.77 0.25 0.10 0.07 1.19 Fund - Class IB Shares RVST RiverSource(R) Partners Variable 0.83 0.13 1.13 -- 2.09(4) Portfolio - Select Value Fund (previously RiverSource(R) Variable Portfolio - Select Value Fund) RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(4) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.44 0.13 0.17 -- 0.74(4) Portfolio - Global Inflation Protected Securities Fund RVST RiverSource(R) Variable 0.60 0.13 0.16 -- 0.89 Portfolio - Growth Fund RVST RiverSource(R) Variable 0.59 0.13 0.15 -- 0.87 Portfolio - High Yield Bond Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND MANAGEMENT 12B-1 OTHER FEES AND FEES FEES EXPENSES EXPENSES** RVST RiverSource(R) Variable 0.58% 0.13% 0.15% --% Portfolio - Mid Cap Growth Fund RVST RiverSource(R) Variable 0.22 0.13 0.17 -- Portfolio - S&P 500 Index Fund RVST RiverSource(R) Variable 0.48 0.13 0.18 -- Portfolio - Short Duration U.S. Government Fund RVST Threadneedle(R) 1.11 0.13 0.26 -- Variable Portfolio - Emerging Markets Fund (previously RiverSource(R) Variable Portfolio - Emerging Markets Fund) Van Kampen Life Investment 0.56 0.25 0.03 -- Trust Comstock Portfolio, Class II Shares Wanger U.S. Smaller 0.90 -- 0.05 -- Companies (effective June 1, 2008, the Fund will change its name to Wanger USA) Wells Fargo Advantage VT 0.55 0.25 0.22 -- Asset Allocation Fund Wells Fargo Advantage VT C&B 0.55 0.25 0.37 -- Large Cap Value Fund Wells Fargo Advantage VT 0.55 0.25 0.24 -- Equity Income Fund Wells Fargo Advantage VT 0.75 0.25 0.43 -- International Core Fund Wells Fargo Advantage VT 0.55 0.25 0.39 -- Large Company Core Fund Wells Fargo Advantage VT 0.55 0.25 0.24 -- Large Company Growth Fund Wells Fargo Advantage VT 0.30 0.25 0.27 -- Money Market Fund Wells Fargo Advantage VT 0.75 0.25 0.23 -- Small Cap Growth Fund Wells Fargo Advantage VT 0.45 0.25 0.25 -- Total Return Bond Fund TOTAL ANNUAL OPERATING EXPENS (Before fee waivers and/or ex GROSS TOTAL ANNUAL EXPENSES RVST RiverSource(R) Variable 0.86% Portfolio - Mid Cap Growth Fund RVST RiverSource(R) Variable 0.52(4) Portfolio - S&P 500 Index Fund RVST RiverSource(R) Variable 0.79 Portfolio - Short Duration U.S. Government Fund RVST Threadneedle(R) 1.50 Variable Portfolio - Emerging Markets Fund (previously RiverSource(R) Variable Portfolio - Emerging Markets Fund) Van Kampen Life Investment 0.84 Trust Comstock Portfolio, Class II Shares Wanger U.S. Smaller 0.95 Companies (effective June 1, 2008, the Fund will change its name to Wanger USA) Wells Fargo Advantage VT 1.02(5) Asset Allocation Fund Wells Fargo Advantage VT C&B 1.17(5) Large Cap Value Fund Wells Fargo Advantage VT 1.04(5) Equity Income Fund Wells Fargo Advantage VT 1.43(5) International Core Fund Wells Fargo Advantage VT 1.19(5) Large Company Core Fund Wells Fargo Advantage VT 1.04(5) Large Company Growth Fund Wells Fargo Advantage VT 0.82(5) Money Market Fund Wells Fargo Advantage VT 1.23(5) Small Cap Growth Fund Wells Fargo Advantage VT 0.95(5) Total Return Bond Fund
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series II shares to 1.45% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 1.30% for AIM V.I. Capital Development Fund, Series II Shares. (2) The investment manager and administrator have contractually agreed to waive or limit their respective fees so that the increase in investment management and fund administration fees paid by the Fund is phased in over a five year period, starting on May 1, 2007, with there being no increase in the rate of such fees for the first year ending April 30, 2008. For each of four years thereafter through April 30, 2012, the investment manager and administrator will receive one-fifth of the increase in the rate of fees. After fee waivers net expenses would be 0.89% for FTVIPT Franklin Global Real Estate Securities Fund - Class 2. (3) The "Other expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year. That undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended Dec. 31, 2007, the transfer agent fees did not exceed this expense limitation. The Manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the acquired fund fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund and OFI Master Loan Fund LLC. After fee waivers and expense reimbursements, the net expenses would be 0.82% for Oppenheimer Strategic Bond Fund/VA, Service Shares. (4) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed: 1.03% for RVST RiverSource(R) Partners Variable Portfolio - Select Value Fund, 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund, 0.72% for RVST RiverSource(R) Variable Portfolio - Global Inflation Protected Securities Fund and 0.51% for RVST RiverSource(R) Variable Portfolio - S&P 500 Index Fund. (5) The adviser has contractually agreed through April 30, 2009 to waive fees and/or reimburse the expenses to the extent necessary to maintain the Fund's net operating expense ratio. After fee waivers and expense reimbursements, net expenses would be 1.00% for Wells Fargo Advantage VT Asset Allocation Fund, 1.00% for Wells Fargo Advantage VT C&B Large Cap Value Fund, 1.00% for Wells Fargo Advantage VT Equity Income Fund, 1.00% for Wells Fargo Advantage VT International Core Fund, 1.00% for Wells Fargo Advantage VT Large Company Core Fund, 1.00% for Wells Fargo Advantage VT Large Company Growth Fund, 0.75% for Wells Fargo Advantage VT Money Market Fund, 1.20% for Wells Fargo Advantage VT Small Cap Growth Fund and 0.90% for Wells Fargo Advantage VT Total Return Bond Fund. - -------------------------------------------------------------------------------- 10 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the MAV Death Benefit, the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,462 $2,696 $3,343 $6,766 $662 $1,996 $3,343 $6,766 Contract Option C 673 2,027 3,391 6,845 673 2,027 3,391 6,845
MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP Death Benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option L $1,030 $1,408 $1,213 $2,599 $230 $708 $1,213 $2,599 Contract Option C 241 742 1,268 2,710 241 742 1,268 2,710
(1) In these examples, the $40 contract administrative charge is estimated as a .022% charge for Option L and .030% for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. (2) Because these examples are intended to illustrate the most expensive combination of contract features, the maximum annual fee for each optional rider is reflected rather than the fee that is currently being charged. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 11 CONDENSED FINANCIAL INFORMATION You can find unaudited condensed financial information for the subaccounts representing the lowest and highest total annual variable account expense combinations in Appendix N. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statements date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. This contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - PRIVATE LABEL: This contract is a "private label" variable annuity. This means the contract includes funds affiliated with the distributor of this contract. Purchase payments and contract values you allocate to subaccounts investing in any of the Wells Fargo Variable Trust funds available under this contract are generally more profitable for the distributor and its affiliates than allocations you make to other subaccounts. In contrast, purchase payments and contract values you allocate to subaccounts investing in any of the RiverSource Variable Portfolio Funds are generally more profitable for us and our affiliates. For - -------------------------------------------------------------------------------- 12 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS example, we may receive compensation from our affiliates in connection with purchase payments and contract value you allocate to the RiverSource Variable Series Trust funds that exceeds the range disclosed in the previous paragraph for funds our affiliates do not manage. These relationships may influence recommendations your investment professional makes regarding whether you should invest in the contract, and whether you should allocate purchase payments or contract values to a particular subaccount. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under the asset allocation program we offer (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program") or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and when there is substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue including, but not limited to, expense payments and non-cash compensation a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue, including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 13 - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- 14 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS UNLESS AN ASSET ALLOCATION PROGRAM WE OFFER IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Capital Growth of capital. Invests principally in common Invesco Aim Advisors, Inc. adviser, Appreciation Fund, Series II stocks of companies likely to benefit from new advisory entities affiliated with Shares or innovative products, services or processes as Invesco Aim Advisors, Inc., well as those with above-average long-term subadvisers. growth and excellent prospects for future growth. The Fund can invest up to 25% of its total assets in foreign securities that involve risks not associated with investing solely in the United States. AIM V.I. Capital Development Long-term growth of capital. Invests primarily Invesco Aim Advisors, Inc. adviser, Fund, Series II Shares in securities (including common stocks, advisory entities affiliated with convertible securities and bonds) of small- and Invesco Aim Advisors, Inc., medium-sized companies. The Fund may invest up subadvisers. to 25% of its total assets in foreign securities. AllianceBernstein VPS Growth Long-term growth of capital. Invests primarily AllianceBernstein L.P. and Income Portfolio (Class in the equity securities of domestic companies B) that the Advisor deems to be undervalued. AllianceBernstein VPS Long-term growth of capital. Invests primarily AllianceBernstein L.P. International Value in a diversified portfolio of equity securities Portfolio (Class B) of established companies selected from more than 40 industries and from more than 40 developed and emerging market countries. American Century VP Long-term total return. To protect against U.S. American Century Investment Management, Inflation Protection, Class inflation. Inc. II American Century VP Value, Long-term capital growth, with income as a American Century Investment Management, Class II secondary objective. Invests primarily in stocks Inc. of companies that management believes to be undervalued at the time of purchase. Dreyfus Investment Capital appreciation. The portfolio invests, The Dreyfus Corporation Portfolios Technology Growth under normal circumstances, at least 80% of its Portfolio, Service Shares assets in the stocks of growth companies of any size that Dreyfus believes to be leading producers or beneficiaries of technological innovation. Up to 25% of the portfolio's assets may be in foreign securities. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities. Dreyfus Variable Investment Long-term capital growth consistent with the The Dreyfus Corporation; Fayez Sarofim Fund Appreciation Portfolio, preservation of capital. Its secondary goal is & Co., sub-adviser. Service Shares current income. To pursue these goals, the portfolio normally invests at least 80% of its assets in common stocks. The portfolio focuses on "blue chip" companies with total market capitalizations of more than $5 billion at the time of purchase, including multinational companies. These established companies have demonstrated sustained patterns of profitability, strong balance sheets, an expanding global presence and the potential to achieve predictable, above-average earnings growth.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Fidelity(R) VIP Long-term capital appreciation. Normally invests Fidelity Management & Research Company Contrafund(R) Portfolio primarily in common stocks. Invests in (FMR), investment manager; FMR U.K. and Service Class 2 securities of companies whose value it believes FMR Far East, sub- advisers. is not fully recognized by the public. Invests in either "growth" stocks or "value" stocks or both. The fund invests in domestic and foreign issuers. Fidelity(R) VIP Mid Cap Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Normally invests at (FMR), investment manager; FMR U.K., least 80% of assets in securities of companies FMR Far East, sub- advisers. with medium market capitalizations. May invest in companies with smaller or larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both. Fidelity(R) VIP Overseas Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks of foreign (FMR), investment manager; FMR U.K., securities. Normally invests at least 80% of FMR Far East, Fidelity International assets in non-U.S. securities. Investment Advisors (FIIA) and FIIA U.K., sub-advisers. FTVIPT Franklin Global Real High total return. The Fund normally invests at Franklin Templeton Institutional, LLC Estate Securities least 80% of its net assets in investments of Fund - Class 2 companies located anywhere in the world that operate in the real estate sector and normally invests predominantly in equity securities. FTVIPT Franklin Income Maximize income while maintaining prospects for Franklin Advisers, Inc. Securities Fund - Class 2 capital appreciation. The Fund normally invests in both equity and debt securities. The Fund seeks income by investing in corporate, foreign, and U.S. Treasury bonds as well as stocks with dividend yields the manager believes are attractive. FTVIPT Templeton Global High current income consistent with preservation Franklin Advisers, Inc. Income Securities Fund - of capital, with capital appreciation as a Class 2 secondary consideration. The Fund normally invests mainly in debt securities of governments and their political subdivisions and agencies, supranational organizations and companies located anywhere in the world, including emerging markets.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Goldman Sachs VIT Mid Cap Long-term capital appreciation. The Fund Goldman Sachs Asset Management, L.P. Value Fund - Institutional invests, under normal circumstances, at least Shares 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase) ("Net Assets") in a diversified portfolio of equity investments in mid-cap issuers with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constituting the Russell Midcap(R) Value Index at the time of investment. If the market capitalization of a company held by the Fund moves outside this range, the Fund may, but is not required to, sell the securities. The capitalization range of the Russell Midcap(R) Value Index is currently between $1.1 billion and $21 billion. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its Net Assets in foreign securities, including securities of issuers in countries with emerging markets or economies ("emerging countries") and securities quoted in foreign currencies. The Fund may invest in the aggregate up to 20% of its Net Assets in companies with public stock market capitalizations outside the range of companies constituting the Russell Midcap(R) Value Index at the time of investment and in fixed-income securities, such as government, corporate and bank debt obligations. Oppenheimer Global Long-term capital appreciation. Invests mainly OppenheimerFunds, Inc. Securities Fund/VA, Service in common stocks of U.S. and foreign issuers Shares that are "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. Oppenheimer Main Street Capital appreciation. Invests mainly in common OppenheimerFunds, Inc. Small Cap Fund/VA, Service stocks of small-capitalization U.S. companies Shares that the fund's investment manager believes have favorable business trends or prospects. Oppenheimer Strategic Bond High level of current income principally derived OppenheimerFunds, Inc. Fund/VA, Service Shares from interest on debt securities. Invests mainly in three market sectors: debt securities of foreign governments and companies, U.S. government securities and lower-rated high yield securities of U.S. and foreign companies. Putnam VT Health Sciences Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Fund - Class IB Shares by investing mainly in common stocks of companies in the health sciences industries, with a focus on growth stocks. Under normal circumstances, the fund invests at least 80% of its net assets in securities of (a) companies that derive at least 50% of their assets, revenues or profits from the pharmaceutical, health care services, applied research and development and medical equipment and supplies industries, or (b) companies Putnam Management thinks have the potential for growth as a result of their particular products, technology, patents or other market advantages in the health sciences industries.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Putnam VT Small Cap Value Capital appreciation. The fund pursues its goal Putnam Investment Management, LLC Fund - Class IB Shares by investing mainly in common stocks of U.S. companies, with a focus on value stocks. Under normal circumstances, the fund invests at least 80% of its net assets in small companies of a size similar to those in the Russell 2000 Value Index. RVST RiverSource Partners Long-term growth of capital. Invests primarily RiverSource Investments, LLC, adviser; Variable Portfolio - Select in equity securities of mid cap companies as Systematic Financial Management, L.P. Value Fund well as companies with larger and smaller market and WEDGE Capital Management L.L.P., (previously RiverSource capitalizations. The Fund considers mid-cap sub- advisers. Variable Portfolio - Select companies to be either those with a market Value Fund) capitalization of up to $15 billion or those whose market capitalization falls within range of the Russell Midcap(R) Value Index. RVST RiverSource Partners Long-term capital appreciation. Under normal RiverSource Investments, LLC, adviser; Variable Portfolio - Small market conditions, at least 80% of the Fund's River Road Asset Management, LLC, Cap Value Fund net assets will be invested in small cap Donald Smith & Co., Inc., Franklin (previously RiverSource companies with market capitalization, at the Portfolio Associates LLC, Barrow, Variable Portfolio - Small time of investment, of up to $2.5 billion or Hanley, Mewhinney & Strauss, Inc. and Cap Value Fund) that fall within the range of the Russell Denver Investment Advisors LLC, 2000(R) Value Index. The Fund may invest up to subadvisers. 25% of its net assets in foreign investments. RVST RiverSource Variable High level of current income while attempting to RiverSource Investments, LLC Portfolio - Diversified Bond conserve the value of the investment for the Fund longest period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage- and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets. RVST RiverSource Variable High level of current income and, as a secondary RiverSource Investments, LLC Portfolio - Diversified goal, steady growth of capital. Under normal Equity Income Fund market conditions, the Fund invests at least 80% of its net assets in dividend- paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Total return that exceeds the rate of inflation RiverSource Investments, LLC Portfolio - Global Inflation over the long-term. Non-diversified mutual fund Protected Securities Fund that, under normal market conditions, invests at least 80% of its net assets in inflation-protected debt securities. These securities include inflation-indexed bonds of varying maturities issued by U.S. and foreign governments, their agencies or instrumentalities, and corporations.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Long-term capital growth. Invests primarily in RiverSource Investments, LLC Portfolio - Growth Fund common stocks and securities convertible into common stocks that appear to offer growth opportunities. These growth opportunities could result from new management, market developments, or technological superiority. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable High current income, with capital growth as a RiverSource Investments, LLC Portfolio - High Yield Bond secondary objective. Under normal market Fund conditions, the Fund invests at least 80% of its net assets in high-yield debt instruments (commonly referred to as "junk") including corporate debt securities as well as bank loans rated below investment grade by a nationally recognized statistical rating organization, or if unrated, determined to be of comparable quality. Up to 25% of the Fund may be invested in high yield debt instruments of foreign issuers. RVST RiverSource Variable Capital appreciation. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Equity conditions, the Fund invests at least 80% of its Fund net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Growth of capital. Under normal market RiverSource Investments, LLC Portfolio - Mid Cap Growth conditions, the Fund invests at least 80% of its Fund net assets at the time of purchase in equity securities of mid capitalization companies. The investment manager defines mid-cap companies as those whose market capitalization (number of shares outstanding multiplied by the share price) falls within the range of the Russell Midcap(R) Growth Index. RVST RiverSource Variable Long-term capital appreciation. The Fund seeks RiverSource Investments, LLC Portfolio - S&P 500 Index to provide investment results that correspond to Fund the total return (the combination of appreciation and income) of large-capitalization stocks of U.S. companies. The Fund invests in common stocks included in the Standard & Poor's 500 Composite Stock Price Index (S&P 500). The S&P 500 is made up primarily of large-capitalization companies that represent a broad spectrum of the U.S. economy. RVST RiverSource Variable High level of current income and safety of RiverSource Investments, LLC Portfolio - Short Duration principal consistent with investment in U.S. U.S. Government Fund government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. RVST Threadneedle Variable Long-term capital growth. The Fund's assets are RiverSource Investments, LLC, adviser; Portfolio - Emerging Markets primarily invested in equity securities of Threadneedle International Limited, an Fund emerging market companies. Under normal market indirect wholly-owned subsidiary of (previously RiverSource conditions, at least 80% of the Fund's net Ameriprise Financial, sub-adviser. Variable Portfolio - assets will be invested in securities of Emerging Markets Fund) companies that are located in emerging market countries, or that earn 50% or more of their total revenues from goods and services produced in emerging market countries or from sales made in emerging market countries.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Van Kampen Life Investment Capital growth and income through investments in Van Kampen Asset Management Trust Comstock Portfolio, equity securities, including common stocks, Class II Shares preferred stocks and securities convertible into common and preferred stocks. The Portfolio emphasizes value style of investing seeking well-established, undervalued companies believed by the Portfolio's investment adviser to posses the potential for capital growth and income. Wanger U.S. Smaller Long-term growth of capital. Invests primarily Columbia Wanger Asset Management, L.P. Companies in stocks of small- and medium-size U.S. Effective June 1, 2008, the companies with market capitalizations of less Fund will change its name to than $5 billion at time of initial purchase. Wanger USA. Effective June 1, 2008: Long-term growth of capital. Under normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion. Wells Fargo Advantage VT Long-term total return, consisting of capital Wells Fargo Funds Management, LLC, Asset Allocation Fund appreciation and current income. We seek to adviser; Wells Capital Management achieve the Portfolio's investment objective by Incorporated, sub-adviser. allocating 60% of its assets to equity securities and 40% of its assets to fixed income securities. Wells Fargo Advantage VT C&B Maximum long-term total return (current income Wells Fargo Funds Management, LLC, Large Cap Value Fund and capital appreciation) consistent with adviser; Cooke & Bieler, L.P., sub- minimizing risk to principal. Invests adviser. principally in equity securities of large- capitalization companies, which they define as companies with market capitalizations of $3 billion or more. We manage a relatively focused portfolio of 30 to 50 companies that enables them to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. Wells Fargo Advantage VT Long-term capital appreciation and dividend Wells Fargo Funds Management, LLC, Equity Income Fund income. Invests principally in equity securities adviser; Wells Capital Management of large-capitalization companies, which we Incorporated, sub-adviser. define as companies with market capitalizations of $3 billion or more. Wells Fargo Advantage VT Long-term capital appreciation. Invests in Wells Fargo Funds Management, LLC, International Core Fund equity securities of non-U.S. companies that we adviser; Wells Capital Management believe have strong growth potential and offer Incorporated, sub-adviser. good value relative to similar investments. We invest primarily in developed countries, but may invest in emerging markets.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Wells Fargo Advantage VT Total return comprised of long-term capital Wells Fargo Funds Management, LLC, Large Company Core Fund appreciation and current income. Invests adviser; Matrix Asset Advisors, Inc., principally in equity securities of sub-adviser. approximately 30 to 50 large-capitalization companies, the majority of which pay dividends. Large-capitalization companies are defined as those with market capitalizations of $3 billion or more. We may also invest in equity securities of foreign issuers through ADRs and similar investments. Wells Fargo Advantage VT Long-term capital appreciation. Invests Wells Fargo Funds Management, LLC, Large Company Growth Fund principally in equity securities, focusing on adviser; Peregrine Capital Management, approximately 30 to 50 large capitalization Inc., sub-adviser. companies that we believe have favorable growth potential. However, we normally do not invest more than 10% of the Fund's total assets in the securities of a single issuer. We define large-capitalization companies as those with market capitalizations of $3 billion or more. Wells Fargo Advantage VT Current income, while preserving capital and Wells Fargo Funds Management, LLC, Money Market Fund liquidity. We actively manage a portfolio of adviser; Wells Capital Management high-quality, short-term U.S. dollar-denominated Incorporated, sub-adviser. money market instruments. We will only purchase First Tier securities. These investments may have fixed, floating, or variable rates of interest and may be obligations of U.S. or foreign issuers. We may invest more than 25% of the Fund's total assets in U.S. dollar-denominated obligations of U.S. banks. Our security selection is based on several factors, including credit quality, yield and maturity, while taking into account the Fund's overall level of liquidity and average maturity. Wells Fargo Advantage VT Long-term capital appreciation. Invests Wells Fargo Funds Management, LLC, Small Cap Growth Fund principally in equity securities of adviser; Wells Capital Management small-capitalization companies that we believe Incorporated, sub-adviser. have above-average growth potential. We define small-capitalization companies as those with market capitalizations at the time of purchase of less than $2 billion. Wells Fargo Advantage VT Total return consisting of income and capital Wells Fargo Funds Management, LLC, Total Return Bond Fund appreciation. Invests principally in adviser; Wells Capital Management investment-grade debt securities, including U.S. Incorporated, sub-adviser. Government obligations, corporate bonds and mortgage- and asset-backed securities. Under normal circumstances, we expect to maintain an overall dollar-weighted average effective duration range between 4 and 5 1/2 years.
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 21 THE GUARANTEE PERIOD ACCOUNTS (GPAS) The GPAs may not be available in some states. Currently, unless an asset allocation program is in effect, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The required minimum investment in each GPA is $1,000. These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the guarantee period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion (future rates). We will determine future rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable guarantee periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We will not apply an MVA to contract value you transfer or withdraw out of the GPAs within 30 days before the end of the guarantee period. During this 30 day window you may choose to start a new guarantee period of the same length, transfer the contract value to a GPA of another length, transfer the contract value to any of the subaccounts or withdraw the contract value (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your guarantee period, our current practice is to automatically transfer the contract value into the shortest GPA term offered in your state. We guarantee the contract value allocated to the GPAs, including interest credited, if you do not make any transfers or withdrawals from the GPAs prior to 30 days before the end of the Guarantee Period (30 day rule). At all other times, and unless one of the exceptions to the 30 day rule described below applies, we will apply an MVA if you withdraw or transfer contract value from a GPA including withdrawals under the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider, or you elect an annuity payout plan while you have contract value invested in a GPA. We will refer to these transactions as "early withdrawals." The application of an MVA may result in either a gain or loss of principal. - -------------------------------------------------------------------------------- 22 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The 30-day rule does not apply and no MVA will apply to: - - transfers from a one-year GPA occurring under an automated dollar-cost averaging program or Interest Sweep Strategy; - - automatic rebalancing under any Portfolio Navigator model portfolio we offer which contains one or more GPAs. However, an MVA will apply if you reallocate to a new Portfolio Navigator model portfolio; - - amounts applied to an annuity payout plan while a Portfolio Navigator asset allocation model containing one or more GPAs is in effect; - - reallocation or your contract value according to an updated Portfolio Navigator model portfolio; - - amounts withdrawn for fees and charges; or - - amounts we pay as death claims. When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your guarantee period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the guarantee period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A. THE FIXED ACCOUNT (APPLIES TO CONTRACTS ISSUED ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR STATE) The fixed account is our general account. Amounts allocated to the fixed account become part of our general account. The fixed account includes the one-year fixed account and the DCA fixed account. We credit interest on amounts you allocate to the fixed account at rates we determine from time to time in our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns we earn on our general account investments, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed minimum interest rate on amounts invested in the fixed account may vary by state but will not be lower than state law allows. We back the principal and interest guarantees relating to the fixed account. These guarantees are based on the continued claims-paying ability of RiverSource Life. The fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the fixed account, however, disclosures regarding the fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ONE-YEAR FIXED ACCOUNT Unless an asset allocation program we offer is in effect, you may allocate purchase payments or transfer contract value to the one-year fixed account.(1) The value of the one-year fixed account increases as we credit interest to the one-year fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. We credit the one-year fixed account with the current guaranteed annual rate that is in effect on the date we receive your purchase payment or you transfer contract value to the one-year fixed account. The interest rate we apply to each purchase payment or transfer to the one-year fixed account is guaranteed for one year. There are restrictions on the amount you can allocate to the one-year fixed account as well as on transfers from this account (see "Buying Your Contract" and "Making the Most of Your Contract -- Transfer policies"). (1) For Contract Option C, the one-year fixed account may not be available, or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. DCA FIXED ACCOUNT You may allocate purchase payments to the DCA fixed account. You may not transfer contract value to the DCA fixed account. You may allocate your entire initial purchase payment to the DCA fixed account for a term of six or twelve months. We reserve the right to offer shorter or longer terms for the DCA fixed account. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 23 In accordance with your investment instructions, we transfer a pro rata amount from the DCA fixed account to your investment allocations monthly so that, at the end of the DCA fixed account term, the balance of the DCA fixed account is zero. The value of the DCA fixed account increases when we credit interest to the DCA fixed account, and decreases when we make monthly transfers from the DCA fixed account to your investment allocations. We credit interest only on the declining balance of the DCA fixed account; we do not credit interest on amounts that have been transferred from the DCA fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. Generally, we will credit the DCA fixed account with interest at the same annual effective rate we apply to one-year fixed account on the date we receive your purchase payment, regardless of the length of the term you select. We reserve the right to declare different annual effective rates: - - for the DCA fixed account and the one-year fixed account; - - for the DCA fixed accounts with terms of differing length; - - for amounts in the DCA fixed account you instruct us to transfer to the one-year fixed account if available under your contract; - - for amounts in the DCA fixed account you instruct us to transfer to the GPAs; - - for amounts in the DCA fixed account you instruct us to transfer to the subaccounts. The interest rates in effect for the DCA fixed account when we receive your purchase payment are guaranteed for the length of the term. When you allocate an additional purchase payment to an existing DCA fixed account term, the interest rates applicable to that purchase payment will be the rates in effect for the DCA fixed account of the same term on the date we receive your purchase payment. For DCA fixed accounts with an initial term (or, in the case of an additional purchase payment, a remaining term) of less than twelve months, the net effective interest rates we credit to the DCA fixed account balance will be less than the declared annual effective rates. Alternatively, you may allocate your initial purchase payment to any combination of the following which equals one hundred percent of the amount you invest: - - the DCA fixed account for a six month term; - - the DCA fixed account for a twelve month term; - - the Portfolio Navigator model portfolio in effect; - - if no Portfolio Navigator model portfolio is in effect, to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If you make a purchase payment while a DCA fixed account term is in progress, you may allocate your purchase payment among the following: - - to the DCA fixed account term(s) then in effect. Amounts you allocate to an existing DCA fixed account term will be transferred out of the DCA fixed account over the remainder of the term. For example, if you allocate a new purchase payment to an existing DCA fixed account term of six months when only two months remains in the six month term, the amount you allocate will be transferred out of the DCA fixed account over the remaining two months of the term; - - to the Portfolio Navigator model portfolio then in effect; - - if no Portfolio Navigator model portfolio is in effect, then to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If no DCA fixed account term is in progress when you make an additional purchase payment, you may allocate it according to the rules above for the allocation of your initial purchase payment. If you participate in a model portfolio, and you change to a different model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account to your newly-elected model portfolio. If your contract permits, and you discontinue your participation in a model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account for the remainder of the term in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). You may discontinue any DCA fixed account before the end of its term by giving us notice. If you do so, we will transfer the remaining balance of the DCA fixed account whose term you are ending to the model portfolio in effect, or if no model portfolio is in effect, in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the - -------------------------------------------------------------------------------- 24 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). Dollar-cost averaging from the DCA fixed account does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. For a discussion of how dollar-cost averaging works, see "Making the Most of Your Contract -- Automated Dollar-Cost Averaging." BUYING YOUR CONTRACT New contracts are not currently being offered. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. You may buy Contract Option L or Contract Option C. Contract Option L has a four-year withdrawal charge schedule. Contract Option C eliminates the withdrawal charge schedule in exchange for a higher mortality and expense risk fee. Both contracts have the same underlying funds. As the owner, you have all rights and may receive all benefits under the contract. You may select a qualified or nonqualified annuity. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 85 or younger. (The age limit may be younger for qualified annuities in some states.) When you apply, you may select (if available in your state): - - contract Option L or Option C; - - GPAs, the one-year fixed account, the DCA fixed account and/or subaccounts in which you want to invest; - - how you want to make purchase payments; - - a beneficiary; - - the optional Portfolio Navigator asset allocation program(1); and - - one of the following Death Benefits: - ROP Death Benefit - MAV Death Benefit - 5% Accumulation Death Benefit(2) - Enhanced Death Benefit(2) In addition, you may also select (if available in your state): EITHER ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM): - - Accumulation Protector Benefit rider - - Guarantor Withdrawal Benefit for Life rider(3) - - Income Assurer Benefit - MAV rider - - Income Assurer Benefit - 5% Accumulation Benefit Base rider - - Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS: - - Benefit Protector Death Benefit rider(4) - - Benefit Protector Plus Death Benefit rider(4) (1) There is no additional charge for this feature (2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not available with Benefit Protector and Benefit Protector Plus Death Benefit riders. (3) In those states where the Guarantor Withdrawal Benefit for Life rider is not available, you may select the Guarantor Withdrawal Benefit rider which is available if you and the annuitant are age 79 or younger at contract issue. (4) Available if you and the annuitant are age 75 or younger at contract issue. Not available with the 5% Accumulation Death Benefit or Enhanced Death Benefit riders. This contract provides for allocations of purchase payments to the GPAs, the one-year fixed account, the DCA fixed account and/or to the subaccounts in even 1% increments subject to the required $1,000 required minimum investment for the GPAs. For Contract Option L, the amount of any purchase payment allocated to the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish an automated dollar-cost averaging arrangement with respect to the purchase payment according to procedures currently in effect. We reserve the right to further limit purchase payment allocations to the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. For - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 25 Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. If your application is complete, we will process it and apply your purchase payment to the GPAs, the one-year fixed account, the DCA fixed account and subaccounts you selected within two business days after we receive it at our corporate office. If we accept your application, we will send you a contract. If your application is not complete, you must give us the information to complete it within five business days. If we cannot accept your application within five business days, we will decline it and return your payment unless you specifically ask us to keep the payment and apply it once your application is complete. We will credit additional purchase payments you make to your accounts on the valuation date we receive them. If we receive an additional purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our corporate office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. You may make monthly payments to your contract under a Systematic Investment Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts begin on the retirement date. When we processed your application, we established the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. Your selected date can align with your actual retirement from a job, or it can be a different date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 90th(1) birthday or the tenth contract anniversary, if purchased after age 80(1), or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the retirement date generally must be: - - for IRAs by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 85th birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. (1) Applies to contracts purchased on or after May 1, 2006, in most states. For all other contracts, the retirement date must be no later than the annuitant's 85th birthday or the tenth contract anniversary, if purchased after age 75. Ask your investment professional which retirement date applies to you. BENEFICIARY We will pay your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. See your contract and/or ask your investment professional for the actual terms of the contract you purchased. MINIMUM INITIAL PURCHASE PAYMENT $10,000 - -------------------------------------------------------------------------------- 26 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS MINIMUM ADDITIONAL PURCHASE PAYMENTS $50 for SIPs $100 for all other payment types MAXIMUM TOTAL PURCHASE PAYMENTS*: $1,000,000 * This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the tax-deferred retirement plan's or the Code's limits on annual contributions also apply. We also reserve the right to restrict cumulative additional purchase payments for contracts with the Guarantor Withdrawal Benefit for Life rider and the Guarantor Withdrawal Benefit rider. Additional purchase payments are restricted during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider. HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values and satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers,withdrawals or death benefits until instructions are received from the appropriate governmental authority or court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary. We prorate this charge among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. Some states also limit any contract charge allocated to the fixed account. We will waive this charge when your contract value is $50,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct the charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the fixed account. We cannot increase these fees. The contract (either Option L or Option C) and the death benefit guarantee you select determines the mortality and expense risk fee you pay:
CONTRACT OPTION L CONTRACT OPTION C ROP Death Benefit 1.55% 1.65% MAV Death Benefit 1.75 1.85 5% Accumulation Death Benefit 1.90 2.00 Enhanced Death Benefit 1.95 2.05
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 27 Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the annuity payout period even if the annuity payout plan does not include a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option L will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option L or Option C at the time of application. Contract Option C has no purchase payment withdrawal charge schedule but carries a higher mortality and expense risk fee than contract Option L. If you select contract Option L and you withdraw all or part of your contract value before annuity payouts begin, we may deduct a withdrawal charge. As described below, a withdrawal charge schedule applies to each purchase payment you make. The withdrawal charge lasts for four years (see "Expense Summary"). You may withdraw an amount during any contract year without a withdrawal charge. We call this amount the Total Free Amount (TFA). The TFA varies depending on whether your contract Option L includes the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider: CONTRACT OPTION L WITHOUT GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER OR THE GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greater of: - - 10% of the contract value on the prior contract anniversary(1); or - - current contract earnings. CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime Payment. CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the Remaining Benefit Payment. (1) We consider your initial purchase payment to be the prior contract anniversary's contract value during the first contract year. Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as described below. A withdrawal charge will apply if the amount you withdraw includes any of your prior purchase payments that are still within their withdrawal charge schedule. To determine whether your withdrawal includes any of your prior purchase payments that are still within their withdrawal charge schedule, we withdraw amounts from your contract in the following order: 1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA. 2. We withdraw purchase payments not previously withdrawn, in the order you made them: the oldest purchase payment first, the next purchase payment second, etc. until all purchase payments have been withdrawn. By applying this "first-in, first-out" rule, we do not assess a withdrawal charge on purchase payments that we received prior to the number of years stated in - -------------------------------------------------------------------------------- 28 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS the withdrawal charge schedule you select when you purchase the contract. We only assess a withdrawal charge on purchase payments that are still within the withdrawal charge schedule you selected. EXAMPLE: Each time you make a purchase payment under the contract Option L, a withdrawal charge schedule attaches to that purchase payment. The withdrawal charge percentage for each purchase payment declines according to the withdrawal charge schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 4-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY" ABOVE.) For example, if you select contract Option L, during the first two years after a purchase payment is made, the withdrawal charge percentage attached to that payment is 8%. The withdrawal charge percentage for that payment during the fourth year after it is made is 6%. At the beginning of the fifth year after that purchase payment is made, and thereafter, there is no longer a withdrawal charge as to that payment. We determine your withdrawal charge by multiplying each of your payments withdrawn by the applicable withdrawal charge percentage (see "Expense Summary"), and then adding the total withdrawal charges. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. A partial withdrawal that includes contract value taken from the Guarantee Period Accounts may also be subject to a Market Value Adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay you the amount you request. Note that the withdrawal charge is assessed against the original amount of your purchase payments that are subject to a withdrawal charge, even if your contract has lost value. This means that purchase payments withdrawn may be greater than the amount of contract value you withdraw. For an example, see Appendix C. WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION L We do not assess withdrawal charges for: - - withdrawals of any contract earnings; - - withdrawals of amounts totaling up to 10% of the contract value on the prior contract anniversary to the extent it exceeds contract earnings; - - if you elected the Guarantor Withdrawal Benefit for Life rider, the greater of your contract's Remaining Benefit Payment or Remaining Annual Lifetime Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - if you elected the Guarantor Withdrawal Benefit rider, your contract's Remaining Benefit Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required amount calculated under your specific contract currently in force; and - - contracts settled using an annuity payout plan (EXCEPTION: As described below, if you select annuity payout Plan E, and choose later to withdraw the value of your remaining annuity payments, we will assess a withdrawal charge. This exception also applies to contract Option C.) - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal under this annuity payout plan we impose a withdrawal charge whether you have Contract Option L or Contract Option C. This charge will vary based on your contract option and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 29 remaining variable payouts using the applicable discount rate shown in a table in the "Expense Summary." (See "The Annuity Payout Period -- Annuity Payout Plans.") POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. OPTIONAL LIVING BENEFIT CHARGES ACCUMULATION PROTECTOR BENEFIT RIDER FEE We charge an annual fee of 0.55% of the greater of your contract value or the minimum contract accumulation value on your contract anniversary for this optional benefit only if you select it. We deduct the fee from the contract value on the contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Accumulation Protector Benefit rider, you may not cancel it and the fee will continue to be deducted until the end of the waiting period. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently, the Accumulation Protector Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Accumulation Protector Benefit rider charge will not exceed a maximum of 1.75%. We will not change the Accumulation Protector Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge; (b) you choose the spousal continuation step up after we have exercised our right to increase the rider charge; (c) you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. We reserve the right to restart the waiting period whenever you elect to change your model portfolio to one that causes the rider charge to increase. The fee does not apply after annuity payouts begin. GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE We charge an annual fee of 0.65% of the greater of the contract anniversary value or the total Remaining Benefit Amount (RBA) for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the RBA goes to zero but the contract value has not been depleted, you will continue to be charged. - -------------------------------------------------------------------------------- 30 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Currently the Guarantor Withdrawal Benefit for Life rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Guarantor Withdrawal Benefit for Life rider charge will not exceed a maximum charge of 1.50%. We will not change the Guarantor Withdrawal Benefit for Life rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to exercise the annual elective step up before the end of the waiting period, the Guarantor Withdrawal Benefit for Life(SM) rider charge will not change until the end of the waiting period. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective annual step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose elective spousal continuation step up after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. GUARANTOR WITHDRAWAL BENEFIT RIDER FEE THIS FEE INFORMATION APPLIES TO BOTH RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER B (SEE APPENDIX H) UNLESS OTHERWISE NOTED. We charge an annual fee of 0.55% of contract value for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the Remaining Benefit Amount (RBA) goes to zero but the contract value has not been depleted, you will continue to be charged. Currently the Guarantor Withdrawal Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Guarantor Withdrawal Benefit rider charge will not exceed a maximum charge of 1.50%. We will not change the Guarantor Withdrawal Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to step up before the third contract anniversary, the Guarantor Withdrawal Benefit rider charge will not change until the third contract anniversary. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the spousal continuation step up under Rider A after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 31 INCOME ASSURER BENEFIT RIDER FEE We charge an annual fee for this optional feature only if you select it. We determine the fee by multiplying the guaranteed income benefit base by the charge of the Income Assurer Benefit rider you select. There are three Income Assurer Benefit rider options available under your contract (see "Optional Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed income benefit base calculation. The charge for each Income Assurer Benefit rider is as follows:
MAXIMUM CURRENT Income Assurer Benefit - MAV 1.50% 0.30%(1) Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1) Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%. We deduct the fee from the contract value on your contract anniversary at the end of each contract year. We prorate this fee among the GPAs, the one-year fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently the Income Assurer Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate charge for each model but not to exceed the maximum charges shown above. We cannot change the Income Assurer Benefit rider charge after the rider effective date, unless you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge and/or charge a separate charge for each model. If you choose to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge for new contract owners, you will pay the charge that is in effect on the valuation date we receive your written request to change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. For an example of how each Income Assurer Benefit fee is calculated, see Appendix B. OPTIONAL DEATH BENEFIT CHARGES BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. - -------------------------------------------------------------------------------- 32 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS VALUING YOUR INVESTMENT We value your accounts as follows: GPAS We value the amounts you allocated to the GPAs directly in dollars. The value of a GPA equals: - - the sum of your purchase payments and transfer amounts allocated to the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after any applicable MVA (including any applicable withdrawal charges for contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. THE FIXED ACCOUNT THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT IF AVAILABLE UNDER YOUR CONTRACT, AND THE DCA FIXED ACCOUNT. We value the amounts you allocate to the fixed account directly in dollars. The value of the fixed account equals: - - the sum of your purchase payments allocated to the one-year fixed account (if included) and the DCA fixed account, and transfer amounts to the one-year fixed account (if included); - - plus interest credited; - - minus the sum of amounts withdrawn (including any applicable withdrawal charges for Contract Option L) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: To calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 33 WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option L); and the deduction of a prorated portion of: - - the contract administrative charge; and - - the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - Guarantor Withdrawal Benefit for Life rider; - Guarantor Withdrawal Benefit rider; - Income Assurer Benefit rider; - Benefit Protector rider; or - Benefit Protector Plus rider. Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or one-year GPA to one or more subaccounts. Automated transfers are not available for GPA terms of two or more years. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly transfer of the interest earned from the one-year fixed account or one-year GPA into the subaccounts of your choice. If you participate in an Interest Sweep strategy the interest you earn on the one-year fixed account or one-year GPA will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. - -------------------------------------------------------------------------------- 34 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your registered representative. Dollar-cost averaging as described in this section is not available when a Portfolio Navigator model portfolio is in effect. However, subject to certain restrictions, dollar-cost averaging is available through the DCA fixed account. See the "DCA Fixed Account" and "Portfolio Navigator Asset Allocation Program" sections in this prospectus for details. ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. Different rules apply to asset rebalancing under a Portfolio Navigator model portfolio (see "Asset Allocation Program" and "Portfolio Navigator Asset Allocation Program" below). As long as you are not participating in a Portfolio Navigator model portfolio, asset rebalancing is available for use with the DCA fixed account (see "DCA Fixed Account") only if your subaccount allocation for asset rebalancing is exactly the same as your subaccount allocation for transfers from the DCA fixed account. If you change your subaccount allocations under the asset rebalancing program or the DCA fixed account, we will automatically change the subaccount allocations so they match. If you do not wish to have the subaccount allocation be the same for the asset rebalancing program and the DCA fixed account, you must terminate the asset rebalancing program or the DCA fixed account, as you may choose. ASSET ALLOCATION PROGRAM For contracts purchased before May 1, 2006, we offered an asset allocation program called Portfolio Navigator. You could elect to participate in the asset allocation program, and there is no additional charge. If you purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider, you are required to participate in the PN program under the terms of the rider. This asset allocation program allows you to allocate your contract value to a model portfolio that consists of subaccounts and may include certain GPAs and/or the one-year fixed account (if available under the asset allocation program), which represent various asset classes. By spreading your contract value among these various asset classes, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will occur. Asset allocation does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. If you choose or are required to participate in the asset allocation program, you are responsible for - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 35 determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool that can help you determine which model portfolio is suited to your needs based on factors such as your investment goals, your tolerance for risk, and how long you intend to invest. Currently, there are five model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. You are allowed to request a change to another model portfolio twice per contract year. Each model portfolio specifies allocation percentages to each of the subaccounts and any GPAs and/or the one-year fixed account that make up that model portfolio. By participating in the asset allocation program, you authorize us to invest your contract value in the subaccounts and any GPAs and/or one-year fixed account (if included) according to the allocation percentages stated for the specific model portfolio you have selected. You also authorize us to automatically rebalance your contract value quarterly beginning three months after the effective date of your contract in order to maintain alignment with the allocation percentages specified in the model portfolio. Special rules will apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio (see "Guarantee Period Accounts -- Market Value Adjustment"). Under the asset allocation program, the subaccounts, any GPAs and/or the one-year fixed account (if included) that make up the model portfolio you selected and the allocation percentages to those subaccounts, any GPAs and/or the one-year fixed account (if included) will not change unless we adjust the composition of the model portfolio to reflect the liquidation, substitution or merger of an underlying fund, a change of investment objective by an underlying fund or when an underlying fund stops selling its shares to the variable account. We reserve the right to change the terms and conditions of the asset allocation program upon written notice to you. If permitted under applicable securities law, we reserve the right to: - - reallocate your current model portfolio to an updated version of your current model portfolio; or - - substitute a fund of funds for your current model portfolio. We also reserve the right to discontinue the asset allocation program. We will give you 30 days' written notice of any such change. If you elected to participate in the asset allocation program, you may discontinue your participation in the program at any time by giving us written notice. Upon cancellation, automated rebalancing associated with the asset allocation program will end. You can elect to participate in the asset allocation program again at any time. REQUIRED USE OF ASSET ALLOCATION PROGRAM WITH ACCUMULATION PROTECTOR BENEFIT RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER If you are required to participate in the asset allocation program because you purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider, you may not discontinue your participation in the asset allocation program unless permitted by the terms of the rider as summarized below: - - ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation Protector Benefit rider. As long as the Accumulation Protector Benefit rider is in effect, your contract value must be invested in one of the model portfolios. The Accumulation Protector Benefit rider automatically ends at the end of the waiting period as does the requirement that you participate in the asset allocation program. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS UNTIL THE END OF THE WAITING PERIOD. - - GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit rider requires that your contract value be invested in one of the model portfolios for the life of the contract, and you cannot terminate the Guarantor Withdrawal Benefit rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS FOR THE LIFE OF THE CONTRACT. - - INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit rider during a 30-day period after the first rider anniversary and at any time after the expiration of the waiting period. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. As long as the Income Assurer Benefit rider is in effect, your contract value must be invested in one of - -------------------------------------------------------------------------------- 36 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS the model portfolios. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS DURING THE PERIOD OF TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT. PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM The Portfolio Navigator Asset Allocation Program (PN program) described in this section replaces the previously offered asset allocation program described above for owners of all contracts purchased on or after May 1, 2006 and for contract owners who choose to move from the previously offered asset allocation program to the PN program or who add the PN program on or after May 1, 2006. The PN program is available for nonqualified annuities and for qualified annuities. The PN program allows you to allocate your contract value to a PN program model portfolio that consists of subaccounts, each of which invests in an underlying fund with a particular investment objective (underlying fund), and may include certain GPAs and/or the one-year fixed account (if available under the PN program) that represent various asset classes (allocation options). The PN program also allows you to periodically update your model portfolio or transfer to a new model portfolio. You are required to participate in the PN program if your contract purchased after May 1, 2006 includes an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit for Life rider (if available in your state, otherwise the Guarantor Withdrawal Benefit rider) or Income Assurer Benefit rider. If your contract does not include one of these riders, you also may elect to participate in the PN program at no additional charge. You should review any PN program information, including the terms of the PN program, carefully. Your investment professional can provide you with additional information and can answer questions you may have on the PN program. SERVICE PROVIDERS TO THE PN PROGRAM. RiverSource Investments, an affiliate of ours, serves as non-discretionary investment adviser for the PN program solely in connection with the development of the model portfolios and periodic updates of the model portfolios. In this regard, RiverSource Investments enters into an investment advisory agreement with each contract owner participating in the PN program. In its role as investment adviser to the PN program, RiverSource Investments relies upon the recommendations of a third party service provider. In developing and updating the model portfolios, RiverSource Investments reviews the recommendations, and the third party's rationale for the recommendations, with the third party service provider. RiverSource Investments also conducts periodic due diligence and provides ongoing oversight with respect to the process utilized by the third party service provider. For more information on RiverSource Investment's role as investment adviser for the PN program, please see the Portfolio Navigator Asset Allocation Program Investment Adviser Disclosure Document, which is based on Part II of RiverSource Investment's Form ADV, the SEC investment adviser registration form. The Disclosure Document is delivered to contract owners at or before the time they enroll in the PN program. Currently, the PN program model portfolios are designed and periodically updated for RiverSource Investments by Morningstar Associates, LLC, a registered investment adviser and wholly owned subsidiary of Morningstar, Inc. RiverSource Investments may replace Morningstar Associates and may hire additional firms to assist with the development and periodic updates of the model portfolios in the future. Also, RiverSource Investments may elect to develop and periodically update the model portfolios without the assistance of a third party service provider. The criteria used in developing and updating the model portfolios do not guarantee or predict future performance. Neither Morningstar Associates nor RiverSource Investments, in connection with their respective roles, provides any individualized investment advice to contract owners regarding the application of a particular model portfolio to his or her circumstances. Contract owners are solely responsible for determining whether any model portfolio is appropriate. We identify to Morningstar Associates the universe of allocation options that can be included in the model portfolios and, in limited circumstances, underlying funds of such allocation options (the universe of allocation options). The universe of allocation options may not include all allocation options available under your contract. We may modify from time to time such universe of allocation options. These modifications may reflect instructions from, or respond to actions taken by, any party making an allocation option available to us. For example, we may modify the universe of allocation options in response to the liquidation, merger or other closure of a fund. Once we identify this universe of allocation options to Morningstar Associates, neither RiverSource Investments, nor any of its affiliates, including us, dictates to Morningstar Associates the number of allocation options that should be included in a model portfolio, the percentage that any allocation option represents in a model portfolio, or whether a particular allocation option may be included in a model portfolio. However, as described below under "Potential conflict of interest", there are certain conflicts of interest associated with RiverSource Investments and its affiliates' influence over the development and updating of the model portfolios. POTENTIAL CONFLICT OF INTEREST. In identifying the universe of allocation options, we and our affiliates, including RiverSource Investments, are subject to competing interests that may influence the allocation options we propose. These competing interests involve compensation that RiverSource Investments or its affiliates may receive as the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options as well as compensation we or an affiliate of ours may receive for providing services in connection with the RiverSource Variable Series Trust funds and such allocation options or their underlying funds. These competing interests also involve compensation we or an affiliate of ours may receive if certain funds that - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 37 RiverSource Investments does not advise are included in model portfolios. The inclusion of funds that pay compensation to RiverSource Investments or an affiliate may have a positive or negative impact on performance. As an affiliate of RiverSource Investments, the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options, we may have an incentive to identify the RiverSource Variable Series Trust funds and such allocation options for consideration as part of a model portfolio over unaffiliated funds. In addition, RiverSource Investments, in its capacity as investment adviser to the RiverSource Variable Series Trust funds, monitors the performance of the RiverSource Variable Series Trust funds. In this role, RiverSource Investments may, from time to time, recommend certain changes to the board of directors of the RiverSource Variable Series Trust funds. These changes may include but not be limited to a change in portfolio management or fund strategy or the closure or merger of a RiverSource Variable Series Trust fund. RiverSource Investments also may believe that certain RiverSource Variable Series Trust funds may benefit from additional assets or could be harmed by redemptions. All of these factors may impact RiverSource Investment's view regarding the composition and allocation of a model portfolio. RiverSource Investments' role as investment adviser to the PN program in connection with the development and updating of the model portfolios, and our identification of the universe of allocation options to Morningstar Associates for consideration, may influence the allocation of assets to or away from allocation options that are affiliated with, or managed or advised by RiverSource Investments or its affiliates. RiverSource Investments, we or another affiliate of ours may receive higher compensation from certain unaffiliated funds that RiverSource Investments does not advise or manage. (See "Expense Summary -- Annual Operating Expenses of the Funds" and "The Variable Account and the Funds -- The Funds.") Therefore, we may have an incentive to identify these unaffiliated funds to Morningstar Associates for inclusion in the model portfolios. In addition, we or an affiliate of ours may receive higher compensation from certain GPAs or the one-year fixed account than from other allocation options. We therefore may have an incentive to identify these allocation options to Morningstar Associates for inclusion in the model portfolios. Some officers and employees of RiverSource Investments are also officers or employees of us or our affiliates which may be involved in, and/or benefit from, your participation in the PN program. These officers and employees may have an incentive to make recommendations, or take actions, that benefit one or more of the entities they represent, rather than participants in the PN program. PARTICIPATING IN THE PN PROGRAM. If you choose or are required to participate in the PN program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool to help define your investing style which is based on factors such as your investment goals, your tolerance for risk and how long you intend to invest. Your responses to the investor questionnaire can help you determine which model portfolio most closely matches your investing style. While the scoring of the investor questionnaire is objective, there is no guarantee that your responses to the investor questionnaire accurately reflect your tolerance for risk. Similarly, there is no guarantee that the asset mix reflected in the model portfolio you select after completing the investor questionnaire is appropriate to your ability to withstand investment risk. Neither RiverSource Life nor RiverSource Investments is responsible for your decision to participate in the PN program, your selection of a specific model portfolio or your decision to change to an updated or different model portfolio. Currently, there are five PN model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. Each model portfolio specifies allocation percentages to each of the subaccounts, any GPAs and/or the one-year fixed account that make up that model portfolio. By participating in the PN program, you instruct us to invest your contract value in the subaccounts, any GPAs and/or the one-year fixed account (if included) according to the allocation percentages stated for the specific model portfolio you have selected. By participating in the PN program, you also instruct us to automatically rebalance your contract value quarterly in order to maintain alignment with these allocation percentages. Special rules apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); - - no MVA will apply if you reallocate your contract value according to an updated model portfolio; and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio. (See "Guarantee Period Accounts -- Market Value Adjustment.") If you initially allocate qualifying purchase payments to the DCA fixed account, when available (see "DCA Fixed Account"), and you are participating in the PN program, we will make monthly transfers in accordance with your instructions from the DCA fixed account into the model portfolio you have chosen. Each model portfolio is evaluated periodically by Morningstar Associates, which may then provide updated recommendations to RiverSource Investments. As a result, the model portfolios may be updated from time to time (typically annually) with new - -------------------------------------------------------------------------------- 38 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS allocation options and allocation percentages. When these reassessments are completed and changes to the model portfolios occur, you will receive a reassessment letter. This reassessment letter will notify you that the model portfolio has been reassessed and that, unless you instruct us not to do so, your contract value, less amounts allocated to the DCA fixed account, is scheduled to be reallocated according to the updated model portfolio. The reassessment letter will specify the scheduled reallocation date and will be sent to you at least 30 days prior to this date. Based on the written authorization you provided when you enrolled in the PN program, if you do not notify us otherwise, you will be deemed to have instructed us to reallocate your contract value, less amounts allocated to the DCA fixed account, according to the updated model portfolio. If you do not want your contract value, less amounts allocated to the DCA fixed account, to be reallocated according to the updated model portfolio, you must provide written or other authorized notification as specified in the reassessment letter. In addition to this periodic reassessment and reallocation of the model portfolios, you may also request a change to your model portfolio up to twice per contract year by written request on an authorized form or by another method agreed to by us. Such changes include changing to a different model portfolio at any time or requesting to reallocate according to the updated version of your existing model portfolio other than according to the reassessment process described above. If your contract includes an optional Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit for Life rider, Guarantor Withdrawal Benefit rider or Income Assurer Benefit rider and you make such a change (other than a scheduled periodic reallocation), we may charge you a higher fee for your rider. If your contract includes the Guarantor Withdrawal Benefit for Life rider, we reserve the right to limit the number of model portfolios from which you can select, subject to state restrictions. We reserve the right to change the terms and conditions of the PN program upon written notice to you. This includes but is not limited to the right to: - - limit your choice of models based on the amount of your initial purchase payment we accept or when you take a withdrawal; - - cancel required participation in the program after 30 days written notice; - - substitute a fund of funds for your current model portfolio if permitted under applicable securities law; and - - discontinue the PN program. We will give you 30 days' written notice of any such change. In addition, RiverSource Investments has the right to terminate its investment advisory agreement with you upon 30 days' written notice. If RiverSource Investments terminates its investment advisory agreement with you and other participants in the PN program, we would either have to find a replacement investment adviser or terminate the PN program unless otherwise permitted by applicable law, regulations or positions of the SEC staff. The investment advisory agreement will terminate automatically in the event that we are notified of a death which results in a death benefit becoming payable under the contract. In this case, your investment advisory relationship with RiverSource Investments and the notification of future reassessments will cease, but prior instructions provided by you in connection with your participation in the PN program will continue (e.g., rebalancing instructions provided to insurer). RISKS. Asset allocation through the PN program does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. By spreading your contract value among various allocation options under the PN program, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will happen. Although each model portfolio is intended to optimize returns given various levels of risk tolerance, a model portfolio may not perform as intended. A model portfolio, the allocation options and market performance may differ in the future from historical performance and from the assumptions upon which the model portfolio is based, which could cause the model portfolio to be ineffective or less effective in reducing volatility. Investment performance of your contract value could be better or worse by participating in the PN program than if you had not participated. A model portfolio may perform better or worse than any single fund or allocation option or any other combination of funds or allocation options. The performance of a model portfolio depends on the performance of the component funds. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of the model portfolios can cause their component funds to incur transactional expenses to raise cash for money flowing out of the funds or to buy securities with money flowing into the funds. Moreover, a large outflow of money from the funds may increase the expenses attributable to the assets remaining in the funds. These expenses can adversely affect the performance of the relevant funds and of the model portfolios. In addition, when a particular fund needs to buy or sell securities due to quarterly rebalancing or periodic updating of a model portfolio, it may hold a large cash position. A large cash position could detract from the achievement of the fund's investment objective in a period of rising market prices; conversely, a large cash position would reduce the fund's magnitude of loss in the event of falling market prices and provide the fund with liquidity to make additional investments or to meet redemptions. (See also the description of competing interests in the section titled "Service Providers to the PN Program" above.) For additional information regarding the risks of investing in a particular fund, see that fund's prospectus. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 39 PN PROGRAM UNDER THE ACCUMULATION PROTECTOR BENEFIT RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER If you purchase the optional Accumulation Protector Benefit rider, the optional Guarantor Withdrawal Benefit for Life rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider, you are required to participate in the PN program under the terms of each rider. - - ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation Protector Benefit rider. As long as the Accumulation Protector Benefit rider is in effect, your contract value must be invested in one of the model portfolios. The Accumulation Protector Benefit rider automatically ends at the end of the waiting period as does the requirement that you participate in the PN program. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD. - - GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: The Guarantor Withdrawal Benefit for Life rider requires that your contract value be invested in one of the model portfolios for the life of the contract. Subject to state restrictions, we reserve the right to limit the number of model portfolios from which you can select based on the dollar amount of purchase payments you make. Because you cannot terminate the Guarantor Withdrawal Benefit for Life rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. - - GUARANTOR WITHDRAWAL BENEFIT RIDER: In those states where the Guarantor Withdrawal Benefit for Life rider is not available, you may purchase the Guarantor Withdrawal Benefit rider. Because the Guarantor Withdrawal Benefit rider requires that your contract value be invested in one of the model portfolios for the life of the contract, and you cannot terminate the Guarantor Withdrawal Benefit rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. - - INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit rider during a 30-day period after the first rider anniversary and at any time after the expiration of the waiting period. At all other times, if you do not want to participate in any of the model portfolios, you must terminate you contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. As long as the Income Assurer Benefit rider is in effect, your contract value must be invested in one of the model portfolios. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) DURING THE PERIOD OF TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT. OPTIONAL PN PROGRAM If you do not select the optional Accumulation Protector Benefit rider, the optional Guarantor Withdrawal Benefit for Life rider, the optional Guarantor Withdrawal Benefit rider or the optional Income Assurer Benefit rider with your contract, you may elect to participate in the PN program. You may elect the PN program at any time. You may cancel your participation in the PN program at any time by giving us written notice or by any other method authorized by us. Upon cancellation, automated rebalancing associated with the PN program will end. You may ask us in writing to allocate the variable subaccount portion of your policy value according to the percentage that you then choose (see "Asset Rebalancing"). You can elect to participate in the PN program again at any time. You will also cancel the PN program if you initiate transfers other than transfers to one of the current model portfolios or transfers from the DCA fixed account (see "DCA Fixed Account"). Partial withdrawals do not cancel the PN program. Your participation in the PN program will terminate on the date you make a full withdrawal from your contract, on your retirement date, or when your contract terminates for any reason. TRANSFERRING AMONG ACCOUNTS The transfer rights discussed in this section do not apply while a Portfolio Navigator model portfolio is in effect. You may transfer contract value from any one subaccount, GPAs, the one-year fixed account, or the DCA fixed account, to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. You may not transfer contract value to the DCA fixed account. - -------------------------------------------------------------------------------- 40 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account (if included) at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from the one-year fixed account (if included) to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to an MVA. For Contract Option L, the amount of contract value transferred to the one-year fixed account cannot result in the value of the one-year fixed account being greater than 30% of the contract value; transfers out of the one-year fixed account are limited to 30% of one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. For Contract Option C, transfers out of the one-year fixed account may not be available or may be significantly limited. See your contract for the actual terms of the one-year fixed account you purchased. For both Contract Option L and Contract Option C, we reserve the right to further limit transfers to or from the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the guarantee period will receive an MVA, which may result in a gain or loss of contract value, unless an exception applies (see "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)"). - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - You may not transfer contract values from the subaccounts, the GPAs, or the one-year fixed account into the DCA fixed account. However, you may transfer contract values from the DCA fixed account to any of the investment options available under your contract, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPA, as described above. (See "DCA Fixed Account.") - - Once annuity payouts begin, you may not make transfers to or from the GPAs or the fixed account, but you may make transfers once per contract year among the subaccounts. During the annuity payout period, we reserve the right to limit the number of subaccounts in which you may invest. When annuity payments begin, you must transfer all contract value out of your GPAs and the DCA fixed account. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE OR LESS RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 41 Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Further the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under our automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the funds and harm contract owners. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW - -------------------------------------------------------------------------------- 42 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund may require us to reject your transfer request. For example, while we disregard transfers permitted under any asset allocation, dollar-cost averaging and asset rebalancing programs that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will be able to do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our administrative office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers among your subaccounts, the one-year fixed account or GPAs or automated partial withdrawals from the GPAs, one-year fixed account, DCA fixed account or the subaccounts. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - If a Portfolio Navigator model portfolio is in effect, you are not allowed to set up automated transfers except in connection with a DCA fixed account (see "The Fixed Account -- DCA Fixed Account" and "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly $250 quarterly, semiannually or annually - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 43 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our administrative office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our administrative office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay administrative charges, withdrawal charges, or any applicable optional rider charges (see "Charges") and IRS taxes and penalties (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.") Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced. If you have elected the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider and your partial withdrawals in any contract year exceed the permitted withdrawal amount under the terms of the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit rider, your benefits under the rider may be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will automatically withdraw from all your subaccounts and GPAs, the DCA fixed account, and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless requested otherwise. After executing a partial withdrawal, the value in each subaccount, one-year fixed account or GPA must be either zero or at least $50. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. - -------------------------------------------------------------------------------- 44 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (see "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have an Income Assurer Benefit and/or Benefit Protector Plus riders, the riders will terminate upon transfer of ownership of the annuity contract. The Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders will continue upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are four death benefit options under your contract. You must select one of the following death benefits: - - Return of Purchase Payment (ROP) Death Benefit; - - Maximum Anniversary Value (MAV) Death Benefit; - - 5% Accumulation Death Benefit; - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 45 - - Enhanced Death Benefit (EDB). If it is available in your state and if both you and the annuitant are age 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are age 80 or older at contract issue, the ROP Death Benefit will apply. Once you elect a death benefit, you cannot change it. We show the death benefit that applies in your contract. The death benefit you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under each option, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you chose when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS: ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV = PW X DB DEATH BENEFITS) ------------ CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA. DB = the death benefit on the date of (but prior to) the partial withdrawal CV = contract value on the date of (but prior to) the partial withdrawal MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus adjusted partial withdrawals. Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by adjusted partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. 5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs, the one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts and the DCA fixed account at issue increased by 5%; - - plus any subsequent amounts allocated to the subaccounts and the DCA fixed account; - - minus adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. Thereafter, we continue to add subsequent amounts allocated to the subaccounts or the DCA fixed account and subtract adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. 5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED = PWT X VAF PARTIAL WITHDRAWALS --------------- SV
PWT = the amount transferred from the subaccounts or the DCA fixed account or the amount of the partial withdrawal (including any applicable withdrawal charge or MVA) from the subaccounts or the DCA fixed account. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts and the DCA fixed account on the date of (but prior to) the transfer of partial withdrawal.
The amount of purchase payment withdrawn from or transferred from any subaccount or fixed account (if applicable) or GPA account is calculated as (a) times (b) where: (a) is the amount of purchase payment in the account or subaccount on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount transferred or withdrawn from the account or subaccount to the value in the account or subaccount on the date of (but prior to) the current withdrawal or transfer. For contracts issued in New Jersey, the cap on the Variable Account Floor is 200% of the sum of the purchase payments allocated to the subaccounts and the DCA fixed account that have not been withdrawn or transferred out of the subaccounts or the DCA fixed account. NOTE: The 5% variable account floor is calculated differently and is not the same value as the Income Assurer Benefit 5% variable account floor. - -------------------------------------------------------------------------------- 46 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT The ROP Death Benefit is the basic death benefit to the contract that will pay your beneficiaries no less than your purchase payments, adjusted for withdrawals. If you or the annuitant die before annuity payouts begin and while this contract is in force, the death benefit will be the greater of these two values: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. The ROP Death Benefit will apply unless you select one of the alternative death benefits described immediately below. IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION. MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT The MAV Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the MAV on the date of death. 5% ACCUMULATION DEATH BENEFIT The 5% Accumulation Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the 5% variable account floor. ENHANCED DEATH BENEFIT The Enhanced Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the MAV on the date of death; or 4. the 5% variable account floor. For an example of how each death benefit is calculated, see Appendix D. IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. We will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (see "Optional Benefits.") - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 47 If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the IRS; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option L from that point forward. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus riders, if selected, will terminate. The Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of the Benefit Protector is optional. (see "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS OPTIONAL LIVING BENEFITS ACCUMULATION PROTECTOR BENEFIT RIDER The Accumulation Protector Benefit rider is an optional benefit that you may select for an additional charge. The Accumulation Protector Benefit rider may provide a guaranteed contract value at the end of the specified waiting period on the benefit date, but not until then, under the following circumstances:
ON THE BENEFIT DATE, IF: THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER BENEFIT IS: The Minimum Contract Accumulation Value The contract value is increased on the benefit date to (defined below) as determined under the equal the Minimum Contract Accumulation Value as Accumulation Protector Benefit rider is determined under the Accumulation Protector Benefit rider greater than your contract value, on the benefit date. The contract value is equal to or greater than Zero; in this case, the Accumulation Protector Benefit the Minimum Contract Accumulation Value as rider ends without value and no benefit is payable. determined under the Accumulation Protector Benefit rider,
If the contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time during the waiting period and before the benefit date, the contract and all riders, including the Accumulation Protector Benefit rider will terminate without value and no benefits will be paid. EXCEPTION: If you are still living on the benefit date, we will pay you an amount equal to the Minimum Contract Accumulation Value as determined under the Accumulation Protector Benefit rider on the valuation date your contract value reached zero. If this rider is available in your state, you may elect the Accumulation Protector Benefit at the time you purchase your contract and the rider effective date will be the contract issue date. The Accumulation Protector Benefit rider may not be terminated once you have elected it, except as described in the "Terminating the Rider" section below. An additional charge for the - -------------------------------------------------------------------------------- 48 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Accumulation Protector Benefit rider will be assessed annually during the waiting period. The rider ends when the waiting period expires and no further benefit will be payable and no further fees for the rider will be deducted. The Accumulation Protector Benefit rider may not be purchased with the optional Guarantor Withdrawal Benefit for Life rider, or the Guarantor Withdrawal Benefit rider or any Income Assurer Benefit rider. When the rider ends, you may be able to purchase another optional rider we then offer by written request received within 30 days of that contract anniversary date. The Accumulation Protector Benefit rider may not be available in all states. You should consider whether a Accumulation Protector Benefit rider is appropriate for you because: - - you must participate in the Portfolio Navigator program if you purchase a contract on or after May 1, 2006 with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). If you selected this rider before May 1, 2006, you must participate in the asset allocation program (see "Making the Most of Your Contract -- Asset Allocation Program"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts and GPAs (if included) and one-year fixed account (if included) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, one-year fixed account (if included) and GPAs that are available under the contract to contract owners who do not elect this rider; - - you may not make additional purchase payments to your contract during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider; - - if you purchase this annuity as a qualified annuity, for example, an IRA, you may need to take partial withdrawals from your contract to satisfy the minimum distribution requirements of the Code (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Partial withdrawals, including those you take to satisfy RMDs, will reduce any potential benefit that the Accumulation Protector Benefit rider provides. You should consult your tax advisor if you have any questions about the use of this rider in your tax situation; - - if you think you may withdraw all of your contract value before you have held your contract with this benefit rider attached for 10 years, or you are considering selecting an annuity payout option within 10 years of the effective date of your contract, you should consider whether this optional benefit is right for you. You must hold the contract a minimum of 10 years from the effective date of the Accumulation Protector Benefit rider, which is the length of the waiting period under the Accumulation Protector Benefit rider, in order to receive the benefit, if any, provided by the Accumulation Protector Benefit rider. In some cases, as described below, you may need to hold the contract longer than 10 years in order to qualify for any benefit the Accumulation Protector Benefit rider may provide; - - the 10 year waiting period under the Accumulation Protector Benefit rider will restart if you exercise the elective step up option (described below) or your surviving spouse exercises the spousal continuation elective step up (described below); and - - the 10 year waiting period under the Accumulation Protector Benefit rider may be restarted if you elect to change model portfolios to one that causes the Accumulation Protector Benefit rider charge to increase (see "Charges"). Be sure to discuss with your investment professional whether a Accumulation Protector Benefit rider is appropriate for your situation. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE ACCUMULATION PROTECTOR BENEFIT: BENEFIT DATE: This is the first valuation date immediately following the expiration of the waiting period. MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the Accumulation Protector Benefit rider. The contract value will be increased to equal the MCAV on the benefit date if the contract value on the benefit date is less than the MCAV on the benefit date. ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial withdrawal from the contract is equal to the amount derived from multiplying (a) and (b) where: (a) is 1 minus the ratio of the contract value on the date of (but immediately after) the partial withdrawal to the contract value on the date of (but immediately prior to) the partial withdrawal; and (b) is the MCAV on the date of (but immediately prior to) the partial withdrawal. WAITING PERIOD: The waiting period for the rider is 10 years. We reserve the right to restart the waiting period on the latest contract anniversary if you change your asset allocation model after we have exercised our rights to increase the rider charge for new contract owners, or if you change your asset allocation model after we have exercised our rights to charge a separate charge for each model. Your initial MCAV is equal to your initial purchase payment. It is increased by the amount of any subsequent purchase payments received within the first 180 days that the rider is effective. It is reduced by adjustments for any partial withdrawals made during the waiting period. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 49 AUTOMATIC STEP UP On each contract anniversary after the effective date of the rider, the MCAV will be set to the greater of: 1. 80% of the contract value on the contract anniversary; or 2. the MCAV immediately prior to the automatic step up. The automatic step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The automatic step up of the MCAV does not restart the waiting period or increase the charge (although the total fee for the rider may increase). ELECTIVE STEP UP OPTION Within thirty days following each contract anniversary after the rider effective date, but prior to the benefit date, you may notify us in writing that you wish to exercise the annual elective step up option. You may exercise this elective step up option only once per contract year during this 30 day period. If your contract value on the valuation date we receive your written request to step up is greater than the MCAV on that date, your MCAV will increase to 100% of that contract value. When you exercise the annual elective step up, we may be charging more for the Accumulation Protector Benefit rider at that time for new contract owners. If your MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, you will pay the charge that is in effect on the valuation date we receive your written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. Failure to exercise this elective step up in subsequent years will not reinstate any prior waiting period. Rather, the waiting period under the rider will always commence from the most recent anniversary for which the elective step up option was exercised. The elective step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The elective step up option is not available to non-spouse beneficiaries that continue the contract during the waiting period. SPOUSAL CONTINUATION If a spouse chooses to continue the contract under the spousal continuation provision, the rider will continue as part of the contract. Once, within the thirty days following the date of spousal continuation, the spouse may choose to exercise an elective step up. The spousal continuation elective step up is in addition to the annual elective step up. If the contract value on the valuation date we receive the written request to exercise this option is greater than the MCAV on that date, we will increase the MCAV to that contract value. If the MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, the spouse will pay the charge that is in effect on the valuation date we receive their written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. TERMINATING THE RIDER The rider will terminate under the following conditions: The rider will terminate before the benefit date without paying a benefit on the date: - you take a full withdrawal; or - annuitization begins; or - the contract terminates as a result of the death benefit being paid. The rider will terminate on the benefit date. For an example, see Appendix E. GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you may select for an additional annual charge if: - - you purchase your contract on or after May 1, 2006(1); - - the rider is available in your state; and - - you and the annuitant are 80 or younger on the date the contract is issued. (1) The Guarantor Withdrawal Benefit for Life rider is not available under an inherited qualified annuity. You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase your contract. The rider effective date will be the contract issue date. - -------------------------------------------------------------------------------- 50 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able to withdraw up to a certain amount each year from the contract, regardless of the investment performance of your contract before the annuity payments begin, until you have recovered at minimum all of your purchase payments. And, under certain limited circumstances defined in the rider, you have the right to take a specified amount of partial withdrawals in each contract year until death (see "At Death" heading below) -- even if the contract value is zero. Your contract provides for annuity payouts to begin on the retirement date (see "Buying Your Contract -- The Retirement Date"). Before the retirement date, you have the right to withdraw some or all of your contract value, less applicable administrative, withdrawal and rider charges imposed under the contract at the time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals"). Because your contract value will fluctuate depending on the performance of the underlying funds in which the subaccounts invest, the contract itself does not guarantee that you will be able to take a certain withdrawal amount each year before the annuity payouts begin, nor does it guarantee the length of time over which such withdrawals can be made before the annuity payouts begin. The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if you intend to make periodic withdrawals from your annuity contract and do not intend to elect an annuity payout and wish to ensure that market performance will not adversely affect your ability to withdraw your principal over time. Under the terms of the Guarantor Withdrawal Benefit for Life rider, the calculation of the amount which can be withdrawn in each contract year varies depending on several factors, including but not limited to the waiting period (see "Waiting period" heading below) and whether or not the lifetime withdrawal benefit has become effective: (1) The basic withdrawal benefit gives you the right to take limited partial withdrawals in each contract year and guarantees that over time the withdrawals will total an amount equal to, at minimum, your purchase payments. Key terms associated with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP)," "Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See these headings below for more information. (2) The lifetime withdrawal benefit gives you the right, under certain limited circumstances defined in the rider, to take limited partial withdrawals until the later of death (see "At Death" heading below) or until the RBA [under the basic withdrawal benefit] is reduced to zero. Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime Payment (ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and "Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for more information. Only the basic withdrawal benefit will be in effect prior to the date that the lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit becomes effective automatically on the rider anniversary date after the covered person reaches age 65, or the rider effective date if the covered person is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" heading below). Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for Life rider guarantees that you may take the following partial withdrawal amounts each contract year: - - After the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the GBP; - - During the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the value of the RBP at the beginning of the contract year; - - After the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal the ALP or the GBP, but the rider does not guarantee withdrawals of the sum of both the ALP and the GBP in a contract year; - - During the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RALP or the RBP at the beginning of the contract year, but the rider does not guarantee withdrawals of the sum of both the RALP and the RBP in a contract year; If you withdraw less than the allowed partial withdrawal amount in a contract year, the unused portion cannot be carried over to the next contract year. As long as your partial withdrawals in each contract year do not exceed the annual partial withdrawal amount allowed under the rider, and there has not been a contract ownership change or spousal continuation of the contract, the guaranteed amounts available for partial withdrawals are protected (i.e., will not decrease). If you withdraw more than the allowed partial withdrawal amount in a contract year, we call this an "excess withdrawal" under the rider. Excess withdrawals trigger an adjustment of a benefit's guaranteed amount, which may cause it to be reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and "ALP Excess Withdrawal Processing" headings below). Please note that each of the two benefits has its own definition of the allowed annual withdrawal amount. Therefore a partial withdrawal may be considered an excess withdrawal for purposes of the lifetime withdrawal benefit only, the basic withdrawal benefit only, or both. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 51 If your withdrawals exceed the greater of the RBP or the RALP, withdrawal charges under the terms of the contract may apply (see "Charges -- Withdrawal Charges"). The amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Making the Most of Your Contract -- Withdrawals"). The rider's guaranteed amounts can be increased at the specified intervals if your contract value has increased. An annual step up feature is available at each contract anniversary, subject to certain conditions, and may be applied automatically to your contract or may require you to elect the step up (see "Annual Step Up" heading below). If you exercise the annual step up election, the spousal continuation step up election (see "Spousal Continuation Step Up" heading below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). If you take withdrawals during the waiting period, any prior steps ups applied will be reversed and step ups will not be available until the third rider anniversary. You may take withdrawals after the waiting period without reversal of prior step ups. You should consider whether the Guarantor Withdrawal Benefit for Life rider is appropriate for you because: - - LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is subject to certain limitations, including but not limited to: (a) Once the contract value equals zero, payments are made for as long as the oldest owner or annuitant is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the first death of any owner or annuitant except as otherwise provided below (see "At Death" heading below). Therefore, if there are multiple contract owners or the annuitant is not an owner, the rider may terminate or the lifetime withdrawal benefit may be reduced. This possibility may present itself when: (i) There are multiple contract owners -- when one of the contract owners dies the benefit terminates even though other contract owners are still living (except if the contract is continued under the spousal continuation provision of the contract); or (ii) The owner and the annuitant are not the same persons -- if the annuitant dies before the owner, the benefit terminates even though the owner is still living. This is could happen, for example, when the owner is younger than the annuitant. This risk increases as the age difference between owner and annuitant increases. (b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA, GBP and/or RBP values are greater than zero. If the both the ALP and the contract value are zero, the lifetime withdrawal benefit will terminate. (c) When the lifetime withdrawal benefit is first established, the initial ALP is based on the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below), unless there has been a spousal continuation or ownership change. Any withdrawal you take before the ALP is established reduces the RBA and therefore may result in a lower amount of lifetime withdrawals you are allowed to take. (d) Withdrawals can reduce both the contract value and the RBA to zero prior to the establishment of the ALP. If this happens, the contract and the Guarantor Withdrawal Benefit for Life rider will terminate. - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program.") Subject to state restrictions, we reserve the right to limit the number of model portfolios from which you can select based on the dollar amount of purchase payments you make. - - TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income tax law, withdrawals under nonqualified annuities, including partial withdrawals taken from the contract under the terms of this rider, are treated less favorably than amounts received as annuity payments under the contract (see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation. - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD that exceeds the specified amount of withdrawal available under the rider. Partial withdrawals in any contract year that exceed the guaranteed amount available for withdrawal may reduce future benefits guaranteed under the rider. While the rider permits certain excess withdrawals to be made for the purpose of satisfying RMD requirements for this contract alone without reducing future benefits guaranteed under the rider, - -------------------------------------------------------------------------------- 52 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS there can be no guarantee that changes in the federal income tax law after the effective date of the rider will not require a larger RMD to be taken, in which case, future guaranteed withdrawals under the rider could be reduced. See Appendix G for additional information. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit for Life rider may be of limited value to you. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation. - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the Guarantor Withdrawal Benefit for Life rider, you may not elect an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. - - INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw from the contract in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than the RBP or RALP under this rider. Any amount you withdraw in a contract year under the contract's TFA provision that exceeds the RBP or RALP is subject to the excess withdrawal procedures described below for the GBA, RBA and ALP. For an example, see Appendix F. KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE DESCRIBED BELOW: PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a surrender of the contract. The partial withdrawal amount is a gross amount and will include any withdrawal charge and any market value adjustment. WAITING PERIOD: The period of time starting on the rider effective date during which the annual step up is not available if you take withdrawals. The current waiting period is three years. GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for partial withdrawals over the life of the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not payable as a death benefit. Rather, the GBA is an interim value used to calculate the amount available for withdrawals each year under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of the individual GBAs associated with each purchase payment. The GBA is determined at the following times, calculated as described: - - At contract issue -- the GBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBA that is associated with that RBA will also be set to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBA remains unchanged. If there have been multiple purchase payments, both the total GBA and each payment's GBA remain unchanged. (b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 53 GBA EXCESS WITHDRAWAL PROCESSING The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that is guaranteed by this rider as future withdrawals. At any point in time, the RBA equals the amount of GBA that remains available for withdrawals for the remainder of the contract's life, and total RBA is the sum of the individual RBAs associated with each purchase payment. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the RBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own RBA initially set equal that payment's GBA. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the RBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the total RBA is reduced by the amount of the withdrawal. If there have been multiple purchase payments, each payment's RBA is reduced in proportion to its RBP. (b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. Please note that if the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. RBA EXCESS WITHDRAWAL PROCESSING The total RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the total RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, both the total RBA and each payment's RBA will be reset. The total RBA will be reset according to the excess withdrawal processing described above. Each payment's RBA will be reset in the following manner: 1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in proportion to its individual RBP at the time of the withdrawal; and 2. The withdrawal amount above the total RBP and any amount determined by the excess withdrawal processing are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial withdrawals in each contract year after the waiting period, until the RBA is reduced to zero, under the basic withdrawal benefit. At any point in time, each purchase payment has its own GBP, which is equal to the lesser of that payment's RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual GBPs. During the waiting period, the guaranteed annual withdrawal amount may be less than the GBP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual withdrawal amount during the waiting period is equal to the value of the RBP at the beginning of the contract year. THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBP is established as 7% of the GBA value. - - At each contract anniversary -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value. - - When you make additional purchase payments -- each additional purchase payment has its own GBP equal to 7% of the purchase payment amount. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - -------------------------------------------------------------------------------- 54 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - When an individual RBA is reduced to zero -- the GBP associated with that RBA will also be reset to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA and the RBA associated with each purchase payment will be reset to the amount of that purchase payment. Each payment's GBP will be reset to 7% of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBP remains unchanged. (b) is greater than the total RBP -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value, based on the RBA and GBA after the withdrawal. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals for the remainder of the contract year under the basic withdrawal benefit. At any point in time, the total RBP is the sum of the RBPs for each purchase payment. During the waiting period, when the guaranteed amount maybe less than the GBP, the value of the RBP at the beginning of the contract year will be that amount that is actually guaranteed each contract year. THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At the beginning of each contract year during the waiting period and prior to any withdrawal -- the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. - - At the beginning of any other contract year -- the RBP for each purchase payment is set equal to that purchase payment's GBP. - - When you make additional purchase payments -- each additional purchase payment has its own RBP equal to that payment's GBP. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At spousal continuation -- (see "Spousal Option to Continue the Contract" heading below). - - When an individual RBA is reduced to zero -- the RBP associated with that RBA will also be reset to zero. - - When you make any partial withdrawal -- the total RBP is reset to equal the total RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. If there have been multiple purchase payments, each payment's RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in the excess withdrawal processing, the applicable RBP will not yet reflect the amount of the current withdrawal. COVERED PERSON: The person whose life is used to determine when the ALP is established, and the duration of the ALP payments. The Covered Person is the oldest contract owner or annuitant. The covered person may change during the contract's life if there is a spousal continuation or a change of contract ownership. If the covered person changes, we recompute the benefits guaranteed by the rider, based on the life of the new covered person, which may reduce the amount of the lifetime withdrawal benefit. ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after which time the lifetime benefit can be established. Currently, the lifetime benefit can be established on the later of the contract effective date or the contract anniversary date following the date the covered person reaches age 65. ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the amount available for withdrawals in each contract year after the waiting period until the later of death (see "At Death" heading below), or the RBA is reduced to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the ALP is zero. During the waiting period, the guaranteed annual lifetime withdrawal amount may be less than the ALP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual lifetime withdrawal amount during the waiting period is equal to the value of the RALP at the beginning of the contract year. THE ALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date following the date the covered person reaches age 65 -- the ALP is established as 6% of the total RBA. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 55 - - When you make additional purchase payments -- each additional purchase payment increases the ALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At contract ownership change -- (see "Spousal Option to Continue the Contract" and "Contract Ownership Change" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the ALP will be reset to equal total purchase payments multiplied by 6%. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the RALP -- the ALP remains unchanged. (b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE ALP. Please note that if the partial withdrawal is made during the waiting period, the excess withdrawal processing are applied AFTER any previously applied annual step ups have been reversed. ALP EXCESS WITHDRAWAL PROCESSING The ALP is reset to the lesser of the ALP immediately prior to the withdrawal, or 6% of the contract value immediately following the withdrawal. REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial withdrawals for the remainder of the contract year under the lifetime withdrawal benefit. During the waiting period, when the guaranteed annual withdrawal amount may be less than the ALP, the value of the RALP at the beginning of the contract year will be the amount that is actually guaranteed each contract year. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the RALP is zero. THE RALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date following the date the covered person reaches age 65, and: (a) During the waiting period and prior to any withdrawals -- the RALP is established equal to 6% of purchase payments. (b) At any other time -- the RALP is established equal to the ALP. - - At the beginning of each contract year during the waiting period and prior to any withdrawals -- the RALP is set equal to the total purchase payments, multiplied by 6%. - - At the beginning of any other contract year -- the RALP is set equal to ALP. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make additional purchase payments -- each additional purchase payment increases the RALP by 6% of the amount of the purchase payment. - - When you make any partial withdrawal -- the RALP equals the RALP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in excess withdrawal processing, the applicable RALP will not yet reflect the amount of the current withdrawal. REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from this contract and the RMD calculated separately for this contract is greater than the RBP or the RALP on the most recent contract anniversary, the portion of the RMD that exceeds the RBP or RALP will not be subject to excess withdrawal processing provided that the following conditions are met: - - The RMD is the life expectancy RMD for this contract alone, and - - The RMD amount is based on the requirements of section 401(a)(9), related Code provisions and regulations thereunder that were in effect on the effective date of this rider. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. Withdrawal amounts greater than the RBP or RALP on the contract anniversary date that do not meet these conditions will result in excess withdrawal processing as described above. See Appendix G for additional information. STEP UP DATE: The date any step up becomes effective, and depends on the type of step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - -------------------------------------------------------------------------------- 56 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may extend the payment period or increase the allowable payment. The annual step up is subject to the following rules: - - The annual step up is available when the RBA or, if established, the ALP, would increase on the step up date. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the waiting period, any previously applied step ups will be reversed and the Annual step up will not be available until the end of the waiting period. - - If the application of the step up does not increase the rider charge, the annual step up will be automatically applied to your contract, and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - The ALP and RALP are not eligible for step ups until they are established. Prior to being established, the ALP and RALP values are both zero. - - Please note it is possible for the ALP and RALP to step up even if the RBA or GBA do not step up and it is also possible for the RBA and GBA to step up even if the ALP and the RALP do not step up. The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as follows: - - The total RBA will be reset to the greater of the total RBA immediately prior to the step up date or the contract value on the step up date. - - The total GBA will be reset to the greater of the total GBA immediately prior to the step up date or the contract value on the step up date. - - The total GBP will be reset using the calculation as described above based on the increased GBA and RBA. - - The total RBP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made in the current contract year, but never less than zero. - - The ALP will be reset to the greater of the ALP immediately prior to the step up date or 6% of the contract value on the step up date. - - The RALP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RALP will not be affected by the step up. (b) At any other time, the RALP will be reset as the increased ALP less all prior withdrawals made in the current contract year, but never less than zero. SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to continue the contract, the Guarantor Withdrawal Benefit for Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled; the covered person will be re-determined and is the covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP values are affected as follows: - - The GBA, RBA, and GBP values remain unchanged. - - The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the date of continuation -- the ALP will be established on the contract anniversary following the date the covered person reaches age 65 as the lesser of the RBA or the contract anniversary value, multiplied by 6%. The RALP will be established on the same date equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the date of continuation -- the ALP will be established on the date of continuation as the lesser of the RBA or the contract value, multiplied by 6%. The RALP will be established on the same date in an amount equal to the ALP less all prior partial withdrawals made in the current contract year, but will never be less than zero. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 57 - - If the ALP has been established but the new covered person has not yet reached age 65 as of the date of continuation -- the ALP and RALP will be automatically reset to zero for the period of time beginning with the date of continuation and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%, and the RALP will be reset to equal the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the date of continuation -- the ALP will be automatically reset to the lesser of the current ALP or 6% of the contract value on the date of continuation. The RALP will be reset to equal to the ALP less all prior withdrawals made in the current contract year, but never less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the spousal continuation. SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the contract, another elective step up option becomes available. To exercise the step up, the spouse or the spouse's investment professional must submit a request within 30 days of the date of continuation. The step up date is the date we receive the spouse's request to step up. If the request is received after the close of business, the step up date will be the next valuation day. The GBA, RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step up. The spousal continuation step up is subject to the following rules: - - If the spousal continuation step up option is exercised and we have increased the charge for the rider, the spouse will pay the charge that is in effect on the step up date. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the total RBA remains greater than zero, you will be paid in the following scenarios: 1) The ALP has not yet been established and the contract value is reduced to zero for any reason other than full withdrawal of the contract. In this scenario, you can choose to: (a) receive the remaining schedule of GBPs until the RBA equals zero; or (b) wait until the rider anniversary following the date the covered person reaches age 65, and then receive the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 2) The ALP has been established and the contract value reduces to zero as a result of fees or charges, or a withdrawal that is less than or equal to both the RBP and the RALP. In this scenario, you can choose to receive: (a) the remaining schedule of GBPs until the RBA equals zero; or (b) the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 3) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP. In this scenario, the remaining schedule of GBPs will be paid until the RBA equals zero. 4) The ALP has been established and the contract value falls to zero as a result of a partial withdrawal that is greater than the RBP but less than or equal to the RALP. In this scenario, the ALP will be paid annually until the death of the covered person. Under any of these scenarios: - - The annualized amounts will be paid to you in the frequency you elect. You may elect a frequency offered by us at the time payments begin. Available payment frequencies will be no less frequent than annually; - - We will no longer accept additional purchase payments; - - You will no longer be charged for the rider; - - Any attached death benefit riders will terminate; and - - The death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. - -------------------------------------------------------------------------------- 58 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS The Guarantor Withdrawal Benefit for Life rider and the contract will terminate under either of the following two scenarios: - - If the contract value falls to zero as a result of a withdrawal that is greater than both the RALP and the RBP. This is full withdrawal of the contract. - - If the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP, and the total RBA is reduced to zero. AT DEATH: If the contract value is greater than zero, then the Guarantor Withdrawal Benefit for Life rider will terminate when the death benefit becomes payable (see "Benefits in Case of Death"). The beneficiary may elect to take the death benefit as a lump sum under the terms of the contract (see "Benefits in Case of Death") or the annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option" heading below). If the contract value equals zero and the death benefit becomes payable, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person dies and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person is still alive and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the later of the death of the covered person or the RBA equals zero. - - If the covered person is still alive and the RBA equals zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the death of the covered person. - - If the covered person dies and the RBA equals zero, the benefit terminates. No further payments will be made. CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing Ownership"), the covered person will be redetermined and is the covered person referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP and RALP will be reset as follows: - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be established on the anniversary contract anniversary following the date the covered person reaches age 65. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the anniversary date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the anniversary date occurs at any other time, the RALP will be set equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be established on the ownership change date. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be set equal to the ALP less all prior withdrawals made in the current contract year but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be reset to zero for the period of time beginning with the ownership change date and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the time period ends during the waiting period and prior to any withdrawals, the RALP will be reset to equal the lesser of the ALP or total purchase payments multiplied by 6%. If the time period ends at any other time, the RALP will be reset to equal the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be reset on the ownership change date. The ALP will be reset to the lesser of the current ALP or 6% of the contract value. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be reset to equal the ALP less all prior withdrawals made in the current contract year but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the ownership change. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout plans are available under the contract. In addition to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit for Life rider. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity payout option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 59 but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This option may not be available if the contract is issued to qualify under Section 403 or 408 of the Code, as amended. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed under the mortality table we then use to determine current life annuity purchase rates under the contract to which this rider is attached. This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the future schedule of GBPs if necessary to comply with the Code. RIDER TERMINATION The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by you or us except as follows: 1. Annuity payouts under an annuity payout plan will terminate the rider. 2. Termination of the contract for any reason will terminate the rider. GUARANTOR WITHDRAWAL BENEFIT RIDER The Guarantor Withdrawal Benefit rider is an optional benefit that you may select for an additional annual charge if: - - you purchase your contract on or after May 1, 2006(1),(2) in those states where the Guarantor Withdrawal Benefit for Life rider is not available(3); - - you and the annuitant are 79 or younger on the date the contract is issued. (1) The Guarantor Withdrawal Benefit rider is not available under an inherited qualified annuity. (2) The disclosures in this section also apply to contract owners who purchased this rider on or after April 29, 2005. In previous disclosures, we have referred to this rider as Rider A. We also offered an earlier version of this rider, previously referred to as Rider B. See Appendix H for information regarding Rider B which is no longer offered. See the rider attached to your contract for the actual terms of the benefit you purchased. (3) Ask your investment professional if this rider is available in your state. You must elect the Guarantor Withdrawal Benefit rider when you purchase your contract (original rider). This benefit may not be available in your state. The original rider you receive at contract issue offers an elective annual step-up and any withdrawal after a step up during the first three years is considered an excess withdrawal, as described below. The rider effective date of the original rider is the contract issue date. We will offer you the option of replacing the original rider with a new Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The enhanced rider offers an automatic annual step-up and a withdrawal after a step up during the first three years is not necessarily an excess withdrawal, as described below. The effective date of the enhanced rider will be the contract issue date except for the automatic step-up which will apply to contract anniversaries that occur after you accept the enhanced rider. The descriptions below apply to both the original and enhanced riders unless otherwise noted. The Guarantor Withdrawal Benefit initially provides a guaranteed minimum withdrawal benefit that gives you the right to take limited partial withdrawals in each contract year that over time will total an amount equal to your purchase payments. Certain withdrawals and step ups, as described below, can cause the initial guaranteed withdrawal benefit to change. The guarantee remains in effect if your partial withdrawals in a contract year do not exceed the allowed amount. As long as your withdrawals in each contract year do not exceed the allowed amount, you will not be assessed a withdrawal charge. Under the original rider, the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third contract anniversary, as described below). Under the enhanced rider, the allowed amount is equal to 7% of purchase payments for the first three years, and the GBP in all other years. If you withdraw an amount greater than the allowed amount in a contract year, we call this an "excess withdrawal" under the rider. If you make an excess withdrawal under the rider: - - withdrawal charges, if applicable, will apply only to the amount of the withdrawal that exceeds the allowed amount; - - the guaranteed benefit amount will be adjusted as described below; and - - the remaining benefit amount will be adjusted as described below. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefit (see - -------------------------------------------------------------------------------- 60 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Withdrawals"). Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. If you select the Guarantor Withdrawal Benefit rider, you may not select an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. If you exercise the annual step up election (see "Elective Step Up" and "Annual Step Up" below), the special spousal continuation step up election (see "Spousal Continuation and Special Spousal Continuation Step Up" below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). You should consider whether the Guarantor Withdrawal Benefit is appropriate for you because: - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the Portfolio Navigator program if you purchase a contract on or after May 1, 2006 with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). If you selected this Guarantor Withdrawal Benefit rider before May 1, 2006, you must participate in the asset allocation program (see "Making the Most of Your Contract -- Asset Allocation Program"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Asset Allocation Program and Portfolio Navigator Asset Allocation Program."); - - TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income; - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD. If you make a withdrawal in any contract year to satisfy an RMD, this may constitute an excess withdrawal, as defined below, and the excess withdrawal procedures described below will apply. Under the terms of the enhanced rider, we allow you to satisfy the RMD based on the life expectancy RMD for your contract and the requirements of the Code and regulations in effect when you purchase your contract, without the withdrawal being treated as an excess withdrawal. It is our current administrative practice to make the same accommodation under the original rider, however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. See Appendix I for additional information. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit rider may be of limited value to you. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments. - - INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than GBP under this rider. Any amount you withdraw in a contract year under the contract's TFA provision that exceeds the GBP is subject to the excess withdrawal procedures for the GBA and RBA described below. THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION. GUARANTEED BENEFIT AMOUNT The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment, adjusted for subsequent purchase payments, partial withdrawals in excess of the GBP, and step ups. The maximum GBA is $5,000,000. The GBA is determined at the following times: - - At contract issue -- the GBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment plus any purchase payment credit. The total GBA when an additional purchase payment is added is the sum of the individual GBAs immediately prior to the receipt of the additional purchase payment, plus the GBA associated with the additional purchase payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 61 - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the GBA remains unchanged. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; c) under the original rider in a contract year after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; GBA EXCESS WITHDRAWAL PROCEDURE The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT The remaining benefit amount (RBA) at any point is the total guaranteed amount available for future partial withdrawals. The maximum RBA is $5,000,000. The RBA is determined at the following times: - - At contract issue -- the RBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own RBA equal to the amount of the purchase payment. The total RBA when an additional purchase payment is added is the sum of the individual RBAs immediately prior to the receipt of the additional purchase payment, plus the RBA associated with the additional payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the RBA becomes the RBA immediately prior to the partial withdrawal, less the partial withdrawal. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; c) under the original rider after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups. RBA EXCESS WITHDRAWAL PROCEDURE The RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, any reduction of the RBA will be taken out of each payment's RBA in the following manner: The withdrawal amount up to the remaining benefit payment (defined below) is taken out of each RBA bucket in proportion to its remaining benefit payment at the time of the withdrawal; and the withdrawal amount above the remaining benefit payment and any amount determined by the excess withdrawal procedure are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT Under the original rider, the GBP is the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third anniversary (see "Elective Step Up" above). The GBP is equal to 7% of the GBA. - -------------------------------------------------------------------------------- 62 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS Under the enhanced rider, the GBP is the withdrawal amount that you are entitled to take each contract year after the third anniversary until the RBA is depleted. The GBP is the lesser of (a) 7% of the GBA; or (b) the RBA. Under both the original and enhanced riders, if you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. REMAINING BENEFIT PAYMENT Under the original rider, at the beginning of each contract year, the remaining benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA. Under the enhanced rider, at the beginning of each contract year, during the first three years and prior to any withdrawal, the RBP for each purchase payment is set equal to that purchase payment, multiplied by 7%. At the beginning of any other contract year, each individual RBP is set equal to each individual GBP. Each additional purchase payment has its own RBP established equal to that payment's GBP. The total RBP is equal to the sum of the individual RBPs. Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY) You have the option to increase the RBA, the GBA, the GBP and the RBP beginning with the first contract anniversary. An annual elective step up option is available for 30 days after the contract anniversary. The elective step up option allows you to step up the remaining benefit amount and guaranteed benefit amount to the contract value on the valuation date we receive your written request to step up. The elective step up is subject to the following rules: - - If you do not take any withdrawals during the first three contract years, you may step up annually beginning with the first contract anniversary; - - If you take any withdrawals during the first three contract years, the annual elective step up will not be available until the third contract anniversary; - - If you step up but then take a withdrawal prior to the third contract anniversary, you will lose any prior step ups and the withdrawal will be considered an excess withdrawal subject to the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed Benefit Amount" and "Remaining Benefit Amount" headings above; and - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. You may only step up if your contract value on the valuation date we receive your written request to step up is greater than the RBA. The elective step up will be determined as follows: - - The effective date of the elective step up is the valuation date we receive your written request to step up. - - The RBA will be increased to an amount equal to the contract value on the valuation date we receive your written request to step up. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract value on the valuation date we receive your written request to step up. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up less any withdrawals made during that contract year. You may elect a step up only once each contract year within 30 days after the contract anniversary. Once a step up has been elected, another step up may not be elected until the next contract anniversary. ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY) Beginning with the first contract anniversary after you accept the enhanced rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A step up does not create contract value, guarantee performance of any investment options, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, and RBP, and may extend the payment period or increase allowable payment. - - The annual step up is subject to the following rules: - - The annual step up is available when the RBA would increase on the step up date. The applicable step up date depends on whether the annual step up is applied on an automatic or elective basis. - - If the application of the step does not increase the rider charge, the annual step up will be automatically applied to your contract and the step up date is the contract anniversary date. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 63 - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the first three contract years, any previously applied step ups will be reversed and the annual step up will not be available until the third contract anniversary; - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. The annual step up will be determined as follows: - - The RBA will be increased to an amount equal to the contract value on the step up date. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the annual step up; or (b) the contract value on the step up date. - - The GBP will be calculated as described earlier, but based on the increased GBA and RBA. - - The RBP will be reset as follows: (a) Prior to any withdrawals during the first three years, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made during the current contract year, but never less than zero. SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP If a surviving spouse elects to continue the contract, this rider also continues. The spousal continuation step up is in addition to the elective step up or the annual step up. When a spouse elects to continue the contract, any rider feature processing particular to the first three years of the contract as described in this prospectus no longer applies. The GBA, RBA and GBP values remain unchanged. The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. A surviving spouse may elect a spousal continuation step up by written request within 30 days following the spouse's election to continue the contract. This step up may be made even if withdrawals have been taken under the contract during the first three years. Under this step up, the RBA will be reset to the greater of the RBA or the contract value on the valuation date we receive the spouse's written request to step up; the GBA will be reset to the greater of the GBA or the contract value on the same valuation date. If a spousal continuation step up is elected and we have increased the charge for the rider for new contract owners, the spouse will pay the charge that is in effect on the valuation date we receive the written request to step up. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor(SM) Withdrawal Benefit. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payments have been made for less than the RBA, the remaining payments will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. - -------------------------------------------------------------------------------- 64 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS IF CONTRACT VALUE REDUCES TO ZERO If the contract value reduces to zero and the RBA remains greater than zero, the following will occur: - - you will be paid according to the annuity payout option described above; - - we will no longer accept additional purchase payments; - - you will no longer be charged for the rider; - - any attached death benefit riders will terminate; and - - the death benefit becomes the remaining payments under the annuity payout option described above. If the contract value falls to zero and the RBA is depleted, the Guarantor Withdrawal Benefit rider and the contract will terminate. For an example, see Appendix J. INCOME ASSURER BENEFIT RIDERS There are three optional Income Assurer Benefit riders available under your contract: - - Income Assurer Benefit - MAV; - - Income Assurer Benefit - 5% Accumulation Benefit Base; or - - Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. The Income Assurer Benefit riders are intended to provide you with a guaranteed minimum income regardless of the volatility inherent in the investments in the subaccounts. The riders benchmark the contract growth at each anniversary against several comparison values and set the guaranteed income benefit base (described below) equal to the largest value. The guaranteed income benefit base, less any applicable premium tax, is the value we apply to the guaranteed annuity purchase rates stated in Table B of the contract to calculate the minimum annuity payouts you will receive if you exercise the rider. If the guaranteed income benefit base is greater than the contract value, the guaranteed income benefit base may provide a higher annuity payout level than is otherwise available. However, the riders use guaranteed annuity purchase rates which may result in annuity payouts that are less than those using the annuity purchase rates that we may apply at annuitization under the standard contract provisions. Therefore, the level of income provided by the riders may be less than the contract otherwise provides. If the annuity payouts through the standard contract provisions are more favorable than the payouts available through the riders, you will receive the higher standard payout option. The guaranteed income benefit base does not create contract value or guarantee the performance of any investment option. The general information in this section applies to each Income Assurer Benefit rider. This section is followed by a description of each specific Income Assurer Benefit rider and how it is calculated. You should consider whether an Income Assurer Benefit rider is appropriate for you because: - - you must participate in the Portfolio Navigator program if you purchase a contract on or after May 1, 2006 with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). If you selected this rider before May 1, 2006, you must participate in the asset allocation program (see "Making the Most of Your Contract -- Asset Allocation Program"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006. The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts, the one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to other contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Asset Allocation Program" and "Portfolio Navigator Asset Allocation Program."); - - if you are purchasing the contract as a qualified annuity, such as an IRA, you are planning to begin annuity payouts after the date on which minimum distributions required by the Code must begin, you should consider whether an Income Assurer Benefit is appropriate for you (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Partial withdrawals you take from the contract, including those used to satisfy RMDs will reduce the guaranteed income benefit base (defined below), which in turn may reduce or eliminate the amount of any annuity payouts available under the rider. Consult a tax advisor before you purchase any Income Assurer Benefit rider with a qualified annuity; - - you must hold the Income Assurer Benefit for 10 years unless you elect to terminate the rider within 30 days following the first anniversary after the effective date of the rider; - - you can only exercise the Income Assurer Benefit within 30 days after a contract anniversary following the expiration of the 10-year waiting period; - - the 10-year waiting period may be restarted if you elect to change the Portfolio Navigator model portfolio to one that causes the rider charge to increase (see "Charges -- Income Assurer Benefit"); and - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 65 - - the Income Assurer Benefit rider terminates* on the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate on the contract anniversary after the annuitant's 86th birthday, however, if you exercise the Income Assurer Benefit rider before this time, your benefits will continue according to the annuity payout plan you have selected. If the Income Assurer Benefit rider is available in your state and the annuitant is 75 or younger at contract issue, you may choose this optional benefit at the time you purchase your contract for an additional charge. The amount of the charge is determined by the Income Assurer Benefit rider you select (see "Charges -- Income Assurer Benefit Rider Fee"). The effective date of the rider will be the contract issue date. The Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders are not available with any Income Assurer Benefit rider. If the annuitant is between age 73 and age 75 at contract issue, you should consider whether a Income Assurer Benefit rider is appropriate for your situation because of the 10-year waiting period requirement. Be sure to discuss with your investment professional whether an Income Assurer Benefit rider is appropriate for your situation. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT RIDERS IN THE SECTIONS BELOW: GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value that will be used to determine minimum annuity payouts when the rider is exercised. It is an amount we calculate, depending on the Income Assurer Benefit rider you choose, that establishes a benefit floor. When the benefit floor amount is greater than the contract value, there may be a higher annuitization payout than if you annuitized your contract without the Income Assurer Benefit. Your annuitization payout will never be less than that provided by your contract value. EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your contract under Contract Data and will include the RiverSource Variable Portfolio - Cash Management Fund and, if available under your contract, GPAs and one-year fixed account. Excluded investment options are not used in the calculation of this riders' variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. EXCLUDED PAYMENTS: These are purchase payments paid in the last five years before exercise of the benefit which we reserve the right to exclude from the calculation of the guaranteed income benefit base. PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the product of (a) times (b) where: (a) is the ratio of the amount of the partial withdrawal (including any withdrawal charges or MVA) to the contract value on the date of (but prior to) the partial withdrawal; and (b) is the benefit on the date of (but prior to) the partial withdrawal. PROTECTED INVESTMENT OPTIONS: All investment options available under this contract that are not defined as Excluded investment options under contract data are known as protected investment options for purposes of this rider and are used in the calculation of the variable account floor for the Income Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base. WAITING PERIOD: This rider can only be exercised after the expiration of a 10-year waiting period. We reserve the right to restart the waiting period if you elect to change your model portfolio to one that causes the rider charge to increase. THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT: EXERCISING THE RIDER Rider exercise conditions are: - - you may only exercise the Income Assurer Benefit rider within 30 days after any contract anniversary following the expiration of the waiting period; - - the annuitant on the retirement date must be between 50 to 86 years old; and - - you can only take an annuity payment in one of the following annuity payout plans: Plan A -- Life Annuity - No Refund; Plan B -- Life Annuity with Ten or Twenty Years Certain; Plan D -- Joint and Last Survivor Life Annuity - No Refund; -- Joint and Last Survivor Life Annuity with Twenty Years Certain; or Plan E -- Twenty Years Certain. After the expiration of the waiting period, the Income Assurer Benefit rider guarantees a minimum amount of fixed annuity lifetime income during annuitization or the option of variable annuity payouts with a guaranteed minimum initial payment or a combination of the two options. If your contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time, the contract and all its riders, including this rider, will terminate without value and no benefits will be paid on account of - -------------------------------------------------------------------------------- 66 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS such termination. Exception: if you are still living, and the annuitant is between 50 and 86 years old, an amount equal to the guaranteed income benefit base will be paid to you under the annuity payout plan and frequency that you select, based upon the fixed or variable annuity payouts described above. The guaranteed income benefit base will be calculated and annuitization will occur at the following times. - - If the contract value falls to zero during the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur on the valuation date after the expiration of the waiting period, or when the annuitant attains age 50 if later. - - If the contract value falls to zero after the waiting period, the guaranteed income benefit base will be calculated and annuitization will occur immediately, or when the annuitant attains age 50 if later. Fixed annuity payouts under this rider will occur at the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" with 100% Projection Scale G and a 2.0% interest rate, for contracts purchased on or after May 1, 2006 and if available in your state(1). These are the same rates used in Table B of the contract (see "The Annuity Payout Period -- Annuity Tables"). Your annuity payouts remain fixed for the lifetime of the annuity payout period. (1) For all other contracts, the guaranteed annuity purchase rates are based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale and a 2.0% interest rate. First year variable annuity payouts are calculated in the same manner as fixed annuity payouts. Once calculated, your variable annuity payouts remain unchanged for the first year. After the first year, subsequent annuity payouts are variable and depend on the performance of the subaccounts you select. Variable annuity payouts after the first year are calculated using the following formula: Pt-1 (1 + I) ------------ = Pt 1.05
Pt-1 = prior annuity payout Pt = current annuity payout i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous variable annuity payout if the subaccount investment performance is greater or less than the 5% assumed investment rate. If your subaccount performance equals 5%, your variable annuity payout will be unchanged from the previous variable annuity payout. If your subaccount performance is in excess of 5%, your variable annuity payout will increase from the previous variable annuity payout. If your subaccount investment performance is less than 5%, your variable annuity payout will decrease from the previous variable annuity payout. TERMINATING THE RIDER Rider termination conditions are: - - you may terminate the rider within 30 days following the first anniversary after the effective date of the rider; - - you may terminate the rider any time after the expiration of the waiting period; - - the rider will terminate on the date you make a full withdrawal from the contract, or annuitization begins, or on the date that a death benefit is payable; and - - the rider will terminate* 30 days following the contract anniversary after the annuitant's 86th birthday. * The rider and annual fee terminate 30 days following the contract anniversary after the annuitant's 86th birthday, however, if you exercise the Income Assurer Benefit rider before this time, your benefits will continue according to the annuity payout plan you have selected. YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW: INCOME ASSURER BENEFIT - MAV The guaranteed income benefit base for the Income Assurer Benefit - MAV is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the maximum anniversary value. MAXIMUM ANNIVERSARY VALUE (MAV) - is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus proportionate adjustments for partial withdrawals. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 67 Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by proportionate adjustments for partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments; or 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the MAV, less market value adjusted excluded payments. MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded purchase payment multiplied by the ratio of the current contract value over the estimated contract value on the anniversary prior to such purchase payment. The estimated contract value at such anniversary is calculated by assuming that payments, and partial withdrawals occurring in a contract year take place at the beginning of the year for that anniversary and every year after that to the current contract year. INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit - 5% Accumulation Benefit Base is the greater of these three values: 1. contract value; or 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor. 5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded investment options plus the variable account floor. The Income Assurer Benefit 5% variable account floor is calculated differently and is not the same value as the death benefit 5% variable account floor. The variable account floor is zero from the effective date of this rider and until the first contract anniversary after the effective date of this rider. On the first contract anniversary after the effective date of this rider the variable account floor is: - - the total purchase payments made to the protected investment options minus adjusted partial withdrawals and transfers from the protected investment options; plus - - an amount equal to 5% of your initial purchase payment allocated to the protected investment options. On any day after the first contract anniversary following the effective date of this rider, when you allocate additional purchase payments to or withdraw or transfer amounts from the protected investment options, we adjust the variable account floor by adding the additional purchase payment and subtracting adjusted withdrawals and adjusted transfers. On each subsequent contract anniversary after the first anniversary of the effective date of this rider, prior to the earlier of your or the annuitant's 81st birthday, we increase the variable account floor by adding the amount ("roll-up amount") equal to 5% of the prior contract anniversary's variable account floor. The amount of purchase payments withdrawn from or transferred between the excluded investment options and the protected investment options is calculated as (a) times (b) where: (a) is the amount of purchase payments in the investment options being withdrawn or transferred on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount of the transfer or withdrawal to the value in the investment options being withdrawn or transferred on the date of (but prior to) the current withdrawal or transfer. The roll-up amount prior to the first anniversary is zero. Also, the roll-up amount on every anniversary after the earlier of your or the annuitant's 81st birthday is zero. Adjusted withdrawals and adjusted transfers for the variable account floor are equal to the amount of the withdrawal or transfer from the protected investment options as long as the sum of the withdrawals and transfers from the protected investment options in a contract year do not exceed the roll-up amount from the prior contract anniversary. If the current withdrawal or transfer from the protected investment options plus the sum of all prior withdrawals and transfers made from the protected investment options in the current policy year exceeds the roll-up amount from the prior contract anniversary we will calculate the adjusted withdrawal or adjusted transfer for the variable account floor as the result of (a) plus [(b) times (c)] where: (a) is the roll-up amount from the prior contract anniversary less the sum of any withdrawals and transfers made from the protected investment options in the current policy year but prior to the current withdrawal or transfer. However, (a) can not be less than zero; and - -------------------------------------------------------------------------------- 68 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS (b) is the variable account floor on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a); and (c) is the ratio of [the amount of the current withdrawal (including any withdrawal charges or MVA) or transfer from the protected investment options less the value from (a)] to [the total in the protected investment options on the date of (but prior to) the current withdrawal or transfer from the protected investment options less the value from (a)]. This method is greater than a dollar-for-dollar reduction, and could potentially deplete the maximum benefit faster than the dollar-for-dollar reduction. IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES: 1. contract value less the market value adjusted excluded payments (described above); or 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; or 3. the 5% variable account floor, less 5% adjusted excluded payments. 5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment accumulated at 5% for the number of full contract years they have been in the contract. INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE The guaranteed income benefit base for the Income Assurer Benefit -- Greater of MAV or 5% Accumulation Benefit Base is the greater of these four values: 1. the contract value; 2. the total purchase payments made to the contract minus proportionate adjustments for partial withdrawals; 3. the MAV (described above); or 4. the 5% variable account floor (described above). IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME BENEFIT BASE AS THE GREATEST OF: 1. contract value less the market value adjusted excluded payments (described above); 2. total purchase payments, less excluded payments, less proportionate adjustments for partial withdrawals; 3. the MAV, less market value adjusted excluded payments (described above); or 4. the 5% variable account floor, less 5% adjusted excluded payments (described above). For an example of how benefits under each Income Assurer Benefit rider are calculated, see Appendix K. OPTIONAL DEATH BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit, plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 69 EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. For an example, see Appendix L. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are 70 or older at the rider effective date. It does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is available only for transfers, exchanges, or rollovers from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector Rider, 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) IF YOU OR THE ANNUITANT ARE AGE 70 CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% X (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. - -------------------------------------------------------------------------------- 70 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). For an example, see Appendix M. THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below, except under annuity payout Plan E. You also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). You may reallocate this contract value to the subaccounts to provide variable annuity payouts. If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs and the DCA fixed account are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin (see "Making the Most of Your Contract -- Transfer policies"). ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payout, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. Some of the annuity payout plans may not be available if you have selected the Income Assurer Benefit rider. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we made only one monthly payout, we will not make any more payouts. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 71 - - PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN (under the Income Assurer Benefit rider: you may select life annuity with ten or 20 years certain): We make monthly payouts for a guaranteed payout period of five, ten, 15 or 20 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND (not available under the Income Assurer Benefit rider): We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly annuity payouts during the lifetime of the annuitant and joint annuitant. When either the annuitant or joint annuitant dies, we will continue to make monthly payouts during the lifetime of the survivor. If the survivor dies before we have made payouts for 20 years, we continue to make payouts to the named beneficiary for the remainder of the 20-year period which begins when the first annuity payout is made. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect (under the Income Assurer Benefit rider, you may elect a payout period of 20 years only). We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the payout period, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. (Exception: If you have an Income Assurer Benefit rider and elect this annuity payout plan based on the Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. The discount rate we use in the calculation will vary between 6.55% and 8.15% depending on the applicable contract option and the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes."). - - GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR GUARANTOR WITHDRAWAL BENEFIT RIDER): This fixed annuity payout option is an alternative to the above annuity payout plans. This option may not be available if the contract is a qualified annuity. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. Under this option, the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the total RBA at the time you begin this fixed payout option (see "Optional Benefits -- Guarantor Withdrawal Benefit for Life Rider" or "Optional Benefits -- Guarantor Withdrawal Benefit Rider"). These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at the time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary. ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. - -------------------------------------------------------------------------------- 72 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 73 - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; - -------------------------------------------------------------------------------- 74 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 75 VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or no longer the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource Variable Portfolio -- Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves as the principal underwriter and general distributor of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. SALES OF THE CONTRACT - - Only securities broker-dealers ("selling firms") registered with the SEC and members of the FINRA may sell the contract. - - The contracts are continuously offered to the public through authorized selling firms. We and RiverSource Distributors have a sales agreement with the selling firm to offer the contracts to the public. We agree to pay the selling firm (or an affiliated insurance agency) for contracts its investment professionals sell. The selling firm may be required to return sales commissions under certain circumstances including but not limited to when contracts are returned under the free look period. - -------------------------------------------------------------------------------- 76 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS PAYMENTS WE MAKE TO SELLING FIRMS - - We may use compensation plans which vary by selling firm. For example, some of these plans pay selling firms a commission of up to 6.0% each time a purchase payment is made for contract Option L and 1% for contract Option C. We may also pay ongoing trail commissions of up to 1.00% of the contract value. We do not pay or withhold payment of trail commissions based on which investment options you select. - - We may pay selling firms a temporary additional sales commission of up to 1% of purchase payments for both contract options offered for a period of time we select. For example, we may offer to pay a temporary additional sales commission to get selling firms to market a new or enhanced contract or to increase sales during the period. - - In addition to commissions, we may, in order to promote sales of the contracts, and as permitted by applicable laws and regulation, pay or provide selling firms with other promotional incentives in cash, credit or other compensation. We generally (but may not) offer these promotional incentives to all selling firms. The terms of such arrangements differ between selling firms. These promotional incentives may include but are not limited to: - sponsorship of marketing, educational, due diligence and compliance meetings and conferences we or the selling firm may conduct for investment professionals, including subsidy of travel, meal, lodging, entertainment and other expenses related to these meetings; - marketing support related to sales of the contract including for example, the creation of marketing materials, advertising and newsletters; - providing service to contract owners; and - funding other events sponsored by a selling firm that may encourage the selling firm's investment professionals to sell the contract. These promotional incentives or reimbursements may be calculated as a percentage of the selling firm's aggregate, net or anticipated sales and/or total assets attributable to sales of the contract, and/or may be a fixed dollar amount. As noted below this additional compensation may cause the selling firm and its investment professionals to favor the contracts. SOURCES OF PAYMENTS TO SELLING FIRMS We pay the commissions and other compensation described above from our assets. Our assets may include: - - revenues we receive from fees and expenses that you will pay when buying, owning and making a withdrawal from the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- The Funds"); - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The Funds"); and - - revenues we receive from other contracts we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part or all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including withdrawal charges; and, - - fees and expenses charged by the underlying subaccount funds in which you invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. POTENTIAL CONFLICTS OF INTEREST Compensation payment arrangements with selling firms can potentially: - - give selling firms a heightened financial incentive to sell the contract offered in this prospectus over another investment with lower compensation to the selling firm. - - cause selling firms to encourage their investment professionals to sell you the contract offered in this prospectus instead of selling you other alternative investments that may result in lower compensation to the selling firm. - - cause selling firms to grant us access to its investment professionals to promote sales of the contract offered in this prospectus, while denying that access to other firms offering similar contracts or other alternative investments which may pay lower compensation to the selling firm. PAYMENTS TO INVESTMENT PROFESSIONALS - - The selling firm pays its investment professionals. The selling firm decides the compensation and benefits it will pay its investment professionals. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 77 - - To inform yourself of any potential conflicts of interest, ask the investment professional before you buy, how the selling firm and its investment professionals are being compensated and the amount of the compensation that each will receive if you buy the contract. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement and other materials we file. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- 78 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE # Appendix A: Example -- Market Value Adjustment (MVA) p. 80 Guarantee Period Accounts (GPAs) p. 22 Appendix B: Example -- Income Assurer Benefit Rider Charges -- Income Assurer Benefit Rider Fee Fee p. 82 p. 32 Appendix C: Example -- Withdrawal Charges for Charges -- Withdrawal Charge Contract Option L p. 83 p. 28 Appendix D: Example -- Death Benefits p. 88 Benefits in Case of Death p. 45 Appendix E: Example -- Accumulation Protector Optional Benefits -- Accumulation Protector Benefit Benefit Rider p. 91 Rider p. 48 Appendix F: Example -- Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal Benefit for for Life Rider p. 93 Life Rider p. 50 Appendix G: Guarantor Withdrawal Benefit for Life Optional Benefits -- Guarantor Withdrawal Benefit for Rider -- Additional RMD Disclosure p. 95 Life Rider p. 50 Appendix H: Example -- Guarantor Withdrawal Optional Benefits -- Guarantor Withdrawal Benefit Rider Benefit -- Rider B Disclosure p. 97 p. 60 Appendix I: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal Benefit Rider Rider -- Additional RMD Disclosure p. 102 p. 60 Appendix J: Example -- Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal Benefit Rider Rider p. 103 p. 60 Appendix K: Example -- Income Assurer Benefit Riders p. 105 Optional Benefits -- Income Assurer Benefit Riders p. 65 Appendix L: Example -- Benefit Protector Death Optional Benefits -- Benefit Protector Death Benefit Benefit Rider p. 110 Rider p. 69 Appendix M: Example -- Benefit Protector Plus Death Optional Benefits -- Benefit Protector Plus Death Benefit Rider p. 112 Benefit Rider p. 70 Appendix N: Condensed Financial Information Condensed Financial Information (Unaudited) (Unaudited) p. 114 p. 12
The purpose of these appendices is first to illustrate the operation of various contract features and riders; second, to provide additional disclosure regarding various contract features and riders; and lastly, to provide condensed financial history (unaudited) of the subaccounts. In order to demonstrate the contract features and riders, an example may show hypothetical contract values. These contract values do not represent past or future performance. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts, GPAs, DCA fixed account, and one-year fixed account and the fees and charges that apply to your contract. The examples of death benefits and optional riders in appendices D through F and J through M include a partial withdrawal to illustrate the effect of a partial withdrawal on the particular benefit. These examples are intended to show how the optional riders operate, and do not take into account whether the rider is part of a qualified contract. Qualified contracts are subject to required minimum distributions at certain ages which may require you to take partial withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you are considering the addition of certain death benefits and/or optional riders to a qualified contract, you should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 79 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA) As the examples below demonstrate, the application of an MVA may result in either a gain or a loss of principal. We refer to all of the transactions described below as "early withdrawals." ASSUMPTIONS: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; and - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your guarantee period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the Guarantee Period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate and, so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new Guaranteed Period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current Guarantee Period (rounded up). EXAMPLES -- MVA Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your guarantee period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. Please note that when you allocate your purchase payment to the ten-year GPA and your purchase payment is in its fourth year from receipt at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also - -------------------------------------------------------------------------------- 80 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you requested after we apply the MVA (and any applicable withdrawal charge under contract Option L), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for Guarantee Period durations equaling the remaining Guarantee Period of the GPA to which the formula is being applied. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 81 APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE ASSUMPTIONS: - - You purchase the contract with a payment of $50,000 and allocate all of your payment to the Protected Investment Options and make no transfers, add-ons or withdrawals; and - - on the first contract anniversary your total contract value is $55,545; and - - on the second contract anniversary your total contract value is $53,270. WE WOULD CALCULATE THE GUARANTEED INCOME BENEFIT BASE FOR EACH INCOME ASSURER BENEFIT ON THE SECOND ANNIVERSARY AS FOLLOWS: THE INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE IS THE GREATEST OF THE FOLLOWING VALUES: Purchase Payments less adjusted partial withdrawals: $50,000 Contract value on the second anniversary: $53,270 Maximum Anniversary Value: $55,545 --------------------------------------------------------------------- INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS THE GREATEST OF THE FOLLOWING VALUES: Purchase Payments less adjusted partial withdrawals: $50,000 Contract value on the second anniversary: $53,270 5% Variable Account Floor = 1.05 X 1.05 X $50,000 $55,125 --------------------------------------------------------------------- INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,125
THE INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS THE GREATEST OF THE FOLLOWING VALUES: Purchase Payments less adjusted partial withdrawals: $50,000 Contract value on the second anniversary: $53,270 Maximum Anniversary Value: $55,545 5% Variable Account Floor = 1.05 X 1.05 X $50,000 $55,125 --------------------------------------------------------------------- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT FEE DEDUCTED FROM YOUR CONTRACT VALUE WOULD BE: INCOME ASSURER BENEFIT - MAV FEE = 0.30% X $55,545 = $166.64 INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE FEE = 0.60% X $55,125 = $330.75 INCOME ASSURER BENEFIT - MAV OR 5% ACCUMULATION BENEFIT BASE FEE = 0.65% X $55,545 = $361.04
- -------------------------------------------------------------------------------- 82 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L For purposes of calculating any withdrawal charge, including the examples illustrated below, we treat amounts withdrawn from your contract value in the following order: 1. First, in each contract year, we withdraw amounts totaling: - up to 10% of your prior anniversary's contract value or your contract's remaining benefit payment if you elected the Guarantor Withdrawal Benefit rider and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. - up to 10% of your prior anniversary's contract value or the greater of your contract's remaining benefit payment or remaining annual lifetime payment if you elected the Guarantor Withdrawal Benefit for Life rider, and the greater of your remaining annual lifetime payment and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. 2. Next, we withdraw contract earnings, if any, that are greater than the amount described in number one above. We do not assess a withdrawal charge on contract earnings. 3. Next we withdraw purchase payments received prior to the withdrawal charge period shown in your contract. We do not assess a withdrawal charge on these purchase payments. 4. Finally, if necessary, we withdraw purchase payments received that are still within the withdrawal charge period you selected and shown in your contract. We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do assess a withdrawal charge on these payments. After withdrawing earnings in numbers one and two above, we next withdraw enough additional contract value (ACV) to meet your requested withdrawal amount. If the amount described in number one above was greater than contract earnings prior to the withdrawal, the excess (XSF) will be excluded from the purchase payments being withdrawn that were received most recently when calculating the withdrawal charge. We determine the amount of purchase payments being withdrawn (PPW) in numbers three and four above as: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) If the additional contract value withdrawn is less than XSF, then PPW will equal ACV. We determine current contract earnings (CE) by looking at the entire contract value (CV), not the earnings of any particular subaccount, GPA, the one-year fixed account or the DCA fixed account. If the contract value is less than purchase payments received and not previously withdrawn (PPNPW) then contract earnings are zero. The examples below show how the withdrawal charge for a full and partial withdrawal is calculated for Contract Option L with a four-year withdrawal charge schedule. Each example illustrates the amount of the withdrawal charge for both a contract that experiences gains and a contract that experiences losses, given the same set of assumptions. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 83 FULL WITHDRAWAL CHARGE CALCULATION -- FOUR YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You withdraw the contract for its total value in the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contract (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 60,000.00 40,000.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 50,000.00 40,000.00 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 50,000.00 40,000.00 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 50,000.00 50,000.00
- -------------------------------------------------------------------------------- 84 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 50,000.00 50,000.00 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 3,000.00 2,748.00 STEP 7. The dollar amount you will receive as a result of your full withdrawal is determined as: Contract value withdrawn: 60,000.00 40,000.00 WITHDRAWAL CHARGE: (3,000.00) (2,748.00) Contract charge (assessed upon full withdrawal): (40.00) (40.00) ---------- ---------- NET FULL WITHDRAWAL PROCEEDS: $56,960.00 $37,212.00
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 85 PARTIAL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a four-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - You request a net partial withdrawal of $15,000.00 in the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - You have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for the net partial withdrawal proceeds to match the amount requested. We start with an estimate of the amount of contract value to withdraw and calculate the resulting withdrawal charge and net partial withdrawal proceeds as illustrated below. We then adjust our estimate and repeat until we determine the amount of contract value to withdraw that generates the desired net partial withdrawal proceeds. WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS FOLLOWS: - --------------------------------------------------------------------------------
STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contract (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 15,319.15 15,897.93 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 5,319.15 15,897.93 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00
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STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 5,319.15 15,897.93 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 5,319.15 19,165.51 STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 5,319.15 19,165.51 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 319.15 897.93 STEP 7. The dollar amount you will receive as a result of your partial withdrawal is determined as: Contract value withdrawn: 15,319.15 15,897.93 WITHDRAWAL CHARGE: (319.15) (897.93) ---------- ---------- NET PARTIAL WITHDRAWAL PROCEEDS: $15,000.00 $15,000.00
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 87 APPENDIX D: EXAMPLE -- DEATH BENEFITS EXAMPLE -- ROP DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $20,000. You select contract Option L; and - - during the first contract year you make an additional purchase payment of $5,000; and - - during the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal, including withdrawal charge; and - - during the third contract year the contract value grows to $23,000. WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $23,000.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45 EXAMPLE -- MAV DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000. You select contract Option L; and - - on the first contract anniversary the contract value grows to $26,000; and - - during the second contract year the contract value falls to $22,000, at which point you take a $1,500 (including withdrawal charge) partial withdrawal, leaving a contract value of $20,500. WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $20,500.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- 3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH: Greatest of your contract anniversary values: $26,000.00 plus purchase payments made since the prior anniversary: +0.00 minus the death benefit adjusted partial withdrawals, calculated as: $1,500 X $26,000 ---------------- = -1,772.73 $22,000 ---------- for a death benefit of: $24,227.27 ----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE MAV: $24,227.27 - -------------------------------------------------------------------------------- 88 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - on the first contract anniversary, the GPA value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - during the second contract year the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a death benefit of: $23,456.79 ---------- 3. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: 1.05 $21,000.00 x $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 5% variable account floor (value of the GPAs, one-year fixed account and the $24,642.11 variable account floor): ----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 89 EXAMPLE -- ENHANCED DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option L; and - - on the first contract anniversary, the GPAs value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - during the second contract year the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP Death Benefit of: $23,456.79 ---------- 3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV Death Benefit of: $23,456.79 ---------- 4. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: 1.05 x $20,000 = $21,000.00 plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 5% variable account floor (value of the GPAs and the variable account floor): $24,642.11 ----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- 90 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER AUTOMATIC STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) in the second, third and seventh contract anniversaries. These increases occur because of the automatic step up feature of the rider. The automatic step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - - you take partial withdrawals from the contract on the fifth and eighth contract anniversaries in the amounts of $2,000 and $5,000, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and - - you do not exercise the elective step up option available under the rider; and - - you do not change model portfolios. Based on these assumptions, the waiting period expires at the end of the 10th contract year. The rider then ends. On the benefit date the hypothetical assumed contract value is $108,118 and the MCAV is $136,513, so the contract value would be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT ADJUSTED ASSUMED ASSUMED DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 0 0 0 12.0% 140,000 125,000 2 0 0 0 15.0% 161,000 128,800(2) 3 0 0 0 3.0% 165,830 132,664(2) 4 0 0 0 -8.0% 152,564 132,664 5 0 2,000 2,046 -15.0% 127,679 130,618 6 0 0 0 20.0% 153,215 130,618 7 0 0 0 15.0% 176,197 140,958(2) 8 0 5,000 4,444 -10.0% 153,577 136,513 9 0 0 0 -20.0% 122,862 136,513 10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date. (2) These values indicate where the automatic step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. ELECTIVE STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) on the first, second, third and seventh contract anniversaries. These increases occur only if you exercise the elective step up Option within 30 days following the contract anniversary. The contract value on the date we receive your written request to step up must be greater than the MCAV on that date. The elective step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a four-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 91 - - you take partial withdrawals from the contract on the fifth, eighth and thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and - - the elective step up is exercised on the first, second, third and seventh contract anniversaries; and - - you do not change asset allocation models. Based on these assumptions, the 10 year waiting period restarts each time you exercise the elective step up option (on the first, second, third and seventh contract anniversaries in this example). The waiting period expires at the end of the 10th contract year following the last exercise of the elective step up option. When the waiting period expires, the rider ends. On the benefit date the hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 10(2) 0 0 0 12.0% 140,000 140,000(3) 2 10(2) 0 0 0 15.0% 161,000 161,000(3) 3 10(2) 0 0 0 3.0% 165,830 165,830(3) 4 9 0 0 0 -8.0% 152,564 165,830 5 8 0 2,000 2,558 -15.0% 127,679 163,272 6 7 0 0 0 20.0% 153,215 163,272 7 10(2) 0 0 0 15.0% 176,197 176,197(3) 8 9 0 5,000 5,556 -10.0% 153,577 170,642 9 8 0 0 0 -20.0% 122,862 170,642 10 7 0 0 0 -12.0% 108,118 170,642 11 6 0 0 0 3.0% 111,362 170,642 12 5 0 0 0 4.0% 115,817 170,642 13 4 0 7,500 10,524 5.0% 114,107 160,117 14 3 0 0 0 6.0% 120,954 160,117 15 2 0 0 0 -5.0% 114,906 160,117 16 1 0 0 0 -11.0% 102,266 160,117 17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB benefit date. (2) The waiting period restarts when the elective step up is exercised. (3) These values indicate when the elective step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Exercising the elective step up provision may result in an increase in the charge that you pay for this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. - -------------------------------------------------------------------------------- 92 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX F: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 60. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 7,000 92,000 100,000 93,000 7,000 0 1 0 0 91,000 100,000 93,000 7,000 7,000 1.5 0 7,000 83,000 100,000 86,000 7,000 0 2 0 0 81,000 100,000 86,000 7,000 7,000 5 0 0 75,000 100,000 86,000 7,000 7,000 5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 6 0 0 69,000 100,000 80,840 7,000 7,000 6.5 0 7,000 62,000 100,000 73,840 7,000 0 7 0 0 70,000 100,000 73,840 7,000 7,000 7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 8 0 0 55,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 1.5 N/A N/A 2 N/A N/A 5 5,160(1) 5,160(1) 5.5 5,160 0 6 5,160 5,160 6.5 3,720(2) 0 7 4,200 4,200 7.5 3,060(3) 0 8 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your death or the RBA is reduced to zero. (1) The ALP and RALP are established on the contract anniversary date following the date the covered person reaches age 65. (2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the basic withdrawal benefit and the $4,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 93 EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 65. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $7,500 each year until the later of your death or the RBA is reduced to zero. (1) The annual step-up has not been applied to the RBP or RALP because any withdrawal after step up during the waiting period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the waiting period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the waiting period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 94 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER -- ADDITIONAL RMD DISCLOSURE This appendix describes our current administrative practice for determining the amount of withdrawals in any contract year which an owner may take under the Guarantor Withdrawal Benefit for Life rider to satisfy the RMD rules under 401(a)(9) of the Code without application of the excess withdrawal procedures described in the rider. We reserve the right to modify this administrative practice at any time upon 30 days' written notice to you. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If on the date we calculated your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA), it is greater than the RBP from the beginning of the current contract year, - Basic Additional Benefit Amount (BABA) will be set equal to that portion of your ALERMDA that exceeds the RBP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. - Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the BABA. These withdrawals will not be considered excess withdrawals with regard to the GBA and RBA as long as they do not exceed the remaining BABA. - Once the BABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the GBA and RBA and will subject them all to the excess withdrawal processing described in the Guarantor Withdrawal Benefit for Life rider. (2) If on the date we calculated your ALERMDA, it is greater than the RALP from the beginning of the current Contract Year, - A Lifetime Additional Benefit Amount (LABA) will be set equal to that portion of your ALERMDA that exceeds the RALP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RALP for that contract year. - Once the RALP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the LABA. These withdrawals will not be considered excess withdrawals with regard to the ALP as long as they do not exceed the remaining LABA. - Once the LABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the ALP and will subject the ALP to the excess withdrawal processing described by the Guarantor Withdrawal Benefit for Life rider. (3) If the ALP is established on a policy anniversary where your current ALERMDA is greater than the new RALP, - An initial LABA will be set equal to that portion of your ALERMDA that exceeds the new RALP. - This new LABA will be immediately reduced by the amount that total withdrawals in the current calendar year exceed the new RALP, but shall not be reduced to less than zero. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the Guarantor Withdrawal Benefit for Life rider is attached as of the date we make the determination; and (3) is otherwise based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable on the effective date of this prospectus, to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a Simplified Employee Pension plan (Section 408(k)); 4. a tax-sheltered annuity rollover (Section 403(b)). In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your available RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP as described under the excess withdrawal provision of the rider. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 95 In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g., ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. - -------------------------------------------------------------------------------- 96 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT -- RIDER B DISCLOSURE GUARANTOR WITHDRAWAL BENEFIT RIDER The Guarantor Withdrawal Benefit rider is an optional benefit that was offered for an additional annual charge if: - - you purchased your contract prior to April 29, 2005(1),(2); - - the rider was available in your state; and - - you and the annuitant were 79 or younger on the date the contract was issued. (1) The Guarantor Withdrawal Benefit rider is not available under an inherited qualified annuity. (2) In previous disclosure, we have referred to this rider as Rider B. This rider is no longer available for purchase. See the Guarantor Withdrawal Benefit for Life and Guarantor Withdrawal Benefit sections in this prospectus for information about currently offered versions of this benefit. See the rider attached to your contract for the actual terms of the benefit you purchased. You must elect the Guarantor Withdrawal Benefit rider when you purchase your contract (original rider). This benefit may not be available in your state. The original rider you receive at contract issue offers an elective annual step-up and any withdrawal after a step up during the first three years is considered an excess withdrawal, as described below. The rider effective date of the original rider is the contract issue date. We will offer you the option of replacing the original rider with a new Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The enhanced rider offers an automatic annual step-up and a withdrawal after a step up during the first three years is not necessarily an excess withdrawal, as described below. The effective date of the enhanced rider will be the contract issue date except for the automatic step-up which will apply to contract anniversaries that occur after you accept the enhanced rider. The descriptions below apply to both the original and enhanced riders unless otherwise noted. The Guarantor Withdrawal Benefit initially provides a guaranteed minimum withdrawal benefit that gives you the right to take limited partial withdrawals in each contract year that over time will total an amount equal to your purchase payments. Certain withdrawals and step ups, as described below, can cause the initial guaranteed withdrawal benefit to change. The guarantee remains in effect if your partial withdrawals in a contract year do not exceed the allowed amount. As long as your withdrawals in each contract year do not exceed the allowed amount, you will not be assessed a withdrawal charge. Under the original rider, the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third contract anniversary, as described below). Under the enhanced rider, the allowed amount is equal to 7% of purchase payments for the first three years, and the GBP in all other years. If you withdraw an amount greater than the allowed amount in a contract year, we call this an "excess withdrawal" under the rider. If you make an excess withdrawal under the rider: - - withdrawal charges, if applicable, will apply only to the amount of the withdrawal that exceeds the allowed amount; - - the guaranteed benefit amount will be adjusted as described below; and - - the remaining benefit amount will be adjusted as described below. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Withdrawals"). Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. If you select the Guarantor Withdrawal Benefit rider, you may not select an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. If you exercise the annual step up election (see "Elective Step Up" and "Annual Step Up" below), the special spousal continuation step up election (see "Spousal Continuation and Special Spousal Continuation Step Up" below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). You should consider whether the Guarantor Withdrawal Benefit is appropriate for you because: - - USE OF ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the asset allocation program (see "Making the Most of Your Contract -- Asset Allocation Program"), however, you may elect to participate in the Portfolio Navigator program after May 1, 2006 (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). The Portfolio Navigator program and the asset allocation program limit your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider; - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 97 - - TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income; - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD. If you make a withdrawal in any contract year to satisfy an RMD, this may constitute an excess withdrawal, as defined below, and the excess withdrawal procedures described below will apply. Under the terms of the enhanced rider, we allow you to satisfy the RMD based on the life expectancy RMD for your contract and the requirements of the Code and regulations in effect when you purchase your contract, without the withdrawal being treated as an excess withdrawal. It is our current administrative practice to make the same accommodation under the original rider, however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. See Appendix I for additional information. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit rider may be of limited value to you. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation; - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than GBP under this rider. Any amount you withdraw in a contract year under the contract's TFA provision that exceeds the GBP is subject to the excess withdrawal procedures for the GBA and RBA described below. THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION. GUARANTEED BENEFIT AMOUNT The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment, adjusted for subsequent purchase payments, partial withdrawals in excess of the GBP, and step ups. The maximum GBA is $5,000,000. THE GBA IS DETERMINED AT THE FOLLOWING TIMES: - - At contract issue -- the GBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. The total GBA when an additional purchase payment is added is the sum of the individual GBAs immediately prior to the receipt of the additional purchase payment, plus the GBA associated with the additional purchase payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the GBA remains unchanged. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: c) under the original rider in a contract year after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken during the first three years, the GBA and the GBP are calculated after the reversal of any prior step ups: GBA EXCESS WITHDRAWAL PROCEDURE The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and - -------------------------------------------------------------------------------- 98 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT The remaining benefit amount (RBA) at any point is the total guaranteed amount available for future partial withdrawals. The maximum RBA is $5,000,000. The RBA is determined at the following times: - - At contract issue -- the RBA is equal to the initial purchase payment; - - When you make additional purchase payments -- each additional purchase payment has its own RBA equal to the amount of the purchase payment. The total RBA when an additional purchase payment is added is the sum of the individual RBAs immediately prior to the receipt of the additional purchase payment, plus the RBA associated with the additional payment; - - At step up -- (see "Elective Step Up" and "Annual Step Up" headings below). - - When you make a partial withdrawal: a) and all of your withdrawals in the current contract year, including the current withdrawal, are less than or equal to the GBP -- the RBA becomes the RBA immediately prior to the partial withdrawal, less the partial withdrawal. Note that if the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; b) and all of your withdrawals in the current contract year, including the current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; c) under the original rider after a step up but before the third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal is taken during the first three years, the RBA and the GBP are calculated after the reversal of any prior step ups; RBA EXCESS WITHDRAWAL PROCEDURE The RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, any reduction of the RBA will be taken out of each payment's RBA in the following manner: The withdrawal amount up to the remaining benefit payment (defined below) is taken out of each RBA bucket in proportion to its remaining benefit payment at the time of the withdrawal; and the withdrawal amount above the remaining benefit payment and any amount determined by the excess withdrawal procedure are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT Under the original rider, the GBP is the amount you may withdraw under the terms of the rider in each contract year, subject to certain restrictions prior to the third anniversary. Under the enhanced rider, the GBP is the withdrawal amount that you are entitled to take each contract year after the third anniversary until the RBA is depleted. Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a contract year, there is no carry over to the next contract year. REMAINING BENEFIT PAYMENT Under the original rider, at the beginning of each contract year, the remaining benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA. Under the enhanced rider, at the beginning of each contract year, during the first three years and prior to any withdrawal, the RBP for each purchase payment is set equal to that purchase payment, multiplied by 7%. At the beginning of any other contract year, each individual RBP is set equal to each individual GBP. Each additional purchase payment has its own RBP established equal to that payment's GBP. The total RBP is equal to the sum of the individual RBPs. Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 99 ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY) You have the option to increase the RBA, the GBA, the GBP and the RBP beginning with the first contract anniversary. An annual elective step up option is available for 30 days after the contract anniversary. The elective step up option allows you to step up the remaining benefit amount and guaranteed benefit amount to the contract value on the valuation date we receive your written request to step up. The elective step up is subject to the following rules: - - if you do not take any withdrawals during the first three contract years, you may step up annually beginning with the first contract anniversary; - - if you take any withdrawals during the first three contract years, the annual elective step up will not be available until the third contract anniversary; - - if you step up but then take a withdrawal prior to the third contract anniversary, you will lose any prior step ups and the withdrawal will be considered an excess withdrawal subject to the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed Benefit Amount" and "Remaining Benefit Amount" headings above; and - - you may take withdrawals on or after the third contract anniversary without reversal of previous step ups. You may only step up if your contract anniversary value is greater than the RBA. The elective step up will be determined as follows: The effective date of the elective step up is the contract anniversary. - - The RBA will be increased to an amount equal to the contract anniversary value. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the elective step up; or (b) the contract anniversary value. - - The GBP will be increased to an amount equal to the greater of (a) the GBP immediately prior to the elective step up; or (b) 7% of the GBA after the elective step up. - - The RBP will be increased to the lesser of (a) the RBA after the elective step up; or (b) the GBP after the elective step up. You may elect a step up only once each contract year within 30 days after the contract anniversary. Once a step up has been elected, another step up may not be elected until the next contract anniversary. ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY) Beginning with the first contract anniversary after you accept the enhanced rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A step up does not create contract value, guarantee performance of any investment options, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, and RBP, and may extend the payment period or increase allowable payment. The annual step up is subject to the following rules: - - The annual step up is available when the RBA would increase on the step up date. The applicable step up date depends on whether the annual step up is applied on an automatic or elective basis. - - If the application of the step does not increase the rider charge, the annual step up will be automatically applied to your contract and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the first three contract years, any previously applied step ups will be reversed and the annual step up will not be available until the third contract anniversary; - - You may take withdrawals on or after the third contract anniversary without reversal of previous step ups. The annual step up will be determined as follows: - - The RBA will be increased to an amount equal to the contract value on the step up date. - - The GBA will be increased to an amount equal to the greater of (a) the GBA immediately prior to the annual step up; or (b) the contract value on the step up date. - - The GBP will be calculated as described earlier, but based on the increased GBA and RBA. - -------------------------------------------------------------------------------- 100 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS - - The RBP will be reset as follows: (a) Prior to any withdrawals during the first three years, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made during the current contract year, but never less than zero. SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP If a surviving spouse elects to continue the contract, this rider also continues. The spousal continuation step up is in addition to the elective step up or the annual step up. When a spouse elects to continue the contract, any rider feature processing particular to the first three years of the contract as described in this prospectus no longer applies. The GBA, RBA and GBP values remain unchanged. The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. A spousal continuation step up occurs automatically when the spouse elects to continue the contract. The rider charge will not change upon this automatic step up. Under this step up, the RBA will be reset to the greater of the RBA on the valuation date we receive the spouse's written request to continue the contract and the death benefit that would otherwise have been paid; the GBA will be reset to the greater of the GBA on the valuation date we receive the spouse' written request to continue the contract and the death benefit that would otherwise have been paid. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payments have been made for less than the RBA, the remaining payments will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. IF CONTRACT VALUE REDUCES TO ZERO If the contract value reduces to zero and the RBA remains greater than zero, the following will occur: - - you will be paid according to the annuity payout option described above; - - we will no longer accept additional purchase payments; - - you will no longer be charged for the rider; - - any attached death benefit riders will terminate; and - - the death benefit becomes the remaining payments under the annuity payout option described above. If the contract value falls to zero and the RBA is depleted, the Guarantor Withdrawal Benefit rider and the contract will terminate. For an example, see Appendix J. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 101 APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT RIDER -- ADDITIONAL RMD DISCLOSURE For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is greater than the GBP on the date we calculated the ALERMDA, an Additional Benefit Amount (ABA) will be set equal to that portion of your ALERMDA that exceeds the GBP. (2) Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. (3) Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce any ABA. These withdrawals will not be considered excess withdrawals as long as they do not exceed the remaining ABA. (4) Once the ABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals and will initiate the excess withdrawal procedure described by the Guarantor Withdrawal Benefit rider. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year, (2) based on the value of this contract alone on the date it is determined, and (3) based on the company's understanding and interpretation of the requirements for the following types of plans under the Code as of the date of this prospectus: Life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable, to: 1. an individual retirement annuity (Code Section 408(b)), 2. a Roth individual retirement account (Code Section 408A), 3. a Simplified Employee Pension plan (Code Section 408(k)), 4. a 401K plan (Code Section 401(k)) (with our approval), 5. custodial and investment only plans (Code Section 401(a)) (with our approval), 6. a tax-sheltered annuity rollover (Code Section 403(b)). In the future, the requirements under tax law for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the requirements under the tax law for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your GBP amount and may result in the reduction of your GBA and RBA as described under the excess withdrawal provision of the rider. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g. some ownerships by trusts and charities), the life expectancy required minimum distribution amount calculated by us will equal zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years for contracts not covered by the sections of the Code listed above as of the date of this prospectus. Please consult your tax advisor about the impact of these rules prior to purchasing the Guarantor Withdrawal Benefit rider. - -------------------------------------------------------------------------------- 102 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX J: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT -- THIS EXAMPLE ILLUSTRATES BOTH RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER B (SEE APPENDIX H). ASSUMPTIONS: - - You purchase the contract with a payment of $100,000; and - - you select contract Option L. The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000 The Guaranteed Benefit Payment (GBP) equals 7% of your GBA: 0.07 X $100,000 = $ 7,000 The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000 On the first contract anniversary the contract value grows to $110,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $110,000 The GBA equals 100% of your contract value: $110,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $110,000 = $ 7,700 During the fourth contract year you decide to take a partial withdrawal of $7,700. You took a partial withdrawal equal to your GBP, so your RBA equals the prior RBA less the amount of the partial withdrawal: $110,000 - $7,700 = $102,300 The GBA equals the GBA immediately prior to the partial withdrawal: $110,000 The GBP equals 7% of your GBA: 0.07 X $110,000 = $ 7,700 On the fourth contract anniversary you make an additional purchase payment of $50,000. The new RBA for the contract is equal to your prior RBA plus 100% of the additional purchase payment: $102,300 + $50,000 = $152,300 The new GBA for the contract is equal to your prior GBA plus 100% of the additional purchase payment: $110,000 + $50,000 = $160,000 The new GBP for the contract is equal to your prior GBP plus 7% of the additional purchase payment: $7,700 + $3,500 = $ 11,200 On the fifth contract anniversary your contract value grows to $200,000. You decide to step up your benefit. The RBA equals 100% of your contract value: $200,000 The GBA equals 100% of your contract value: $200,000 The GBP equals 7% of your stepped-up GBA: 0.07 X $200,000 = $ 14,000 During the seventh contract year your contract value grows to $230,000. You decide to take a partial withdrawal of $20,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 OR (2) your prior RBA less the amount of the partial withdrawal. $200,000 - $20,000 = $180,000 Reset RBA = lesser of (1) or (2) = $180,000
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 103 The GBA gets reset to the lesser of: (1) your prior GBA $200,000 OR (2) your contract value immediately following the partial withdrawal; $230,000 - $20,000 = $210,000 Reset GBA = lesser of (1) or (2) = $200,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $200,000 = $ 14,000 During the eighth contract year your contract value falls to $175,000. You decide to take a partial withdrawal of $25,000. You took more than your GBP of $14,000 so your RBA gets reset to the lesser of: (1) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 OR (2) your prior RBA less the amount of the partial withdrawal. $180,000 - $25,000 = $155,000 Reset RBA = lesser of (1) or (2) = $150,000 The GBA gets reset to the lesser of: (1) your prior GBA; $200,000 OR (2) your contract value immediately following the partial withdrawal; $175,000 - $25,000 = $150,000 Reset GBA = lesser of (1) or (2) = $150,000 The Reset GBP is equal to 7% of your Reset GBA: 0.07 X $150,000 = $ 10,500
- -------------------------------------------------------------------------------- 104 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS APPENDIX K: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS The purpose of these examples is to illustrate the operation of the Income Assurer Benefit Riders. The examples compare payouts available under the contract's standard annuity payout provisions with annuity payouts available under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts (referred to in the riders as "protected investment options") and the fees and charges that apply to your contract. For each of the riders, we provide two annuity payout plan comparisons based on the hypothetical contract values we have assumed. The first comparison assumes that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The second comparison assumes that you select annuity payout Plan D, Joint and Last Survivor Annuity - No Refund. Remember that the riders require you to choose a Portfolio Navigator model portfolio. The riders are intended to offer protection against market volatility in the subaccounts (protected investment options). Some Portfolio Navigator model portfolios include protected investment options and excluded investment options (RiverSource Variable Portfolio - Cash Management Fund, and if available under the contract, GPAs and the one-year fixed account). Excluded investment options are not included in calculating the 5% variable account floor under the Income Assurer Benefit(SM) - 5% Accumulation Benefit Base rider and the Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider. Because the examples which follow are based on hypothetical contract values, they do not factor in differences in Portfolio Navigator model portfolios. ASSUMPTIONS: - - You purchase the contract during the 2006 calendar year, with a payment of $100,000; and - - you invest all contract value in the subaccounts (protected investment options); and - - you make no additional purchase payments, partial withdrawals or changes in model portfolio; and - - the annuitant is male and age 55 at contract issue; and - - the joint annuitant is female and age 55 at contract issue. EXAMPLE -- INCOME ASSURER BENEFIT - MAV Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
ASSUMED MAXIMUM GUARANTEED CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE(2) - ------------------------------------------------------------------------------------------ 1 $108,000 $100,000 $108,000 $108,000 2 125,000 none 125,000 125,000 3 132,000 none 132,000 132,000 4 150,000 none 150,000 150,000 5 85,000 none 150,000 150,000 6 121,000 none 150,000 150,000 7 139,000 none 150,000 150,000 8 153,000 none 153,000 153,000 9 140,000 none 153,000 153,000 10 174,000 none 174,000 174,000 11 141,000 none 174,000 174,000 12 148,000 none 174,000 174,000 13 208,000 none 208,000 208,000 14 198,000 none 208,000 208,000 15 203,000 none 208,000 208,000 - ------------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 105 PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS --------------------------------------------------------------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------------------------------------------------------------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 174,000 791.70 793.44 12 148,000 691.16 692.64 174,000 812.58 814.32 13 208,000 996.32 998.40 208,000 996.32 998.40 14 198,000 974.16 976.14 208,000 1,023.36 1,025.44 15 203,000 1,025.15 1,027.18 208,000 1,050.40 1,052.48 - -----------------------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS ----------------------------------------------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2) - ------------------------------------------------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 $174,000 $629.88 11 141,000 521.70 516.06 174,000 643.80 12 148,000 559.44 553.52 174,000 657.72 13 208,000 807.04 796.64 208,000 807.04 14 198,000 786.06 778.14 208,000 825.76 15 203,000 826.21 818.09 208,000 846.56 - ------------------------------------------------------------------------------------------------------------------- IAB - MAV PROVISIONS --------------------- CONTRACT OLD TABLE(1) ANNIVERSARY PLAN D - LAST AT EXERCISE SURVIVOR NO REFUND(2) - ----------- --------------------- 10 $622.92 11 636.84 12 650.76 13 796.64 14 817.44 15 838.24 - -------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- 106 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME ASSUMED BENEFIT BASE - CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2) - ------------------------------------------------------------------------------------------------ 1 $108,000 $100,000 $105,000 $108,000 2 125,000 none 110,250 125,000 3 132,000 none 115,763 132,000 4 150,000 none 121,551 150,000 5 85,000 none 127,628 127,628 6 121,000 none 134,010 134,010 7 139,000 none 140,710 140,710 8 153,000 none 147,746 153,000 9 140,000 none 155,133 155,133 10 174,000 none 162,889 174,000 11 141,000 none 171,034 171,034 12 148,000 none 179,586 179,586 13 208,000 none 188,565 208,000 14 198,000 none 197,993 198,000 15 203,000 none 207,893 207,893 - ------------------------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - -------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 12 148,000 691.16 692.64 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 203,000 1,025.15 1,027.18 - -------------------------------------------------------------------------- IAB - 5% RF PROVISIONS ---------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - 5% RF PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------- ---------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 11 171,034 778.20 779.91 12 179,586 838.66 840.46 13 208,000 996.32 998.40 14 198,000 974.16 976.14 15 207,893 1,049.86 1,051.94 - --------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 107 PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS -------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ---------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 11 141,000 521.70 516.06 12 148,000 559.44 553.52 13 208,000 807.04 796.64 14 198,000 786.06 778.14 15 203,000 826.21 818.09 - ---------------------------------------------------------------------------- IAB - 5% RF PROVISIONS ------------------------------------------------------------ CONTRACT NEW TABLE(1) OLD TABLE(1) ANNIVERSARY IAB - 5% RF PLAN D - LAST PLAN D - LAST AT EXERCISE BENEFIT BASE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) - ----------- ------------------------------------------------------------ 10 $174,000 $629.88 $622.92 11 171,034 632.83 625.98 12 179,586 678.83 671.65 13 208,000 807.04 796.64 14 198,000 786.06 778.14 15 207,893 846.12 837.81 - ----------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th, 13th or the 14th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE Based on the above assumptions and taking into account fluctuations in contract value due to market conditions, we calculate the guaranteed income benefit base as:
GUARANTEED INCOME BENEFIT BASE - GREATER OF ASSUMED MAXIMUM MAV OR 5% CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2) - ----------------------------------------------------------------------------------------------------------------- 1 $108,000 $100,000 $108,000 $105,000 $108,000 2 125,000 none 125,000 110,250 125,000 3 132,000 none 132,000 115,763 132,000 4 150,000 none 150,000 121,551 150,000 5 85,000 none 150,000 127,628 150,000 6 121,000 none 150,000 134,010 150,000 7 139,000 none 150,000 140,710 150,000 8 153,000 none 153,000 147,746 153,000 9 140,000 none 153,000 155,133 155,133 10 174,000 none 174,000 162,889 174,000 11 141,000 none 174,000 171,034 174,000 12 148,000 none 174,000 179,586 179,586 13 208,000 none 208,000 188,565 208,000 14 198,000 none 208,000 197,993 208,000 15 203,000 none 208,000 207,893 208,000 - -----------------------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the guaranteed income benefit base may increase if the contract value increases. (2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base is a calculated number, not an amount that can be withdrawn. The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation Benefit Base does not create contract value or guarantee the performance of any investment option. - -------------------------------------------------------------------------------- 108 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan B - - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS --------------------------------------------------------------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) OLD TABLE(1) ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH PLAN B - LIFE WITH AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) - ----------------------------------------------------------------------------------------------------------------------------------- 10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56 $ 774.30 11 141,000 641.55 642.96 174,000 791.70 793.44 12 148,000 691.16 692.64 179,586 838.66 840.46 13 208,000 996.32 998.40 208,000 996.32 998.40 14 198,000 974.16 976.14 208,000 1,023.36 1,025.44 15 203,000 1,025.15 1,027.18 208,000 1,050.40 1,052.48 - -----------------------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND If you annuitize the contract within 30 days after the illustrated contract anniversary, the minimum monthly income payment under a fixed annuity option (which is the same for the first year of a variable annuity option) on Plan D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS ----------------------------------------------------------------------------------------------------- CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2) - ------------------------------------------------------------------------------------------------------------------- 10 $174,000 $629.88 $622.92 $174,000 $629.88 11 141,000 521.70 516.06 174,000 643.80 12 148,000 559.44 553.52 179,586 678.83 13 208,000 807.04 796.64 208,000 807.04 14 198,000 786.06 778.14 208,000 825.76 15 203,000 826.21 818.09 208,000 846.56 - ------------------------------------------------------------------------------------------------------------------- IAB - MAX PROVISIONS --------------------- CONTRACT OLD TABLE(1) ANNIVERSARY PLAN D - LAST AT EXERCISE SURVIVOR NO REFUND(2) - ----------- --------------------- 10 $622.92 11 636.84 12 671.65 13 796.64 14 817.44 15 838.24 - -------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under this rider using the guaranteed annuity purchase rates based on the "2000 Individual Annuitant Mortality Table A" (New Table), subject to state approval. Previously, our calculations were based on the "1983 Individual Annuity Mortality Table A" (Old Table). If you purchased a contract prior to May 1, 2006, the references to Old Table apply to your contract. If you purchased a contract on or after May 1, 2006, the table used under rider depends on which state you live in. Ask your investment professional which version of the rider, if any, is available in your state. (2) The monthly annuity payments illustrated under the standard annuity payout provisions of the contract and for the riders are computed using the rates guaranteed in Table B of the contract. These are the minimum amounts that could be paid under the standard annuity payout provisions of the contract based on the above assumptions. Annuity payouts under the standard annuity payout provisions of the contract when based on our current annuity payout rates (which are generally higher than the rates guaranteed in Table B of the contract) may be greater than the annuity payouts under the riders, which are always based on the rates guaranteed in Table B of the contract. If the annuity payouts under the standard contract provisions are more favorable than the payouts available under the rider, you will receive the higher standard payout. NOTE: In the above examples, if you elected to begin receiving annuity payouts within 30 days after the 10th or the 13th contract anniversary, you would not benefit from the rider because the monthly annuity payout in these examples is the same as under the standard provisions of the contract. Because the examples are based on assumed contract values, not actual investment results, you should not conclude from the examples that the riders will provide higher payments more frequently than the standard provisions of the contract. - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 109 APPENDIX L: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit and the seven-year withdrawal charge schedule. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit on May 1, 2008 equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector(SM) benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $58,667 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the eighth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000
- -------------------------------------------------------------------------------- 110 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 111 APPENDIX M: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR PLUS ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option L with the MAV Death Benefit and the seven-year withdrawal charge schedule. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV Death Benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV Death Benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option L. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 -------- Total death benefit of: $64,167 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000
- -------------------------------------------------------------------------------- 112 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 113 APPENDIX N: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (03/01/2002) Accumulation unit value at beginning of period $1.16 $1.12 $1.05 $1.00 $0.79 $1.00 -- -- Accumulation unit value at end of period $1.28 $1.16 $1.12 $1.05 $1.00 $0.79 -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,110 3,472 324 329 238 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.52 $1.42 $1.25 $0.94 $1.00 -- -- Accumulation unit value at end of period $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 -- -- Number of accumulation units outstanding at end of period (000 omitted) 133 147 153 163 29 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002) Accumulation unit value at beginning of period $1.60 $1.39 $1.35 $1.24 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 154 167 189 109 52 8 -- -- - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.82 $1.37 $1.20 $1.00 -- -- -- -- Accumulation unit value at end of period $1.89 $1.82 $1.37 $1.20 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 21,915 15,378 8,725 1,580 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.05 $1.05 $1.00 -- -- -- -- Accumulation unit value at end of period $1.13 $1.05 $1.05 $1.05 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 23,568 25,472 20,290 3,919 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.31 $1.12 $1.09 $1.00 -- -- -- -- Accumulation unit value at end of period $1.22 $1.31 $1.12 $1.09 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 74 88 26 18 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.07 $1.05 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.20 $1.07 $1.05 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,154 7,113 2,763 500 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.20 $1.05 $1.03 $1.00 -- -- -- -- Accumulation unit value at end of period $1.26 $1.20 $1.05 $1.03 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1 1 1 1 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002) Accumulation unit value at beginning of period $1.74 $1.58 $1.38 $1.22 $0.97 $1.00 -- -- Accumulation unit value at end of period $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 -- -- Number of accumulation units outstanding at end of period (000 omitted) 43,300 45,089 16,531 3,067 152 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001) Accumulation unit value at beginning of period $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 $1.00 -- Accumulation unit value at end of period $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06 -- Number of accumulation units outstanding at end of period (000 omitted) 11,091 7,570 3,100 1,208 722 290 13 -- - --------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.28 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.71 $1.49 $1.28 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,416 4,843 4,036 1,573 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $2.87 $2.42 $2.17 $1.68 $1.26 $1.25 $1.18 $1.00 Accumulation unit value at end of period $2.23 $2.87 $2.42 $2.17 $1.68 $1.26 $1.25 $1.18 Number of accumulation units outstanding at end of period (000 omitted) 1,179 527 512 421 292 334 125 6 - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 114 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000) Accumulation unit value at beginning of period $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 $1.00 Accumulation unit value at end of period $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 3,051 2,743 2,554 2,119 1,118 777 413 157 - --------------------------------------------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.11 $1.16 $1.00 -- -- -- -- Accumulation unit value at end of period $1.34 $1.23 $1.11 $1.16 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,814 23,082 7,734 1,493 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000) Accumulation unit value at beginning of period $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 $1.00 Accumulation unit value at end of period $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56 $1.41 Number of accumulation units outstanding at end of period (000 omitted) 11,638 9,377 4,128 1,284 550 386 321 60 - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.64 $1.42 $1.27 $1.08 $0.77 $1.00 -- -- Accumulation unit value at end of period $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 -- -- Number of accumulation units outstanding at end of period (000 omitted) 831 683 680 562 136 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (07/31/2002) Accumulation unit value at beginning of period $1.92 $1.70 $1.58 $1.35 $0.95 $1.00 -- -- Accumulation unit value at end of period $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 -- -- Number of accumulation units outstanding at end of period (000 omitted) 221 168 168 143 64 18 -- -- - --------------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (05/01/2002) Accumulation unit value at beginning of period $1.34 $1.27 $1.26 $1.18 $1.03 $1.00 -- -- Accumulation unit value at end of period $1.44 $1.34 $1.27 $1.26 $1.18 $1.03 -- -- Number of accumulation units outstanding at end of period (000 omitted) 44,474 21,466 9,445 2,076 137 5 -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (05/01/2002) Accumulation unit value at beginning of period $1.15 $1.14 $1.02 $0.97 $0.84 $1.00 -- -- Accumulation unit value at end of period $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 -- -- Number of accumulation units outstanding at end of period (000 omitted) 136 162 175 177 188 73 -- -- - --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.44 $1.25 $1.18 $1.00 -- -- -- -- Accumulation unit value at end of period $1.23 $1.44 $1.25 $1.18 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 355 5,948 89 5 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.24 $1.08 $1.10 $1.00 -- -- -- -- Accumulation unit value at end of period $1.29 $1.24 $1.08 $1.10 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 7 8 8 2 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2002) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.55 $1.31 $1.26 $1.07 $0.79 $1.00 -- -- Accumulation unit value at end of period $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 -- -- Number of accumulation units outstanding at end of period (000 omitted) 11,900 10,097 9,125 1,935 72 20 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (03/01/2002) Accumulation unit value at beginning of period $1.10 $1.07 $1.07 $1.04 $1.01 $1.00 -- -- Accumulation unit value at end of period $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 -- -- Number of accumulation units outstanding at end of period (000 omitted) 67,959 33,990 1,077 842 152 40 -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 $1.00 Accumulation unit value at end of period $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 35,371 27,624 9,764 608 392 325 144 40 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- -- -- -- -- Accumulation unit value at end of period $1.09 $1.02 -- -- -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 35,149 26,599 -- -- -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.25 $1.14 $1.07 $1.00 -- -- -- -- Accumulation unit value at end of period $1.27 $1.25 $1.14 $1.07 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,798 -- -- -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 115
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (03/03/2000) Accumulation unit value at beginning of period $1.25 $1.14 $1.12 $1.02 $0.83 $0.90 $0.87 $1.00 Accumulation unit value at end of period $1.25 $1.25 $1.14 $1.12 $1.02 $0.83 $0.90 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 6,703 8,935 4,144 855 325 80 90 8 - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (03/03/2000) Accumulation unit value at beginning of period $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 $1.00 Accumulation unit value at end of period $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67 $0.83 Number of accumulation units outstanding at end of period (000 omitted) 14,409 15,807 17,584 7,616 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (08/30/2002) Accumulation unit value at beginning of period $1.40 $1.42 $1.31 $1.22 $1.02 $1.00 -- -- Accumulation unit value at end of period $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 597 708 735 335 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.11 $1.08 $1.00 -- -- -- -- Accumulation unit value at end of period $1.30 $1.26 $1.11 $1.08 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 367 227 227 174 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (03/03/2000) Accumulation unit value at beginning of period $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 $1.00 Accumulation unit value at end of period $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 6,207 5,084 3,085 1,544 1,019 864 413 65 - --------------------------------------------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.02 $1.54 $1.17 $1.00 -- -- -- -- Accumulation unit value at end of period $2.75 $2.02 $1.54 $1.17 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 10,106 9,010 5,172 1,070 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (08/30/2002) Accumulation unit value at beginning of period $1.70 $1.49 $1.45 $1.26 $0.98 $1.00 -- -- Accumulation unit value at end of period $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 -- -- Number of accumulation units outstanding at end of period (000 omitted) 36,774 36,888 18,912 3,700 73 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.26 $1.15 $1.00 -- -- -- -- Accumulation unit value at end of period $1.39 $1.34 $1.26 $1.15 -- -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 13,828 7,563 5,332 946 -- -- -- -- *Effective June 1, 2008, the Fund will change its name to Wanger USA. - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (03/03/2000) Accumulation unit value at beginning of period $1.13 $1.03 $0.99 $0.92 $0.77 $0.90 $0.98 $1.00 Accumulation unit value at end of period $1.20 $1.13 $1.03 $0.99 $0.92 $0.77 $0.90 $0.98 Number of accumulation units outstanding at end of period (000 omitted) 1,784 2,517 2,665 2,740 2,853 2,230 1,777 480 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (03/03/2000) Accumulation unit value at beginning of period $1.23 $1.02 $1.01 $0.92 $0.75 $1.00 $1.09 $1.00 Accumulation unit value at end of period $1.19 $1.23 $1.02 $1.01 $0.92 $0.75 $1.00 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 1,729 474 469 450 467 336 307 136 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (03/03/2000) Accumulation unit value at beginning of period $1.36 $1.17 $1.12 $1.03 $0.83 $1.05 $1.12 $1.00 Accumulation unit value at end of period $1.37 $1.36 $1.17 $1.12 $1.03 $0.83 $1.05 $1.12 Number of accumulation units outstanding at end of period (000 omitted) 1,795 1,983 2,255 1,615 1,429 993 522 104 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (07/03/2000) Accumulation unit value at beginning of period $0.99 $0.83 $0.77 $0.72 $0.56 $0.73 $0.89 $1.00 Accumulation unit value at end of period $1.10 $0.99 $0.83 $0.77 $0.72 $0.56 $0.73 $0.89 Number of accumulation units outstanding at end of period (000 omitted) 359 497 418 449 305 140 62 6 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (03/03/2000) Accumulation unit value at beginning of period $0.71 $0.63 $0.65 $0.61 $0.50 $0.69 $0.87 $1.00 Accumulation unit value at end of period $0.72 $0.71 $0.63 $0.65 $0.61 $0.50 $0.69 $0.87 Number of accumulation units outstanding at end of period (000 omitted) 66 121 140 186 230 152 95 42 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (03/03/2000) Accumulation unit value at beginning of period $0.69 $0.68 $0.66 $0.65 $0.52 $0.74 $0.95 $1.00 Accumulation unit value at end of period $0.73 $0.69 $0.68 $0.66 $0.65 $0.52 $0.74 $0.95 Number of accumulation units outstanding at end of period (000 omitted) 10,813 11,871 10,019 5,214 4,072 3,190 2,622 1,011 - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 116 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT MONEY MARKET FUND* (03/03/2000) Accumulation unit value at beginning of period $1.05 $1.03 $1.02 $1.03 $1.04 $1.04 $1.02 $1.00 Accumulation unit value at end of period $1.09 $1.05 $1.03 $1.02 $1.03 $1.04 $1.04 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 1,058 1,196 998 826 1,085 1,248 1,117 404 *The 7-day simple and compound yields for Wells Fargo Advantage VT Money Market Fund at Dec. 31, 2007 were 2.01% and 2.03%, respectively. - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (03/03/2000) Accumulation unit value at beginning of period $0.49 $0.41 $0.39 $0.35 $0.25 $0.41 $0.56 $1.00 Accumulation unit value at end of period $0.55 $0.49 $0.41 $0.39 $0.35 $0.25 $0.41 $0.56 Number of accumulation units outstanding at end of period (000 omitted) 924 1,086 1,314 1,371 1,396 976 911 445 - --------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (03/03/2000) Accumulation unit value at beginning of period $1.33 $1.30 $1.30 $1.26 $1.18 $1.12 $1.06 $1.00 Accumulation unit value at end of period $1.38 $1.33 $1.30 $1.30 $1.26 $1.18 $1.12 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 16,465 11,634 3,551 990 627 579 548 68 - ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------ AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.17 $1.13 $1.06 $1.00 Accumulation unit value at end of period $1.28 $1.17 $1.13 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.18 $1.10 $1.00 Accumulation unit value at end of period $1.45 $1.34 $1.18 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.10 $1.07 $1.00 Accumulation unit value at end of period $1.29 $1.26 $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.80 $1.36 $1.19 $1.00 Accumulation unit value at end of period $1.85 $1.80 $1.36 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 59 67 39 6 - ------------------------------------------------------------------------------------------------ AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.03 $1.04 $1.05 $1.00 Accumulation unit value at end of period $1.11 $1.03 $1.04 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 141 224 126 22 - ------------------------------------------------------------------------------------------------ AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.09 $1.00 Accumulation unit value at end of period $1.20 $1.29 $1.11 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.06 $1.04 $1.03 $1.00 Accumulation unit value at end of period $1.18 $1.06 $1.04 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 19 30 12 -- - ------------------------------------------------------------------------------------------------ DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.18 $1.04 $1.02 $1.00 Accumulation unit value at end of period $1.24 $1.18 $1.04 $1.02 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.37 $1.26 $1.10 $1.00 Accumulation unit value at end of period $1.58 $1.37 $1.26 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 177 296 101 8 - ------------------------------------------------------------------------------------------------ FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.53 $1.40 $1.21 $1.00 Accumulation unit value at end of period $1.73 $1.53 $1.40 $1.21 Number of accumulation units outstanding at end of period (000 omitted) 38 39 16 -- - ------------------------------------------------------------------------------------------------ FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.27 $1.10 $1.00 Accumulation unit value at end of period $1.68 $1.47 $1.27 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 2 5 6 5 - ------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 117
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------ FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.76 $1.49 $1.34 $1.00 Accumulation unit value at end of period $1.36 $1.76 $1.49 $1.34 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.12 $1.00 Accumulation unit value at end of period $1.30 $1.29 $1.11 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.21 $1.10 $1.16 $1.00 Accumulation unit value at end of period $1.31 $1.21 $1.10 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 64 78 39 8 - ------------------------------------------------------------------------------------------------ GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.32 $1.19 $1.00 Accumulation unit value at end of period $1.51 $1.49 $1.32 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 58 65 28 3 - ------------------------------------------------------------------------------------------------ OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.53 $1.47 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.25 $1.16 $1.00 Accumulation unit value at end of period $1.35 $1.40 $1.25 $1.16 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.07 $1.07 $1.00 Accumulation unit value at end of period $1.20 $1.12 $1.07 $1.07 Number of accumulation units outstanding at end of period (000 omitted) 120 136 68 12 - ------------------------------------------------------------------------------------------------ PUTNAM VT HEALTH SCIENCES FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.14 $1.03 $1.00 Accumulation unit value at end of period $1.11 $1.14 $1.14 $1.03 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.23 $1.18 $1.00 Accumulation unit value at end of period $1.21 $1.42 $1.23 $1.18 Number of accumulation units outstanding at end of period (000 omitted) 4 12 -- -- - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.22 $1.08 $1.09 $1.00 Accumulation unit value at end of period $1.26 $1.22 $1.08 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.40 $1.19 $1.15 $1.00 Accumulation unit value at end of period $1.30 $1.40 $1.19 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 56 72 43 5 - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.08 $1.05 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 66 40 -- -- - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (04/30/2004) Accumulation unit value at beginning of period $1.50 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.58 $1.50 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 160 181 83 -- - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- Accumulation unit value at end of period $1.08 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 38 29 -- -- - ------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 118 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.13 $1.07 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.13 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.19 $1.19 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 38 55 30 4 - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.09 $1.05 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.09 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 2 14 21 19 - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.15 $1.06 $1.00 Accumulation unit value at end of period $1.25 $1.12 $1.15 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- 1 1 1 - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.24 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.28 $1.24 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (04/30/2004) Accumulation unit value at beginning of period $1.00 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.03 $1.00 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- 9 5 -- - ------------------------------------------------------------------------------------------------ RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.00 $1.52 $1.16 $1.00 Accumulation unit value at end of period $2.70 $2.00 $1.52 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 32 46 24 3 - ------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.30 $1.15 $1.13 $1.00 Accumulation unit value at end of period $1.24 $1.30 $1.15 $1.13 Number of accumulation units outstanding at end of period (000 omitted) 192 235 119 13 - ------------------------------------------------------------------------------------------------ WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.32 $1.25 $1.15 $1.00 Accumulation unit value at end of period $1.36 $1.32 $1.25 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 49 56 28 4 *Effective June 1, 2008, the Fund will change its name to Wanger USA. - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (04/30/2004) Accumulation unit value at beginning of period $1.21 $1.11 $1.08 $1.00 Accumulation unit value at end of period $1.28 $1.21 $1.11 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (04/30/2004) Accumulation unit value at beginning of period $1.30 $1.09 $1.08 $1.00 Accumulation unit value at end of period $1.25 $1.30 $1.09 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.08 $1.00 Accumulation unit value at end of period $1.29 $1.29 $1.11 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.18 $1.10 $1.00 Accumulation unit value at end of period $1.54 $1.40 $1.18 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.01 $1.06 $1.00 Accumulation unit value at end of period $1.14 $1.14 $1.01 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 119
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.06 $1.06 $1.02 $1.00 Accumulation unit value at end of period $1.12 $1.06 $1.06 $1.02 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT MONEY MARKET FUND* (04/30/2004) Accumulation unit value at beginning of period $1.02 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.04 $1.02 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- *The 7-day simple and compound yields for Wells Fargo Advantage VT Money Market Fund at Dec. 31, 2007 were 1.45% and 1.46%, respectively. - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.32 $1.10 $1.06 $1.00 Accumulation unit value at end of period $1.47 $1.32 $1.10 $1.06 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.04 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.08 $1.04 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 120 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 121 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 122 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 123 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 124 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 125 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 126 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 127 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 45305 H (5/08) PROSPECTUS MAY 1, 2008 RIVERSOURCE(R) Endeavor Plus(SM) VARIABLE ANNUITY CONTRACT OPTION B: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/ VARIABLE ANNUITY CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/ VARIABLE ANNUITY ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE) 829 Ameriprise Financial Center Minneapolis, MN 55474 Telephone: (800) 333-3437 (Corporate Office) RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT This prospectus contains information that you should know before investing in Endeavour Plus Variable Annuity Contract Option B and Contract Option C. The information in this prospectus applies to both contracts unless stated otherwise. Prospectuses are also available for: AIM Variable Insurance Funds, Series II Shares AllianceBernstein Variable Products Series Fund, Inc. (Class B) American Century(R) Variable Portfolios, Inc., Class II Columbia Funds Variable Insurance Trust Credit Suisse Trust Dreyfus Variable Investment Fund, Service Share Class Eaton Vance Variable Trust (VT) Fidelity(R) Variable Insurance Products Service Class 2 Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2 Goldman Sachs Variable Insurance Trust (VIT) Janus Aspen Series: Service Shares Legg Mason Variable Portfolios I, Inc. MFS(R) Variable Insurance Trust(SM) - Service Class Oppenheimer Variable Account Funds, Service Shares PIMCO Variable Investment Trust (VIT) RiverSource Variable Series Trust (RVST) formerly known as RiverSource Variable Portfolio Funds The Universal Institutional Funds, Inc., Class II Shares Van Kampen Life Investment Trust Class II Shares Wanger Advisors Trust Some funds may not be available in your contract. Please read the prospectuses carefully and keep them for future reference. THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information (SAI), dated the same date as this prospectus, is incorporated by reference into this prospectus. It is filed with the SEC and is available without charge by contacting RiverSource Life at the telephone number and address listed above. The table of contents of the SAI is on the last page of this prospectus. The SEC maintains an Internet site. This prospectus, the SAI and other information about the product are available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). Variable annuities are insurance products that are complex investment vehicles. Before you invest, be sure to ask your investment professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based upon your financial situation and objectives. The contract and/or certain optional benefits described in this prospectus may not be available in all jurisdictions. This prospectus constitutes an offering or solicitation only in those jurisdictions where such offering or solicitation may lawfully be made. State variations are covered in a special contract form used in that state. This prospectus provides a general description of the contract. Your actual contract and any riders or endorsements are the controlling documents. RiverSource Life has not authorized any person to give any information or to make any representations regarding the contract other than those contained in this prospectus or the fund prospectuses. Do not rely on any such information or representations. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 1 RiverSource Life offers other variable annuity contracts in addition to the contract described in this prospectus which your investment professional may or may not be authorized to offer to you. Each annuity has different features and optional benefits that may be appropriate for you based on your individual financial situation and needs, your age and how you intend to use the annuity. The different features and benefits may include the investment and fund manager options, variations in interest rate amount and guarantees, credits, withdrawal charge schedules and access to annuity account values. The fees and charges you will pay when buying, owning and withdrawing money from the contract we describe in this prospectus may be more or less than the fees and charges of other variable annuities we issue. A securities broker dealer authorized to sell the contract described in this prospectus (selling firm) may not offer all the variable annuities we issue. In addition, some selling firms may not permit their investment professionals to sell the contract and/or optional benefits described in this prospectus to persons over a certain age (which may be lower than age limits we set), or may otherwise restrict the sale of the optional benefits described in this prospectus by their investment professionals. You should ask your investment professional about his or her selling firm's ability to offer you other variable annuities we issue (which might have lower fees and charges than the contract described in this prospectus), and any limits the selling firm has placed on your investment professional's ability to offer you the contract and/or optional riders described in this prospectus. TABLE OF CONTENTS KEY TERMS....................................... 3 THE CONTRACT IN BRIEF........................... 5 EXPENSE SUMMARY................................. 7 CONDENSED FINANCIAL INFORMATION................. 13 FINANCIAL STATEMENTS............................ 13 THE VARIABLE ACCOUNT AND THE FUNDS.............. 13 THE GUARANTEE PERIOD ACCOUNTS (GPAS)............ 26 THE FIXED ACCOUNT............................... 28 BUYING YOUR CONTRACT............................ 29 CHARGES......................................... 32 VALUING YOUR INVESTMENT......................... 37 MAKING THE MOST OF YOUR CONTRACT................ 38 WITHDRAWALS..................................... 47 TSA -- SPECIAL PROVISIONS....................... 47 CHANGING OWNERSHIP.............................. 48 BENEFITS IN CASE OF DEATH....................... 48 OPTIONAL BENEFITS............................... 51 THE ANNUITY PAYOUT PERIOD....................... 66 TAXES........................................... 68 VOTING RIGHTS................................... 71 SUBSTITUTION OF INVESTMENTS..................... 71 ABOUT THE SERVICE PROVIDERS..................... 72 ADDITIONAL INFORMATION.......................... 73 APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE..................... 75 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)................. 76 APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION B...... 78 APPENDIX C: EXAMPLE -- DEATH BENEFITS........... 81 APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER.......... 84 APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS...... 86 APPENDIX F: SECURESOURCE RIDERS -- ADDITIONAL RMD DISCLOSURE..................... 90 APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER......... 91 APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER.... 93 APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER DISCLOSURE......................... 95 APPENDIX J: CONDENSED FINANCIAL INFORMATION (UNAUDITED)................................... 107 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........... 116
- -------------------------------------------------------------------------------- 2 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS KEY TERMS These terms can help you understand details about your contract. ACCUMULATION UNIT: A measure of the value of each subaccount before annuity payouts begin. ANNUITANT: The person on whose life or life expectancy the annuity payouts are based. ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans. ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn when we calculate your initial annuity payout amount using the annuity table in your contract. The standard assumed investment rate we use is 5% but you may request we substitute an assumed investment rate of 3.5%. BENEFICIARY: The person you designate to receive benefits in case of the owner's or annuitant's death while the contract is in force. CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m. Eastern time unless the NYSE closes earlier). CODE: The Internal Revenue Code of 1986, as amended. CONTRACT: A deferred annuity contract that permits you to accumulate money for retirement by making one or more purchase payments. It provides for lifetime or other forms of payouts beginning at a specified time in the future. CONTRACT VALUE: The total value of your contract before we deduct any applicable charges. CONTRACT YEAR: A period of 12 months, starting on the effective date of your contract and on each anniversary of the effective date. FIXED ACCOUNT: Our general account which includes the one-year fixed account and the DCA fixed account. Amounts you allocate to the fixed account earn interest rates we declare periodically. For Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. FUNDS: Investment options under your contract. You may allocate your purchase payments into subaccounts investing in shares of the funds. GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed interest rate is credited. GUARANTEE PERIOD ACCOUNTS (GPAS): These accounts have guaranteed interest rates for guarantee periods we declare when you allocate purchase payments or transfer contract value to a GPA. These guaranteed rates and periods of time may vary by state. Unless an exception applies, transfers or withdrawals from a GPA done 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 principal. MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any portion of a guarantee period account is withdrawn or transferred more than 30 days before the end of its guarantee period. OWNER (YOU, YOUR): The person or persons who control the contract (decides on investment allocations, transfers, payout options, etc.). Usually, but not always, the owner is also the annuitant. The owner is responsible for taxes, regardless of whether he or she receives the contract's benefits. QUALIFIED ANNUITY: A contract that you purchase to fund one of the following tax-deferred retirement plans that is subject to applicable federal law and any rules of the plan itself: - - Individual Retirement Annuities (IRAs) under Section 408(b) of the Code - - Roth IRAs under Section 408A of the Code - - Simple IRAs under Section 408(p) of the Code - - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code - - Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code - - Custodial and investment only plans under Section 401(a) of the Code A qualified annuity will not provide any necessary or additional tax deferral if it is used to fund a retirement plan that is already tax deferred. All other contracts are considered NONQUALIFIED ANNUITIES. RETIREMENT DATE: The date when annuity payouts are scheduled to begin. RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider. RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life" refer to RiverSource Life Insurance Company. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 3 VALUATION DATE: Any normal business day, Monday through Friday, on which the NYSE is open, up to the close of business. At the close of business, the next valuation date begins. We calculate the accumulation unit value of each subaccount on each valuation date. If we receive your purchase payment or any transaction request (such as a transfer or withdrawal request) at our corporate office before the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the valuation date we received your payment or transaction request. On the other hand, if we receive your purchase payment or transaction request at our corporate office at or after the close of business, we will process your payment or transaction using the accumulation unit value we calculate on the next valuation date. If you make a transaction request by telephone (including by fax), you must have completed your transaction by the close of business in order for us to process it using the accumulation unit value we calculate on that valuation date. If you were not able to complete your transaction before the close of business for any reason, including telephone service interruptions or delays due to high call volume, we will process your transaction using the accumulation unit value we calculate on the next valuation date. VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate purchase payments; each invests in shares of one fund. The value of your investment in each subaccount changes with the performance of the particular fund. WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full withdrawal from your contract. It is the contract value minus any applicable charges. - -------------------------------------------------------------------------------- 4 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS THE CONTRACT IN BRIEF This prospectus describes two contracts. Each contract has different expenses. Contract Option B has lower expenses than Contract Option C. Contract Option B has a seven-year withdrawal charge schedule that applies to each purchase payment you make. Contract Option C eliminates the purchase payment withdrawal charge schedule, but has a higher mortality and expense risk fee than Contract Option B. Contract Option B includes the option to purchase a living benefit rider; living benefit riders are not available on Contract Option C. Your investment professional can help you determine which contract is best suited to your needs based on factors such as your investment goals and how long you intend to keep your contract. PURPOSE: These contracts allow you to accumulate money for retirement or similar long term goal. You do this by making one or more purchase payments. You may allocate your purchase payments to the one-year fixed account, the DCA fixed account, GPAs and/or subaccounts of the variable account under the contract; however you risk losing amounts you invest in the subaccounts of the variable account. These accounts, in turn, may earn returns that increase the value of a contract. You may be able to purchase an optional benefit to reduce the investment risk you assume. Beginning at a specified time in the future called the retirement date, these contracts provide lifetime or other forms of payouts of your contract value (less any applicable premium tax). BUYING A CONTRACT: There are many factors to consider carefully before you buy a variable annuity and any optional benefit rider. Variable annuities -- with or without optional benefit riders -- are not right for everyone. MAKE SURE YOU HAVE ALL THE FACTS YOU NEED BEFORE YOU PURCHASE A VARIABLE ANNUITY OR CHOOSE AN OPTIONAL BENEFIT RIDER. Some of the factors you may wish to consider include: - - "Tax-free" exchanges: It may not be advantageous for you to purchase this contract in exchange for, or in addition to, an existing annuity or life insurance policy. Generally, you can exchange one annuity for another in a "tax-free" exchange under Section 1035 of the Code. You also generally can exchange a life insurance policy for an annuity. However, before making an exchange, you should compare both contracts carefully because the features and benefits may be different. Fees and charges may be higher or lower on your old contract than on this contract. You may have to pay a withdrawal charge when you exchange out of your old contract and a new withdrawal charge period will begin when you exchange into this contract. If the exchange does not qualify for Section 1035 treatment, you also may have to pay federal income tax on the exchange. You should not exchange your old contract for this contract, or buy this contract in addition to your old contract, unless you determine it is in your best interest. - - Tax-deferred retirement plans: Most annuities have a tax-deferred feature. So do many retirement plans under the Code. As a result, when you use a qualified annuity to fund a retirement plan that is tax-deferred, your contract will not provide any necessary or additional tax deferral for that retirement plan. A qualified annuity has features other than tax deferral that may help you reach your retirement goals. In addition, the Code subjects retirement plans to required withdrawals triggered at a certain age. These mandatory withdrawals are called required minimum distributions ("RMDs"). RMDs may reduce the value of certain death benefits and optional riders (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). You should consult your tax advisor before you purchase the contract as a qualified annuity for an explanation of the tax implications to you. - - Taxes: Generally, income earned on your contract value grows tax-deferred until you make withdrawals or begin to receive payouts. (Under certain circumstances, IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified annuities differs. Even if you direct payouts to someone else, you will be taxed on the income if you are the owner. (see "Taxes") - - Your age: if you are an older person, you may not necessarily have a need for tax deferral, retirement income or a death benefit. Older persons who are considering buying a variable annuity may find it helpful to consult with or include a family member, friend or other trusted advisor in the decision making process before buying a contract. - - How long you intend to keep the contract: The contract has withdrawal charges. Does the contract meet your current and anticipated future need for liquidity? (see "Withdrawals") - - If you can afford the contract: are your annual income and assets adequate to buy the annuity and any optional benefit riders you may choose? - - The fees and expenses you will pay when buying, owning and withdrawing money from this contract. (see "Charges") - - How and when you plan to take money from the contract: under current tax law, withdrawals, including withdrawals made under optional benefit riders, are taxed differently than annuity payouts. In addition, certain withdrawals may be subject to a federal income tax penalty. (see "Withdrawals") - - Your investment objectives, how much experience you have in managing investments and how much risk you are you willing to accept. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 5 - - Short-term trading: if you plan to manage your investment in the contract by frequent or short-term trading, this contract is not suitable for you and you should not buy it. (see "Making the Most of Your Contract -- Transferring Among Accounts") FREE LOOK PERIOD: You may return your contract to your investment professional or to our corporate office within the time stated on the first page of your contract. We will not deduct any contract charges or fees. However, you bear the investment risk from the time of purchase until you return the contract; the refund amount may be more or less than the payment you made. (EXCEPTION: If the law requires, we will refund all of your purchase payments.) ACCOUNTS: Generally, you may allocate purchase payments among the: - - subaccounts of the variable account, each of which invests in a fund with a particular investment objective. The value of each subaccount varies with the performance of the particular fund in which it invests. We cannot guarantee that the value at the retirement date will equal or exceed the total purchase payments you allocate to the subaccounts. (see "The Variable Account and the Funds") - - GPAs which earn interest at rates that we declare when you allocate purchase payments or transfer contract value to these accounts. Some states restrict the amount you can allocate to these accounts. The required minimum investment in a GPA is $1,000. (see "The Guarantee Period Accounts"). - - the one-year fixed account, which earns interest at rates that we adjust periodically. There are restrictions on the amount you can allocate to this account as well as on transfers from this account (see "Buying Your Contract" and "Transfer policies"). - - DCA fixed account, which earns interest at rates that we adjust periodically. There are restrictions on how long contract value can remain in this account (see "DCA Fixed Account"). TRANSFERS: Subject to certain restrictions, you currently may redistribute your contract value among the accounts without charge at any time until annuity payouts begin, and once per contract year among the subaccounts after annuity payouts begin. Transfers out of the GPAs done more than 30 days before the end of the guarantee period will be subject to an MVA, unless an exception applies. You may establish automated transfers among the accounts. Transfers into the DCA fixed account are not permitted. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting is equal to the minimum interest rate stated in the contract. (see "Making the Most of Your Contract -- Transferring Among Accounts") WITHDRAWALS: You may withdraw all or part of your contract value at any time before the retirement date. You also may establish automated partial withdrawals. Withdrawals may be subject to charges and tax penalties (including a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and may have other tax consequences. Certain other restrictions may apply. (see "Withdrawals") OPTIONAL BENEFITS: You can buy additional benefits with your contract. We offer optional death benefits. Under Contract Option B, we also offer optional living benefits, including: a guaranteed contract value on a future date ("Accumulation Protector Benefit Rider") and a guaranteed minimum withdrawal benefit that permits you to withdraw a guaranteed amount from the contract over a period of time, which may include, under limited circumstances, the lifetime of a single person (SecureSource - Single Life) or the lifetime of you and your spouse (SecureSource - Joint Life) ("SecureSource Riders"). Optional living benefits require the use of a model portfolio which may limit transfers and allocations; may limit the timing, amount and allocation of purchase payments; and may limit the amount of withdrawals that can be taken under the optional benefit during a contract year. Optional benefits vary by state and may have eligibility requirements. (see "Optional Benefits") BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts begin, we will pay the beneficiary an amount based on the death benefit selected. (see "Benefits in Case of Death") ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan that begins on the retirement date. You may choose from a variety of plans to make sure that payouts continue as long as you like. If you buy a qualified annuity, the payout schedule must meet IRS requirements. We can make payouts on a fixed or variable basis, or both. During the annuity payout period, your choices for subaccounts may be limited. The GPAs and the DCA fixed account are not available during the payout period. (see "The Annuity Payout Period") - -------------------------------------------------------------------------------- 6 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS EXPENSE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (Contingent deferred sales charge as a percentage of purchase payments withdrawn) You select either contract Option B or Option C at the time of application. Option C has no withdrawal charge schedule but carries a higher mortality and expense risk fee than Option B.
CONTRACT OPTION B YEARS FROM PURCHASE PAYMENT RECEIPT WITHDRAWAL CHARGE PERCENTAGE 1-2 8% 3 7 4 6 5 5 6 4 7 2 Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal we impose a withdrawal charge. This charge will vary based on the contract option shown below and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in the table below. (See "Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout Plans.")
IF YOUR AIR IS 3.5%, THEN YOUR IF YOUR AIR IS 5%, THEN YOUR DISCOUNT RATE PERCENT (%) IS: DISCOUNT RATE PERCENT (%) IS: CONTRACT OPTION B 5.90% 7.40% CONTRACT OPTION C 6.65% 8.15%
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES. ANNUAL VARIABLE ACCOUNT EXPENSES (As a percentage of average daily subaccount value.) YOU MUST CHOOSE EITHER CONTRACT OPTION B OR OPTION C AND ONE OF THE FOUR DEATH BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE IF YOU SELECT CONTRACT OPTION B AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE ROP Death Benefit 0.90% 0.15% 1.05% MAV Death Benefit 1.10 0.15 1.25 5% Accumulation Death Benefit 1.25 0.15 1.40 Enhanced Death Benefit 1.30 0.15 1.45 IF YOU SELECT CONTRACT OPTION C AND: ROP Death Benefit 1.55% 0.15% 1.70% MAV Death Benefit 1.75 0.15 1.90 5% Accumulation Death Benefit 1.90 0.15 2.05 Enhanced Death Benefit 1.95 0.15 2.10
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 7 OTHER ANNUAL EXPENSES ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the current contract anniversary.) OPTIONAL DEATH BENEFITS If eligible, you may select an optional death benefit in addition to the ROP and MAV Death Benefits. The fees apply only if you select one of these benefits. BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25% BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract anniversary.) OPTIONAL LIVING BENEFITS -- OFFERED UNDER CONTRACT OPTION B If eligible, you may select one of the following optional living benefits if available in your state. Each optional living benefit requires the use of an asset allocation model. The fees apply only if you elect one of these benefits. ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract value or the Minimum Contract Accumulation Value, whichever is greater.) SECURESOURCE(SM) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65% SECURESOURCE(SM) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract value or the total Remaining Benefit Amount, whichever is greater.) - -------------------------------------------------------------------------------- 8 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS ANNUAL OPERATING EXPENSES OF THE FUNDS THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2007, UNLESS OTHERWISE NOTED. THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS (Including management fee, distribution and/or service (12b-1) fees and other expenses) (1)
MINIMUM MAXIMUM Total expenses before fee waivers and/or expense reimbursements 0.52% 2.09%
(1) Each fund deducts management fees and other expenses from fund assets. Fund assets include amounts you allocate to a particular fund. Funds may also charge 12b-1 fees that are used to finance any activity that is primarily intended to result in the sale of fund shares. Because 12b-1 fees are paid out of fund assets on an ongoing basis, you may pay more if you select subaccounts investing in funds that have adopted 12b-1 plans than if you select subaccounts investing in funds that have not adopted 12b-1 plans. The fund or the fund's affiliates may pay us or our affiliates for promoting and supporting the offer, sale and servicing of fund shares. In addition, the fund's distributor and/or investment adviser, transfer agent or their affiliates may pay us or our affiliates for various services we or our affiliates provide. The amount of these payments will vary by fund and may be significant. See "The Variable Account and the Funds" for additional information, including potential conflicts of interest these payments may create. For a more complete description of each fund's fees and expenses and important disclosure regarding payments the fund and/or its affiliates make, please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES AIM V.I. Capital Appreciation Fund, Series II 0.61% 0.25% 0.27% --% 1.13% Shares AIM V.I. Capital Development Fund, Series II 0.75 0.25 0.31 -- 1.31(1) Shares AIM V.I. Global Health Care Fund, Series II 0.75 0.25 0.32 0.01 1.33(1) Shares AIM V.I. International Growth Fund, Series II 0.71 0.25 0.36 0.01 1.33(1) Shares AllianceBernstein VPS Global Technology 0.75 0.25 0.17 -- 1.17 Portfolio (Class B) AllianceBernstein VPS Growth and Income 0.55 0.25 0.04 -- 0.84 Portfolio (Class B) AllianceBernstein VPS International Value 0.75 0.25 0.06 -- 1.06 Portfolio (Class B) American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16 American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16 American Century VP Value, Class II 0.83 0.25 0.01 -- 1.09 Columbia High Yield Fund, Variable Series, 0.78 0.25 0.12 -- 1.15(2) Class B Columbia Marsico Growth Fund, Variable 0.97 -- 0.02 -- 0.99 Series, Class A Columbia Marsico International Opportunities 1.02 0.25 0.12 -- 1.39 Fund, Variable Series, Class B Columbia Small Cap Value Fund, Variable 0.80 0.25 0.09 -- 1.14(3) Series, Class B Credit Suisse Trust - Commodity Return 0.50 0.25 0.28 -- 1.03(4) Strategy Portfolio Dreyfus Variable Investment Fund 0.75 0.25 0.28 -- 1.28 International Equity Portfolio, Service Shares Dreyfus Variable Investment Fund 1.00 0.25 0.19 -- 1.44 International Value Portfolio, Service Shares Eaton Vance VT Floating-Rate Income Fund 0.57 0.25 0.32 -- 1.14 Fidelity(R) VIP Contrafund(R) Portfolio 0.56 0.25 0.09 -- 0.90 Service Class 2 Fidelity(R) VIP Investment Grade Bond 0.32 0.25 0.11 -- 0.68 Portfolio Service Class 2 Fidelity(R) VIP Mid Cap Portfolio Service 0.56 0.25 0.10 -- 0.91 Class 2 Fidelity(R) VIP Overseas Portfolio Service 0.71 0.25 0.14 -- 1.10 Class 2 FTVIPT Franklin Income Securities 0.45 0.25 0.02 -- 0.72 Fund - Class 2 FTVIPT Templeton Global Income Securities 0.50 0.25 0.14 -- 0.89 Fund - Class 2 FTVIPT Templeton Growth Securities 0.73 0.25 0.03 -- 1.01 Fund - Class 2 Goldman Sachs VIT Mid Cap Value 0.80 -- 0.07 -- 0.87 Fund - Institutional Shares Goldman Sachs VIT Structured U.S. Equity 0.65 -- 0.07 -- 0.72(5) Fund - Institutional Shares Janus Aspen Series Large Cap Growth 0.64 0.25 0.02 0.01 0.92 Portfolio: Service Shares
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED) (Before fee waivers and/or expense reimbursements, if applicable, as a percentage of average daily net assets) ACQUIRED FUND GROSS TOTAL MANAGEMENT 12B-1 OTHER FEES AND ANNUAL FEES FEES EXPENSES EXPENSES** EXPENSES Legg Mason Partners Variable Small Cap Growth 0.75% --% 0.35% --% 1.10%(6) Portfolio, Class I MFS(R) Total Return Series - Service Class 0.75 0.25 0.08 -- 1.08(7) MFS(R) Utilities Series - Service Class 0.75 0.25 0.10 -- 1.10(7) Oppenheimer Capital Appreciation Fund/VA, 0.64 0.25 0.02 -- 0.91 Service Shares Oppenheimer Global Securities Fund/VA, 0.62 0.25 0.02 -- 0.89 Service Shares Oppenheimer Main Street Small Cap Fund/VA, 0.70 0.25 0.02 -- 0.97 Service Shares Oppenheimer Strategic Bond Fund/VA, Service 0.57 0.25 0.02 0.02 0.86(8) Shares PIMCO VIT All Asset Portfolio, Advisor Share 0.18 0.25 0.25 0.69 1.37(9) Class RVST RiverSource(R) Partners Variable 0.70 0.13 0.16 -- 0.99(10) Portfolio - Fundamental Value Fund (previously RiverSource(R) Variable Portfolio - Fundamental Value Fund) RVST RiverSource(R) Partners Variable 0.83 0.13 1.13 -- 2.09(10) Portfolio - Select Value Fund (previously RiverSource(R) Variable Portfolio - Select Value Fund) RVST RiverSource(R) Partners Variable 0.97 0.13 0.18 -- 1.28(10) Portfolio - Small Cap Value Fund (previously RiverSource(R) Variable Portfolio - Small Cap Value Fund) RVST RiverSource(R) Variable Portfolio - Cash 0.33 0.13 0.14 -- 0.60 Management Fund RVST RiverSource(R) Variable 0.45 0.13 0.16 -- 0.74 Portfolio - Diversified Bond Fund RVST RiverSource(R) Variable 0.59 0.13 0.14 -- 0.86 Portfolio - Diversified Equity Income Fund RVST RiverSource(R) Variable 0.44 0.13 0.17 -- 0.74(10) Portfolio - Global Inflation Protected Securities Fund RVST RiverSource(R) Variable 0.60 0.13 0.16 -- 0.89 Portfolio - Growth Fund RVST RiverSource(R) Variable Portfolio - High 0.59 0.13 0.15 -- 0.87 Yield Bond Fund RVST RiverSource(R) Variable 0.61 0.13 0.17 -- 0.91 Portfolio - Income Opportunities Fund RVST RiverSource(R) Variable 0.58 0.13 0.15 -- 0.86 Portfolio - Large Cap Equity Fund RVST RiverSource(R) Variable Portfolio - Mid 0.73 0.13 0.17 -- 1.03(10) Cap Value Fund RVST RiverSource(R) Variable Portfolio - S&P 0.22 0.13 0.17 -- 0.52(10) 500 Index Fund RVST RiverSource(R) Variable 0.48 0.13 0.18 -- 0.79 Portfolio - Short Duration U.S. Government Fund RVST Threadneedle(R) Variable 1.11 0.13 0.26 -- 1.50 Portfolio - Emerging Markets Fund (previously RiverSource(R) Variable Portfolio - Emerging Markets Fund) RVST Threadneedle(R) Variable 0.69 0.13 0.19 -- 1.01 Portfolio - International Opportunity Fund (previously RiverSource(R) Variable Portfolio - International Opportunity Fund) Van Kampen Life Investment Trust Comstock 0.56 0.25 0.03 -- 0.84 Portfolio, Class II Shares Van Kampen UIF Global Real Estate Portfolio, 0.85 0.35 0.38 -- 1.58(11) Class II Shares Van Kampen UIF Mid Cap Growth Portfolio, 0.75 0.35 0.35 -- 1.45(11) Class II Shares Wanger International Small Cap 0.88 -- 0.11 -- 0.99 (effective June 1, 2008, the Fund will change its name to Wanger International) Wanger U.S. Smaller Companies 0.90 -- 0.05 -- 0.95 (effective June 1, 2008, the Fund will change its name to Wanger USA)
* The Funds provided the information on their expenses and we have not independently verified the information. ** Includes fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies (also referred to as acquired funds). (1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit total annual expenses (subject to certain exclusions) of Series II shares to 1.45% of average daily net assets. In addition, effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the Fund in such affiliated money market funds. These waiver agreements are in effect through at least April 30, 2009. After fee waivers and expense reimbursements net expenses would be 1.30% for AIM V.I. Capital Development Fund, Series II Shares, 1.32% for AIM V.I. Global Health Care Fund, Series II Shares and 1.32% for AIM V.I. International Growth Fund, Series II Shares. (2) The Fund's investment adviser has contractually agreed to waive 0.19% of the distribution (12b-1) fees until April 30, 2009. In addition, the Fund's investment adviser has contractually agreed to waive advisory fees and reimburse the Fund for certain expenses so that the total annual Fund operating expenses (exclusive of distribution fees, brokerage commissions, interest, taxes and extraordinary expenses, (if any)) do not exceed 0.60% annually through April 30, 2009. If these waivers were reflected in the above table, net expenses would be 0.66%. There is no guarantee that these waivers and/or limitations will continue after April 30, 2009. (3) The Distributor and/or the Advisor have voluntarily agreed to waive fees and reimburse the Fund for certain expenses so that total expenses (exclusive of brokerage commissions, interest, taxes and extraordinary expenses, but including custodian charges relating to overdrafts, if any), after giving effect to any balance credits from the Fund's custodian, do not exceed 1.10% of the Fund's average daily net assets. If the waiver were reflected in the above table, net expenses would be 1.10%. The Advisor or the Distributor may modify or terminate these arrangements at any time. - -------------------------------------------------------------------------------- 10 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS (4) Credit Suisse fee waivers are voluntary and may be discontinued at any time. After fee waivers and expense reimbursements net expenses would be 0.95% for Credit Suisse Trust - Commodity Return Strategy Portfolio. (5) The Investment Adviser has voluntarily agreed to reduce or limit "Other expenses" (subject to certain exclusions) equal on an annualized basis to 0.044% of the Fund's average daily net assets. The expense reduction may be terminated at any time at the option of the Investment Adviser. After expense reductions net expenses would be 0.71% for Goldman Sachs VIT Structured U.S. Equity Fund - Institutional Shares. (6) Because of voluntary waivers and/or reimbursements, actual total operating expenses are not expected to exceed 1.00%. These voluntary fee waivers and reimbursements do not cover brokerage, taxes, interest and extraordinary expenses and may be reduced or terminated at any time. After fee waivers and expense reimbursements net expenses would be 1.00%. (7) MFS has agreed in writing to reduce its management fee to 0.65% for MFS Total Return Series annually on average daily net assets in excess of $3 billion and 0.70% for MFS Utilities Series annually on average daily net assets in excess of $1 billion. After fee reductions net expenses would be 1.05% for MFS Total Return Series - Service Class and 1.07% for MFS Utilities Series - Service Class. This written agreement will remain in effect until modified by the Fund's Board of Trustees. (8) The "Other expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year. That undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended Dec. 31, 2007, the transfer agent fees did not exceed this expense limitation. The Manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the acquired fund fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund and OFI Master Loan Fund LLC. After fee waivers and expense reimbursements, the net expenses would be 0.82% for Oppenheimer Strategic Bond Fund/VA, Service Shares. (9) PIMCO has contractually agreed through Dec. 31, 2008, to reduce its advisory fee to the extent that the "Acquired fund fees and expenses" attributable to advisory and administrative fees exceed 0.64% of the total assets invested in the acquired funds. PIMCO may recoup these waivers in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. After fee waivers and expense reimbursements, the net expenses would be 1.35%. (10) RiverSource Investments, LLC and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amount waived will not be reimbursed by the Fund. Under this agreement, net expenses (excluding fees and expenses of acquired funds), before giving effect to any applicable performance incentive adjustment, will not exceed: 0.98% for RVST RiverSource(R) Partners Variable Portfolio - Fundamental Value Fund, 1.03% for RVST RiverSource(R) Partners Variable Portfolio - Select Value Fund, 1.20% for RVST RiverSource(R) Partners Variable Portfolio - Small Cap Value Fund, 0.72% for RVST RiverSource(R) Variable Portfolio - Global Inflation Protected Securities Fund, 1.05% for RVST RiverSource(R) Variable Portfolio - Mid Cap Value Fund and 0.51% for RVST RiverSource(R) Variable Portfolio - S&P 500 Index Fund. (11) After giving effect to the Adviser's voluntary fee waivers and/or expense reimbursement, the net expenses incurred by investors including certain investment related expenses, was 1.40% for Van Kampen UIF Global Real Estate Portfolio, Class II Shares and 1.16% for Van Kampen UIF Mid Cap Growth Portfolio, Class II Shares. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 11 EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES (1), VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES. THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR. OFFERED UNDER CONTRACT OPTION B MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the MAV Death Benefit, the SecureSource - Joint Life Rider and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option B $1,363 $2,380 $3,282 $5,476 $563 $1,680 $2,782 $5,476
OFFERED UNDER CONTRACT OPTION C MAXIMUM EXPENSES. These examples assume the most expensive combination of contract features and benefits and the maximum fees and expenses of any of the funds. They assume that you select the MAV Death Benefit and the Benefit Protector Plus Death Benefit(2). Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option C $451 $1,359 $2,276 $4,608 $451 $1,359 $2,276 $4,608
ALL CONTRACTS MINIMUM EXPENSES. These examples assume the least expensive combination of contract features and benefits and the minimum fees and expenses of any of the funds. They assume that you select the ROP Death Benefit and do not select any optional benefits. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Contract Option B $962 $1,202 $1,365 $1,886 $162 $502 $ 865 $1,886 Contract Option C 228 704 1,205 2,583 228 704 1,205 2,583
(1) In these examples, the $40 contract administrative charge is estimated as a .007% charge for Option B and a .007% for Option C. These percentages were determined by dividing the total amount of the contract administrative charges collected during the year that are attributable to each contract by the total average net assets that are attributable to that contract. (2) Because these examples are intended to illustrate the most expensive combination of contract features, the maximum annual fee for each optional rider is reflected rather than the fee that is currently being charged. - -------------------------------------------------------------------------------- 12 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS CONDENSED FINANCIAL INFORMATION You can find financial information for the subaccounts representing the lowest and highest total annual variable account expense combinations in Appendix J. FINANCIAL STATEMENTS You can find our audited financial statements and the audited financial statements of the subaccounts with financial history in the SAI. The SAI does not include audited financial statements for subaccounts that are new and have no activity as of the financial statements date. THE VARIABLE ACCOUNT AND THE FUNDS VARIABLE ACCOUNT. The variable account was established under Indiana law on July 15, 1987, and the subaccounts are registered together as a single unit investment trust under the Investment Company Act of 1940 (the 1940 Act). This registration does not involve any supervision of our management or investment practices and policies by the SEC. All obligations arising under the contracts are general obligations of RiverSource Life. The variable account meets the definition of a separate account under federal securities laws. We credit or charge income, capital gains and capital losses of each subaccount only to that subaccount. State insurance law prohibits us from charging a subaccount with liabilities of any other subaccount or of our general business. The variable account includes other subaccounts that are available under contracts that are not described in this prospectus. Although the Internal Revenue Service (IRS) has issued some guidance on investor control, the U.S. Treasury and the IRS may continue to examine this aspect of variable contracts and provide additional guidance on investor control. Their concern involves how many investment choices (subaccounts) may be offered by an insurance company and how many exchanges among those subaccounts may be allowed before the contract owner would be currently taxed on income earned within the contract. At this time, we do not know what the additional guidance will be or when action will be taken. We reserve the right to modify the contract, as necessary, so that the owner will not be subject to current taxation as the owner of the subaccount assets. We intend to comply with all federal tax laws so that the contract continues to qualify as an annuity for federal income tax purposes. We reserve the right to modify the contract as necessary to comply with any new tax laws. THE FUNDS. This contract currently offers subaccounts investing in shares of the funds listed in the table below. - - INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee that the funds will meet their investment objectives. Please read the funds' prospectuses for facts you should know before investing. These prospectuses are available by contacting us at the address or telephone number on the first page of this prospectus. - - FUND NAME AND MANAGEMENT: A fund underlying your contract in which a subaccount invests may have a name, portfolio manager, objectives, strategies and characteristics that are the same or substantially similar to those of a publicly-traded retail mutual fund. Despite these similarities, an underlying fund is not the same as any publicly-traded retail mutual fund. Each underlying fund will have its own unique portfolio holdings, fees, operating expenses and operating results. The results of each underlying fund may differ significantly from any publicly-traded retail mutual fund. - - ELIGIBLE PURCHASERS: All funds are available to serve as the underlying investments for variable annuities and variable life insurance policies. The funds are not available to the public (see "Fund Name and Management" above). Some funds also are available to serve as investment options for tax-deferred retirement plans. It is possible that in the future for tax, regulatory or other reasons, it may be disadvantageous for variable annuity accounts and variable life insurance accounts and/or tax-deferred retirement plans to invest in the available funds simultaneously. Although we and the funds do not currently foresee any such disadvantages, the boards of directors or trustees of each fund will monitor events in order to identify any material conflicts between annuity owners, policy owners and tax-deferred retirement plans and to determine what action, if any, should be taken in response to a conflict. If a board were to conclude that it should establish separate funds for the variable annuity, variable life insurance and tax-deferred retirement plan accounts, you would not bear any expenses associated with establishing separate funds. Please refer to the funds' prospectuses for risk disclosure regarding simultaneous investments by variable annuity, variable life insurance and tax-deferred retirement plan accounts. Each fund intends to comply with the diversification requirements under Section 817(h) of the Code. - - ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation programs in general may negatively impact the performance of an underlying fund. Even if you do not participate in an asset allocation program, a fund in which your subaccount invests may be impacted if it is included in an asset allocation program. Rebalancing or reallocation under the terms of the asset allocation program may cause a fund to lose money if it must sell large amounts of securities to meet a redemption request. These losses can be greater if the fund holds securities that are not as liquid as others, for example, - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 13 various types of bonds, shares of smaller companies and securities of foreign issuers. A fund may also experience higher expenses because it must sell or buy securities more frequently than it otherwise might in the absence of asset allocation program rebalancing or reallocations. Because asset allocation programs include periodic rebalancing and may also include reallocation, these effects may occur under the asset allocation program we offer (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program") or under asset allocation programs used in conjunction with the contracts and plans of other eligible purchasers of the funds. - - FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of underlying funds taking into account the fees and charges imposed by each fund and the contract charges we impose. We select the underlying funds in which the subaccounts initially invest and when there is substitution (see "Substitution of Investments"). We also make all decisions regarding which funds to retain in a contract, which funds to add to a contract and which funds will no longer be offered in a contract. In making these decisions, we may consider various objective and subjective factors. Objective factors include, but are not limited to fund performance, fund expenses, classes of fund shares available, size of the fund and investment objectives and investing style of the fund. Subjective factors include, but are not limited to, investment sub-styles and process, management skill and history at other funds and portfolio concentration and sector weightings. We also consider the levels and types of revenue a fund, its distributor, investment adviser, subadviser, transfer agent or their affiliates pay us and our affiliates. This revenue includes, but is not limited to compensation for administrative services provided with respect to the fund and support of marketing and distribution expenses incurred with respect to the fund. - - REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST: We or our affiliates receive from each of the funds, or the funds' affiliates, varying levels and types of revenue including but not limited to expense payments and non-cash compensation. The amount of this revenue and how it is computed varies by fund, may be significant and may create potential conflicts of interest. The greatest amount and percentage of revenue we and our affiliates receive comes from assets allocated to subaccounts investing in the RiverSource Variable Series Trust funds (affiliated funds) that are managed by RiverSource Investments, LLC (RiverSource Investments), one of our affiliates. RiverSource Variable Series Trust funds include the RiverSource Variable Portfolio funds, RiverSource Partners Variable Portfolio funds, Threadneedle Variable Portfolio funds and Disciplined Asset Allocation Portfolio funds. Employee compensation and operating goals at all levels are tied to the success of Ameriprise Financial, Inc. and its affiliates, including us. Certain employees may receive higher compensation and other benefits based, in part, on contract values that are invested in the RiverSource Variable Series Trust funds. We or our affiliates receive revenue which ranges up to 0.60% of the average daily net assets invested in the non-RiverSource Variable Series Trust funds (unaffiliated funds) through this and other contracts we and our affiliate issue. We or our affiliates may also receive revenue which ranges up to 0.04% of aggregate, net or anticipated sales of unaffiliated funds through this and other contracts we and our affiliate issue. Please see the SAI for a table that ranks the unaffiliated funds according to total dollar amounts they and their affiliates paid us or our affiliates in 2007. Expense payments, non-cash compensation and other forms of revenue may influence recommendations your investment professional makes regarding whether you should invest in the contract and whether you should allocate purchase payments or contract value to a subaccount that invests in a particular fund (see "About the Service Providers"). The revenue we or our affiliates receive from a fund or its affiliates is in addition to revenue we receive from the charges you pay when buying, owning and surrendering the contract (see "Expense Summary"). However, the revenue we or our affiliates receive from a fund or its affiliates may come, at least in part, from the fund's fees and expenses you pay indirectly when you allocate contract value to the subaccount that invests in that fund. - - WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations and the terms of the agreements under which such revenue is paid, we or our affiliates may receive these revenues including, but not limited to expense payments and non-cash compensation for various purposes: - Compensating, training and educating investment professionals who sell the contracts. - Granting access to our employees whose job it is to promote sales of the contracts by authorized selling firms and their investment professionals, and granting access to investment professionals of our affiliated selling firms. - Activities or services we or our affiliates provide that assist in the promotion and distribution of the contracts including promoting the funds available under the contracts to prospective and existing contract owners, authorized selling firms and investment professionals. - Providing sub-transfer agency and shareholder servicing to contract owners. - Promoting, including and/or retaining the fund's investment portfolios as underlying investment options in the contracts. - Advertising, printing and mailing sales literature, and printing and distributing prospectuses and reports. - Furnishing personal services to contract owners, including education of contract owners, answering routine inquiries regarding a fund, maintaining accounts or providing such other services eligible for service fees as defined under the rules of the Financial Industry Regulatory Authority (FINRA). - -------------------------------------------------------------------------------- 14 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - Subaccounting, transaction processing, recordkeeping and administration. - - SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are managed by RiverSource Investments. The sources of revenue we receive from these affiliated funds, or from affiliates of these funds, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser and transfer agent or an affiliate of these. The revenue resulting from these sources may be based either on a percentage of average daily net assets of the fund or on the actual cost of certain services we provide with respect to the fund. We may receive this revenue either in the form of a cash payment or it may be allocated to us. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - - SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds are not managed by an affiliate of ours. The sources of revenue we receive from these unaffiliated funds, or the funds' affiliates, may include, but are not necessarily limited to, the following: - Assets of the fund's adviser, subadviser, transfer agent or an affiliate of these and assets of the fund's distributor or an affiliate. The revenue resulting from these sources usually is based on a percentage of average daily net assets of the fund but there may be other types of payment arrangements. - Compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of the Funds" table. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 15 UNLESS AN ASSET ALLOCATION PROGRAM WE OFFER IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING FUNDS:
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER AIM V.I. Capital Appreciation Growth of capital. Invests principally in Invesco Aim Advisors, Inc. adviser, Fund, common stocks of companies likely to benefit advisory entities affiliated with Series II Shares from new or innovative products, services or Invesco Aim Advisors, Inc., processes as well as those with above-average subadvisers. long-term growth and excellent prospects for future growth. The Fund can invest up to 25% of its total assets in foreign securities that involve risks not associated with investing solely in the United States. AIM V.I. Capital Development Long-term growth of capital. Invests Invesco Aim Advisors, Inc. adviser, Fund, primarily in securities (including common advisory entities affiliated with Series II Shares stocks, convertible securities and bonds) of Invesco Aim Advisors, Inc., small- and medium-sized companies. The Fund subadvisers. may invest up to 25% of its total assets in foreign securities. AIM V.I. Global Health Care Capital Growth The fund seeks to meet its Invesco Aim Advisors, Inc. adviser, Fund, Series II Shares objective by investing, normally, at least advisory entities affiliated with 80% of its assets in securities of health Invesco Aim Advisors, Inc., care industry companies. The Fund may invest subadvisers. up to 20% of its total assets in companies located in developing countries, i.e., those countries that are in the initial stages of their industrial cycles. The fund may also invest up to 5% of its total assets in lower-quality debt securities, i.e., junk bonds. AIM V.I. International Growth Long-term growth of capital. Invests Invesco Aim Advisors, Inc. adviser, Fund, Series II Shares primarily in a diversified portfolio of advisory entities affiliated with international equity securities, whose Invesco Aim Advisors, Inc., issuers are considered to have strong subadvisers. earnings momentum. The Fund may invest up to 20% of its total assets in security issuers located in developing countries and in securities exchangeable for or convertible into equity securities of foreign companies. AllianceBernstein VPS Global Long-term growth of capital. The Fund invests AllianceBernstein L.P. Technology Portfolio (Class B) at least 80% of its net assets in securities of companies that use technology extensively in the development of new or improved products or processes. Invests in a global portfolio of securities of U.S. and foreign companies selected for their growth potential. AllianceBernstein VPS Growth Long-term growth of capital. Invests AllianceBernstein L.P. and Income Portfolio (Class B) primarily in the equity securities of domestic companies that the Advisor deems to be undervalued. AllianceBernstein VPS Long-term growth of capital. Invests AllianceBernstein L.P. International Value Portfolio primarily in a diversified portfolio of (Class B) equity securities of established companies selected from more than 40 industries and from more than 40 developed and emerging market countries.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER American Century VP Mid Cap Long-term capital growth with income as a American Century Investment Management, Value, Class II secondary objective. Long-term capital growth Inc. with income as secondary objective. Invests primarily in stocks of companies that management believes are undervalued at the time of purchase. The fund will invest at least 80% of its assets in securities of companies whose market capitalization at the time of purchase is within the capitalization range of the Russell 3000 Index, excluding the largest 100 such companies. American Century VP Ultra(R), Long-term capital growth. Analytical research American Century Investment Management, Class II tools and techniques are used to identify the Inc. stocks of larger-sized companies that appear to have the best opportunity of sustaining long-term above average growth. American Century VP Value, Long-term capital growth, with income as a American Century Investment Management, Class II secondary objective. Invests primarily in Inc. stocks of companies that management believes to be undervalued at the time of purchase. Columbia High Yield Fund, Total return, consisting of a high level of Columbia Management Advisors, LLC, Variable Series, Class B income and capital appreciation. Under normal advisor; MacKay Shields LLC, circumstances, the Fund invests at least 80% subadviser. of net assets in domestic and foreign corporate below investment grade debt securities. These securities generally will be, at the time of purchase, rated BB or below by Standard & Poor's Corporation (S&P) or Fitch, rated "Ba" or below by Moody's, or unrated but determined by the Advisor to be of comparable quality. The Fund invests primarily in domestic corporate below investment grade securities (including private placements), U.S. dollar-denominated foreign corporate below investment grade securities (including private placements), zero-coupon bonds and U.S. Government obligations. The Fund may invest up to 20% of net assets in equity securities that may include convertible securities. The Fund is not managed to a specific duration. Columbia Marsico Growth Fund, Long-term growth of capital. Under normal Columbia Management Advisors, LLC, Variable Series, Class A circumstances, the Fund invests primarily in adviser; Marsico Capital Management, equity securities of large- capitalization LLC, sub-adviser. companies that have market capitalizations of $5 billion or more at the time of purchase. The Fund generally holds a core position of between 35 and 50 common stocks. It may hold up to 25% of total assets in foreign securities, including in emerging market securities.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Columbia Marsico International Long-term growth of capital. Under normal Columbia Management Advisors, LLC, Opportunities Fund, Variable circumstances, the Fund invests at least 65% adviser; Marsico Capital Management, Series, Class B of total assets in common stocks of foreign LLC, sub-adviser. companies. The Fund may invest in companies of any size throughout the world that are selected for their long-term growth potential. The Fund normally invests in issuers from at least three different countries not including the United States. The Fund may invest in common stocks of companies operating in or economically tied to emerging markets countries. Some issuers or securities in the Fund's portfolio may be based in or economically tied to the United States. Columbia Small Cap Value Fund, Long-term capital appreciation. Under normal Columbia Management Advisors, LLC Variable Series, Class B circumstances, the Fund invests at least 80% of net assets in equity securities of companies that have market capitalizations in the range of companies in the Russell 2000 Index at the time of purchase that the Advisor believes are undervalued and have the potential for long-term growth. The Fund may invest up to 20% of total assets in foreign securities. The Fund may also invest in real estate investment trusts. Credit Suisse Trust - Commodity Total Return. Invests in commodity-linked Credit Suisse Asset Management, LLC Return Strategy Portfolio derivative instruments backed and fixed-income securities. The portfolio invests in commodity-linked derivative instruments, such as commodity-linked notes, swap agreements, commodity options, futures and options on futures that provide exposure to the investment returns of the commodities markets without investing directly in physical commodities. The portfolio invests all of its assets in commodity-linked derivative instruments, such as structured notes and swaps, and fixed-income securities, subject to applicable IRS limits. The portfolio may also gain exposure to commodity markets by investing in the Credit Suisse Cayman Commodity Fund II, a wholly owned subsidiary of the Portfolio formed in the Cayman Island. Dreyfus Variable Investment Capital growth. To pursue this goal, the The Dreyfus Corporation Fund International Equity portfolio primarily invests in growth stocks Portfolio, Service Shares of foreign companies. Normally, the portfolio invests at least 80% of its assets in stocks, including common stocks, preferred stocks and convertible securities, including those purchased in initial public offering. Dreyfus Variable Investment Long-term capital growth. To pursue this The Dreyfus Corporation Fund International Value goal, the portfolio normally invests at least Portfolio, Service Shares 80% of its assets in stocks. The portfolio ordinarily invests most of its assets in securities of foreign companies which Dreyfus considers to be value companies. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities, including those purchased in initial public offerings or shortly thereafter. The portfolio may invest in companies of any size. The portfolio may also invest in companies located in emerging markets.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Eaton Vance VT Floating-Rate High level of current income. The Fund Eaton Vance Management Income Fund invests primarily in senior floating rate loans ("Senior Loans"). Senior Loans typically are of below investment grade quality and have below investment grade credit ratings, which ratings are associated with securities having high risk, speculative characteristics. The Fund invests at least 80% of its net assets in income producing floating rate loans and other floating rate debt securities. The Fund may also purchase investment grade fixed income debt securities and money market instruments. The Fund may invest up to 25% of its total assets in foreign securities and may engage in certain hedging transactions. The Fund may purchase derivative instruments, such as futures contracts and options thereon, interest rate and credit default swaps, credit linked notes and currency hedging derivatives. Fidelity(R) VIP Contrafund(R) Long-term capital appreciation. Normally Fidelity Management & Research Company Portfolio Service Class 2 invests primarily in common stocks. Invests (FMR), investment manager; FMR U.K. and in securities of companies whose value it FMR Far East, sub-advisers. believes is not fully recognized by the public. Invests in either "growth" stocks or "value" stocks or both. The fund invests in domestic and foreign issuers. Fidelity(R) VIP Investment High level of current income consistent with Fidelity Management & Research Company Grade Bond Portfolio Service the preservation of capital. Normally invests (FMR), investment manager; FMR U.K., Class 2 at least 80% of assets in investment-grade FMR Far East, sub-advisers. debt securities (those of medium and high quality) of all types and repurchase agreements for those securities. Fidelity(R) VIP Mid Cap Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks. Normally invests (FMR), investment manager; FMR U.K., at least 80% of assets in securities of FMR Far East, sub-advisers. companies with medium market capitalizations. May invest in companies with smaller or larger market capitalizations. Invests in domestic and foreign issuers. The Fund invests in either "growth" or "value" common stocks or both. Fidelity(R) VIP Overseas Long-term growth of capital. Normally invests Fidelity Management & Research Company Portfolio Service Class 2 primarily in common stocks of foreign (FMR), investment manager; FMR U.K., securities. Normally invests at least 80% of FMR Far East, Fidelity International assets in non-U.S. securities. Investment Advisors (FIIA) and FIIA U.K., sub-advisers. FTVIPT Franklin Income Maximize income while maintaining prospects Franklin Advisers, Inc. Securities Fund - Class 2 for capital appreciation. The Fund normally invests in both equity and debt securities. The Fund seeks income by investing in corporate, foreign, and U.S. Treasury bonds as well as stocks with dividend yields the manager believes are attractive.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER FTVIPT Templeton Global Income High current income consistent with Franklin Advisers, Inc. Securities Fund - Class 2 preservation of capital, with capital appreciation as a secondary consideration. The Fund normally invests mainly in debt securities of governments and their political subdivisions and agencies, supranational organizations and companies located anywhere in the world, including emerging markets. FTVIPT Templeton Growth Long-term capital growth. The Fund normally Templeton Global Advisors Limited, Securities Fund - Class 2 invests primarily in equity securities of adviser; Templeton Asset Management companies located anywhere in the world, Ltd., subadviser. including those in the U.S. and in emerging markets. Goldman Sachs VIT Mid Cap Value Long-term capital appreciation. The Fund Goldman Sachs Asset Management, L.P. Fund - Institutional Shares invests, under normal circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase) ("Net Assets") in a diversified portfolio of equity investments in mid-cap issuers with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constituting the Russell Midcap(R) Value Index at the time of investment. If the market capitalization of a company held by the Fund moves outside this range, the Fund may, but is not required to, sell the securities. The capitalization range of the Russell Midcap(R) Value Index is currently between $1.1 billion and $21 billion. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its Net Assets in foreign securities, including securities of issuers in countries with emerging markets or economies ("emerging countries") and securities quoted in foreign currencies. The Fund may invest in the aggregate up to 20% of its Net Assets in companies with public stock market capitalizations outside the range of companies constituting the Russell Midcap(R) Value Index at the time of investment and in fixed-income securities, such as government, corporate and bank debt obligations.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Goldman Sachs VIT Structured Long-term growth of capital and dividend Goldman Sachs Asset Management, L.P. U.S. Equity Fund - income. The Fund invests, under normal Institutional Shares circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at the time of purchase) ("Net Assets") in a diversified portfolio of equity investments in U.S. issuers, including foreign companies that are traded in the United States. However, it is currently anticipated that, under normal circumstances, the Fund will invest at least 95% of its Net Assets in such equity investments. The Fund's investments are selected using a variety of quantitative techniques, derived from fundamental research including but not limited to valuation, momentum, profitability and earnings quality, in seeking to maximize the Fund's expected returns. The Fund maintains risk, style, capitalization and industry characteristics similar to the S&P 500 Index. The S&P 500 Index is an index of large-cap stocks designed to reflect a broad representation of the U.S. economy. The Fund seeks to maximize expected return while maintaining these and other characteristics similar to the benchmark. The Fund is not required to limit its investments to securities in the S&P 500 Index. Janus Aspen Series Large Cap Long-term growth of capital in a manner Janus Capital Management LLC Growth Portfolio: Service consistent with the preservation of capital. Shares Invests under normal circumstances at least 80% of its net assets in common stocks of large-sized companies. Large-sized companies are those whose market capitalization falls within the range of companies in the Russell 1000(R) Index at the time of purchase. Legg Mason Partners Variable Long-term growth of capital. Under normal Legg Mason Partners Fund Advisor, LLC, Small Cap Growth Portfolio, circumstances, the fund invests at least 80% adviser; ClearBridge Advisors, LLC, Class I of its net assets in equity securities of sub-adviser. companies with small market capitalizations and related investments. MFS(R) Total Return Series - Total return. Invests primarily in equity and MFS Investment Management(R) Service Class fixed income securities. MFS invests between 40% and 75% of the fund's net assets in equity securities and at least 25% of the fund's total assets in fixed-income senior securities. MFS(R) Utilities Series - Total return. Normally invests at least 80% MFS Investment Management(R) Service Class of the fund's net assets in securities of issuers in the utilities industry. The Fund's assets may be invested in companies of any size. Oppenheimer Capital Capital appreciation by investing in OppenheimerFunds, Inc. Appreciation Fund/VA, Service securities of well- known, established Shares companies. Oppenheimer Global Securities Long-term capital appreciation. Invests OppenheimerFunds, Inc. Fund/VA, Service Shares mainly in common stocks of U.S. and foreign issuers that are "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Oppenheimer Main Street Small Capital appreciation. Invests mainly in OppenheimerFunds, Inc. Cap Fund/VA, Service Shares common stocks of small-capitalization U.S. companies that the fund's investment manager believes have favorable business trends or prospects. Oppenheimer Strategic Bond High level of current income principally OppenheimerFunds, Inc. Fund/VA, Service Shares derived from interest on debt securities. Invests mainly in three market sectors: debt securities of foreign governments and companies, U.S. government securities and lower-rated high yield securities of U.S. and foreign companies. PIMCO VIT All Asset Portfolio, Maximum real return consistent with Pacific Investment Management Company Advisor Share Class preservation of real capital and prudent LLC investment management period. The Portfolio seeks to achieve its investment objective by investing under normal circumstances substantially all of its assets in Institutional Class shares of the PIMCO Funds, an affiliated open-end investment company, except the All Asset and All Asset All Authority Funds ("Underlying Funds"). Though it is anticipated that the Portfolio will not currently invest in the European StocksPLUS(R) TR Strategy, Far East (ex-Japan) StocksPLUS(R) TR Strategy, Japanese StocksPLUS(R) TR Strategy, StocksPLUS(R) Municipal-Backed and StocksPLUS(R) TR Short Strategy Funds, the Portfolio may invest in these Funds in the future, without shareholder approval, at the discretion of the Portfolio's asset allocation sub-adviser. RVST RiverSource Partners Long-term capital growth. The Fund's assets RiverSource Investments, LLC, adviser; Variable Portfolio - are primarily invested in equity securities Davis Selected Advisers, L.P., Fundamental Value Fund of U.S. companies. Under normal market subadviser. (previously RiverSource conditions, the Fund's assets will be Variable Portfolio - invested primarily in companies with market Fundamental Value Fund) capitalizations of at least $5 billion at the time of the Fund's investment. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Partners Long-term growth of capital. Invests RiverSource Investments, LLC, adviser; Variable Portfolio - Select primarily in equity securities of mid cap Systematic Financial Management, L.P. Value Fund companies as well as companies with larger and WEDGE Capital Management L.L.P., (previously RiverSource and smaller market capitalizations. The Fund sub-advisers. Variable Portfolio - Select considers mid-cap companies to be either Value Fund) those with a market capitalization of up to $15 billion or those whose market capitalization falls within range of the Russell Midcap(R) Value Index. RVST RiverSource Partners Long-term capital appreciation. Under normal RiverSource Investments, LLC, adviser; Variable Portfolio - Small Cap market conditions, at least 80% of the Fund's River Road Asset Management, LLC, Value Fund net assets will be invested in small cap Donald Smith & Co., Inc., Franklin (previously RiverSource companies with market capitalization, at the Portfolio Associates LLC, Barrow, Variable Portfolio - Small Cap time of investment, of up to $2.5 billion or Hanley, Mewhinney & Strauss, Inc. and Value Fund) that fall within the range of the Russell Denver Investment Advisors LLC, 2000(R) Value Index. The Fund may invest up subadvisers. to 25% of its net assets in foreign investments.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable Maximum current income consistent with RiverSource Investments, LLC Portfolio - Cash Management liquidity and stability of principal. Invests Fund primarily in money market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper. RVST RiverSource Variable High level of current income while attempting RiverSource Investments, LLC Portfolio - Diversified Bond to conserve the value of the investment for Fund the longest period of time. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and other debt securities. At least 50% of the Fund's net assets will be invested in securities like those included in the Lehman Brothers Aggregate Bond Index (Index), which are investment grade and denominated in U.S. dollars. The Index includes securities issued by the U.S. government, corporate bonds, and mortgage-and asset-backed securities. Although the Fund emphasizes high- and medium-quality debt securities, it will assume some credit risk to achieve higher yield and/or capital appreciation by buying lower-quality (junk) bonds. The Fund may invest up to 25% of its net assets in foreign investments, which may include instruments in emerging markets. RVST RiverSource Variable High level of current income and, as a RiverSource Investments, LLC Portfolio - Diversified Equity secondary goal, steady growth of capital. Income Fund Under normal market conditions, the Fund invests at least 80% of its net assets in dividend-paying common and preferred stocks. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Total return that exceeds the rate of RiverSource Investments, LLC Portfolio - Global Inflation inflation over the long-term. Non-diversified Protected Securities Fund mutual fund that, under normal market conditions, invests at least 80% of its net assets in inflation-protected debt securities. These securities include inflation-indexed bonds of varying maturities issued by U.S. and foreign governments, their agencies or instrumentalities, and corporations. RVST RiverSource Variable Long-term capital growth. Invests primarily RiverSource Investments, LLC Portfolio - Growth Fund in common stocks and securities convertible into common stocks that appear to offer growth opportunities. These growth opportunities could result from new management, market developments, or technological superiority. The Fund may invest up to 25% of its net assets in foreign investments.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable High current income, with capital growth as a RiverSource Investments, LLC Portfolio - High Yield Bond secondary objective. Under normal market Fund conditions, the Fund invests at least 80% of its net assets in high-yield debt instruments (commonly referred to as "junk") including corporate debt securities as well as bank loans rated below investment grade by a nationally recognized statistical rating organization, or if unrated, determined to be of comparable quality. Up to 25% of the Fund may be invested in high yield debt instruments of foreign issuers. RVST RiverSource Variable High total return through current income and RiverSource Investments, LLC Portfolio - Income capital appreciation. Under normal market Opportunities Fund conditions, the Fund invests primarily in income-producing debt securities with an emphasis on the higher rated segment of the high-yield (junk bond) market. These income-producing debt securities include corporate debt securities as well as bank loans. The Fund will purchase only securities rated B or above, or unrated securities believed to be of the same quality. If a security falls below a B rating, the Fund may continue to hold the security. Up to 25% of the Fund may be in foreign investments. RVST RiverSource Variable Capital appreciation. Under normal market RiverSource Investments, LLC Portfolio - Large Cap Equity conditions, the Fund invests at least 80% of Fund its net assets in equity securities of companies with market capitalization greater than $5 billion at the time of purchase. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Long-term growth of capital. Under normal RiverSource Investments, LLC Portfolio - Mid Cap Value Fund circumstances, the Fund invests at least 80% of its net assets (including the amount of any borrowings for investment purposes) in equity securities of medium-sized companies. Medium-sized companies are those whose market capitalizations at the time of purchase fall within the range of the Russell Midcap(R) Value Index. The Fund may invest up to 25% of its net assets in foreign investments. RVST RiverSource Variable Long-term capital appreciation. The Fund RiverSource Investments, LLC Portfolio - S&P 500 Index Fund seeks to provide investment results that correspond to the total return (the combination of appreciation and income) of large-capitalization stocks of U.S. companies. The Fund invests in common stocks included in the Standard & Poor's 500 Composite Stock Price Index (S&P 500). The S&P 500 is made up primarily of large-capitalization companies that represent a broad spectrum of the U.S. economy.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER RVST RiverSource Variable High level of current income and safety of RiverSource Investments, LLC Portfolio - Short Duration U.S. principal consistent with investment in U.S. Government Fund government and government agency securities. Under normal market conditions, at least 80% of the Fund's net assets are invested in securities issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. RVST Threadneedle Variable Long-term capital growth. The Fund's assets RiverSource Investments, LLC, adviser; Portfolio - Emerging Markets are primarily invested in equity securities Threadneedle International Limited, an Fund of emerging market companies. Under normal indirect wholly-owned subsidiary of (previously RiverSource market conditions, at least 80% of the Fund's Ameriprise Financial, sub-adviser. Variable Portfolio - Emerging net assets will be invested in securities of Markets Fund) companies that are located in emerging market countries, or that earn 50% or more of their total revenues from goods and services produced in emerging market countries or from sales made in emerging market countries. RVST Threadneedle Variable Capital appreciation. Invests primarily in RiverSource Investments, LLC, adviser; Portfolio - International equity securities of foreign issuers that are Threadneedle International Limited, an Opportunity Fund believed to offer strong growth potential. indirect wholly-owned subsidiary of (previously RiverSource The Fund may invest in developed and in Ameriprise Financial, sub-adviser. Variable Portfolio - emerging markets. International Opportunity Fund) Van Kampen Life Investment Capital growth and income through investments Van Kampen Asset Management Trust Comstock Portfolio, Class in equity securities, including common II Shares stocks, preferred stocks and securities convertible into common and preferred stocks. The Portfolio emphasizes value style of investing seeking well-established, undervalued companies believed by the Portfolio's investment adviser to posses the potential for capital growth and income. Van Kampen UIF Global Real Current income and capital appreciation. Morgan Stanley Investment Management Estate Portfolio, Class II Invests primarily in equity securities of Inc., doing business as Van Kampen, Shares companies in the real estate industry located adviser; Morgan Stanley Investment throughout the world, including real estate Management Limited and Morgan Stanley operating companies, real estate investment Investment Management Company, trusts and similar entities established sub-advisers. outside the U.S. (foreign real estate companies). Van Kampen UIF Mid Cap Growth Long-term capital growth. Invests primarily Morgan Stanley Investment Management Portfolio, Class II Shares in growth-oriented equity securities of U.S. Inc., doing business as Van Kampen. mid cap companies and foreign companies, including emerging market securities.
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INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER Wanger International Long-term growth of capital. Invests Columbia Wanger Asset Management, L.P. Small Cap primarily in stocks of companies based Effective June 1, 2008, the outside the U.S. with market capitalizations Fund will change its name to of less than $5 billion at time of initial Wanger International. purchase. Effective June 1, 2008: Long-term growth of capital. Under normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion. Wanger U.S. Smaller Companies Long-term growth of capital. Invests Columbia Wanger Asset Management, L.P. Effective June 1, 2008, the primarily in stocks of small- and medium-size Fund will change its name to U.S. companies with market capitalizations of Wanger USA. less than $5 billion at time of initial purchase. Effective June 1, 2008: Long-term growth of capital. Under normal market circumstances, the Fund invests a majority of its net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. However, if the Fund's investments in such companies represent less than a majority of its net assets, the Fund may continue to hold and to make additional investments in an existing company in its portfolio even if that company's capitalization has grown to exceed $5 billion. Except as noted above, under normal market circumstances, the Fund may invest in other companies with market capitalizations above $5 billion, provided that immediately after that investment a majority of its net assets would be invested in companies with market capitalizations under $5 billion.
THE GUARANTEE PERIOD ACCOUNTS (GPAS) The GPAs may not be available in some states. Currently, unless an asset allocation program is in effect, you may allocate purchase payments to one or more of the GPAs with guarantee periods declared by us. The required minimum investment in each GPA is $1,000. These accounts are not available in all states and are not offered after annuity payouts begin. Each GPA pays an interest rate that is declared when you make an allocation to that account. That interest rate is then fixed for the Guarantee Period that you chose. We will periodically change the declared interest rate for any future allocations to these accounts, but we will not change the rate paid on money currently in a GPA. - -------------------------------------------------------------------------------- 26 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS The interest rates that we will declare as guaranteed rates in the future are determined by us at our discretion (future rates). We will determine future rates based on various factors including, but not limited to, the interest rate environment, returns we earn on investments in the nonunitized separate account we have established for the GPAs, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition and RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE. We hold amounts you allocate to the GPAs in a "nonunitized" separate account we have established under the Indiana Insurance Code. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the GPAs. State insurance law prohibits us from charging this separate account with liabilities of any other separate account or of our general business. We own the assets of this separate account as well as any favorable investment performance of those assets. You do not participate in the performance of the assets held in this separate account. We guarantee all benefits relating to your value in the GPAs. This guarantee is based on the continued claims-paying ability of the company. We intend to construct and manage the investment portfolio relating to the separate account in such a way as to minimize the impact of fluctuations by interest rates. We seek to achieve this by constructing a portfolio of assets with a price sensitivity to interest rate changes (i.e., price duration) that is similar to the price duration of the corresponding portfolio of liabilities. We must invest this portfolio of assets in accordance with requirements established by applicable state laws regarding the nature and quality of investments that life insurance companies may make and the percentage of their assets that they may commit to any particular type of investment. Our investment strategy will incorporate the use of a variety of debt instruments having price durations tending to match the applicable guarantee periods. These instruments include, but are not necessarily limited to, the following: - - Securities issued by the U.S. government or its agencies or instrumentalities, which issues may or may not be guaranteed by the U.S. government; - - Debt securities that have an investment grade, at the time of purchase, within the four highest grades assigned by any of three nationally recognized rating agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are rated in the two highest grades by the National Association of Insurance Commissioners; - - Other debt instruments which are unrated or rated below investment grade, limited to 10% of assets at the time of purchase; and - - Real estate mortgages, limited to 45% of portfolio assets at the time of acquisition. In addition, options and futures contracts on fixed income securities will be used from time to time to achieve and maintain appropriate investment and liquidity characteristics on the overall asset portfolio. While this information generally describes our investment strategy, we are not obligated to follow any particular strategy except as may be required by federal law and Indiana and other state insurance laws. MARKET VALUE ADJUSTMENT (MVA) We will not apply an MVA to contract value you transfer or withdraw out of the GPAs within 30 days before the end of the guarantee period. During this 30 day window you may choose to start a new guarantee period of the same length, transfer the contract value to a GPA of another length, transfer the contract value to any of the subaccounts or withdraw the contract value (subject to applicable withdrawal provisions). If we do not receive any instructions at the end of your guarantee period, our current practice is to automatically transfer the contract value into the shortest GPA term offered in your state. We guarantee the contract value allocated to the GPAs, including interest credited, if you do not make any transfers or withdrawals from the GPAs prior to 30 days before the end of the guarantee period (30 day rule). At all other times, and unless one of the exceptions to the 30 day rule described below applies, we will apply an MVA if you withdraw or transfer contract value from a GPA including withdrawals under a SecureSource rider or the Guarantor Withdrawal Benefit for Life rider or you elect an annuity payout plan while you have contract value invested in a GPA. We will refer to these transactions as "early withdrawals." The application of an MVA may result in either a gain or loss of principal. The 30-day rule does not apply and no MVA will apply to: - - transfers from a one-year GPA occurring under an automated dollar-cost averaging program or interest sweep strategy; - - automatic rebalancing under any Portfolio Navigator model portfolio we offer which contains one or more GPAs. However, an MVA will apply if you transfer to a new Portfolio Navigator model portfolio; - - amounts applied to an annuity payout plan while a Portfolio Navigator model portfolio containing one or more GPAs is in effect; - - reallocation of your contract value according to an updated Portfolio Navigator model portfolio; - - amounts withdrawn for fees and charges; or - - amounts we pay as death claims. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 27 When you request an early withdrawal, we adjust the early withdrawal amount by an MVA formula. The early withdrawal amount reflects the relationship between the guaranteed interest rate you are earning in your current GPA and the interest rate we are crediting on new GPAs that end at the same time as your current GPA. The MVA is sensitive to changes in current interest rates. The magnitude of any applicable MVA will depend on our current schedule of guaranteed interest rates at the time of the withdrawal, the time remaining in your guarantee period and your guaranteed interest rate. The MVA is negative, zero or positive depending on how the guaranteed interest rate on your GPA compares to the interest rate of a new GPA for the same number of years as the guarantee period remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS: Less than the new GPA rate + 0.10% Negative Equal to the new GPA rate + 0.10% Zero Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A. THE FIXED ACCOUNT (APPLIES IF AVAILABLE IN YOUR STATE) The fixed account is our general account. Amounts allocated to the fixed account become part of our general account. The fixed account includes the one-year fixed account and the DCA fixed account. We credit interest on amounts you allocate to the fixed account at rates we determine from time to time in our discretion. These rates will be based on various factors including, but not limited to, the interest rate environment, returns we earn on our general account investments, the rates currently in effect for new and existing RiverSource Life annuities, product design, competition, and RiverSource Life's revenues and expenses. The guaranteed minimum interest rate on amounts invested in the fixed account may vary by state but will not be lower than state law allows. We back the principal and interest guarantees relating to the fixed account. These guarantees are based on the continued claims-paying ability of RiverSource Life. The fixed account is not required to be registered with the SEC. The SEC staff does not review the disclosures in this prospectus on the fixed account, however, disclosures regarding the fixed account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ONE-YEAR FIXED ACCOUNT Unless an asset allocation program we offer is in effect, you may allocate purchase payments or transfer contract value to the one-year fixed account.(1) The value of the one-year fixed account increases as we credit interest to the one-year fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. We credit the one-year fixed account with the current guaranteed annual rate that is in effect on the date we receive your purchase payment or you transfer contract value to the one-year fixed account. The interest rate we apply to each purchase payment or transfer to the one-year fixed account is guaranteed for one year. There are restrictions on the amount you can allocate to the one-year fixed account as well as on transfers from this account (see "Buying Your Contract" and "Making the Most of Your Contract -- Transfer policies"). (1) For Contract Option C, the one-year fixed account may not be available, or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. DCA FIXED ACCOUNT You may allocate purchase payments to the DCA fixed account. You may not transfer contract value to the DCA fixed account. You may allocate your entire initial purchase payment to the DCA fixed account for a term of six or twelve months. We reserve the right to offer shorter or longer terms for the DCA fixed account. In accordance with your investment instructions, we transfer a pro rata amount from the DCA fixed account to your investment allocations monthly so that, at the end of the DCA fixed account term, the balance of the DCA fixed account is zero. The value of the DCA fixed account increases when we credit interest to the DCA fixed account, and decreases when we make monthly transfers from the DCA fixed account to your investment allocations. We credit interest only on the declining balance of the DCA fixed account; we do not credit interest on amounts that have been transferred from the DCA fixed account. We credit and compound interest daily based on a 365-day year (366 in a leap year) so as to produce the annual effective rate which we declare. Generally, we will credit the DCA fixed account with interest at the same annual effective rate we apply to the one-year fixed account on the date we receive your purchase payment, regardless of the length of the term you select. We reserve the right to declare different annual effective rates: - - for the DCA fixed account and the one-year fixed account; - - for the DCA fixed accounts with terms of differing length; - -------------------------------------------------------------------------------- 28 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - - for amounts in the DCA fixed account you instruct us to transfer to the one-year fixed account if available under your contract; - - for amounts in the DCA fixed account you instruct us to transfer to the GPAs; - - for amounts in the DCA fixed account you instruct us to transfer to the subaccounts. The interest rates in effect for the DCA fixed account when we receive your purchase payment are guaranteed for the length of the term. When you allocate an additional purchase payment to an existing DCA fixed account term, the interest rates applicable to that purchase payment will be the rates in effect for the DCA fixed account of the same term on the date we receive your purchase payment. For DCA fixed accounts with an initial term (or, in the case of an additional purchase payment, a remaining term) of less than twelve months, the net effective interest rates we credit to the DCA fixed account balance will be less than the declared annual effective rates. Alternatively, you may allocate your initial purchase payment to any combination of the following which equals one hundred percent of the amount you invest: - - the DCA fixed account for a six month term; - - the DCA fixed account for a twelve month term; - - the Portfolio Navigator model portfolio in effect; - - if no Portfolio Navigator model portfolio is in effect, to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If you make a purchase payment while a DCA fixed account term is in progress, you may allocate your purchase payment among the following: - - to the DCA fixed account term(s) then in effect. Amounts you allocate to an existing DCA fixed account term will be transferred out of the DCA fixed account over the remainder of the term. For example, if you allocate a new purchase payment to an existing DCA fixed account term of six months when only two months remains in the six month term, the amount you allocate will be transferred out of the DCA fixed account over the remaining two months of the term; - - to the Portfolio Navigator model portfolio then in effect; - - if no Portfolio Navigator model portfolio is in effect, then to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs. If no DCA fixed account term is in progress when you make an additional purchase payment, you may allocate it according to the rules above for the allocation of your initial purchase payment. If you participate in a model portfolio, and you change to a different model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account to your newly-elected model portfolio. If your contract permits, and you discontinue your participation in a model portfolio while a DCA fixed account term is in progress, we will allocate transfers from the DCA fixed account for the remainder of the term in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). You may discontinue any DCA fixed account before the end of its term by giving us notice. If you do so, we will transfer the remaining balance of the DCA fixed account whose term you are ending to the model portfolio in effect, or if no model portfolio is in effect, in accordance with your investment instructions to us to the one-year fixed account if available under your contract, the GPAs and/or the subaccounts, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPAs, including but not limited to, any limitations described in this prospectus on transfers (see "Transfer policies"). Dollar-cost averaging from the DCA fixed account does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. For a discussion of how dollar-cost averaging works, see "Making the Most of Your Contract -- Automated Dollar-Cost Averaging." BUYING YOUR CONTRACT Your investment professional will help you complete and submit an application and send it along with your initial purchase payment to our corporate office. We are required by law to obtain personal information from you which we will use to verify your identity. If you do not provide this information we reserve the right to refuse to issue your contract or take other steps we deem reasonable. You may buy Contract Option B or Contract Option C. Contract Option B has a seven-year withdrawal charge - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 29 schedule and optional living benefit riders. Contract Option C eliminates the per purchase payment withdrawal charge schedule in exchange for a higher mortality and expense risk fee; additionally, optional living benefit riders are not available under Contract Option C. Both contracts have the same underlying funds. As the owner, you have all rights and may receive all benefits under the contract. You may select a qualified or nonqualified annuity. You can own a nonqualified annuity in joint tenancy with rights of survivorship only in spousal situations. You cannot own a qualified annuity in joint tenancy. You can buy a contract or become an annuitant if you are 85 or younger. (The age limit may be younger for qualified annuities in some states.) When you apply, you may select (if available in your state): - - contract Option B or Option C; - - GPAs, the one-year fixed account (if included), the DCA fixed account and/or subaccounts in which you want to invest; - - how you want to make purchase payments; - - a beneficiary; - - the optional Portfolio Navigator asset allocation program(1); and - - one of the following Death Benefits: - ROP Death Benefit - MAV Death Benefit(2) - 5% Accumulation Death Benefit(2) - Enhanced Death Benefit(2) (1) There is no additional charge for this feature (2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not available with Benefit Protector and Benefit Protector Plus Death Benefit riders. In addition, under Contract Option B, you may also select (if available in your state): EITHER OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM): - - Accumulation Protector Benefit rider - - SecureSource - Single Life rider - - SecureSource - Joint Life rider Under both Contract Option B and Contract Option C, you may also select (if available in your state): EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS: - - Benefit Protector Death Benefit rider(3) - - Benefit Protector Plus Death Benefit rider(3) (3) Not available with the 5% Accumulation Death Benefit or Enhanced Death Benefit riders. This contract provides for allocations of purchase payments to the GPAs, the one-year fixed account, the DCA fixed account and/or to the subaccounts in even 1% increments subject to the required $1,000 required minimum investment for the GPAs. For Contract Option B, the amount of any purchase payment allocated to the one-year fixed account in total cannot exceed 30% of the purchase payment. More than 30% of a purchase payment may be so allocated if you establish an automated dollar-cost averaging arrangement with respect to the purchase payment according to procedures currently in effect. We reserve the right to further limit purchase payment allocations to the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. For Contract Option C, the one-year fixed account may not be available or may be significantly limited in some states. See your contract for the actual terms of the one-year fixed account you purchased. If your application is complete, we will process it and apply your purchase payment to the GPAs, the one-year fixed account, DCA fixed account and subaccounts you selected within two business days after we receive it at our administrative office. If we accept your application, we will send you a contract. If your application is not complete, you must give us the information to complete it within five business days. If we cannot accept your application within five business days, we will decline it and return your payment unless you specifically ask us to keep the payment and apply it once your application is complete. We will credit additional purchase payments you make to your accounts on the valuation date we receive them. If we receive an additional purchase payment at our corporate office before the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the valuation date we received the payment. If we receive an additional purchase payment at our corporate office at or after the close of business, we will credit any portion of that payment allocated to the subaccounts using the accumulation unit value we calculate on the next valuation date after we received the payment. - -------------------------------------------------------------------------------- 30 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS You may make monthly payments to your contract under a Systematic Investment Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin the SIP, you will complete and send a form and your first SIP payment along with your application. There is no charge for SIP. You can stop your SIP payments at any time. In most states, you may make additional purchase payments to nonqualified and qualified annuities until the retirement date. THE RETIREMENT DATE Annuity payouts begin on the retirement date. When we process your application, we will establish the retirement date to be the maximum age (or contract anniversary if applicable) for nonqualified annuities and Roth IRAs and for qualified annuities the date specified below. Your selected date can align with your actual retirement from a job, or it can be a different date, depending on your needs and goals and on certain restrictions. You also can change the retirement date, provided you send us written instructions at least 30 days before annuity payouts begin. FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be: - - no earlier than the 30th day after the contract's effective date; and - - no later than the annuitant's 90th birthday or the tenth contract anniversary, if purchased after age 80, or such other date as agreed upon by us. FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the retirement date generally must be: - - for IRAs by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2; or - - for all other qualified annuities, by April 1 of the year following the calendar year when the annuitant reaches age 70 1/2 or, if later, retires (except that 5% business owners may not select a retirement date that is later than April 1 of the year following the calendar year when they reach age 70 1/2). If you satisfy your required minimum distributions in the form of partial withdrawals from your contract, annuity payouts can start as late as the annuitant's 90th birthday or the tenth contract anniversary, if later, or a date that has been otherwise agreed to by us. Contract owners of IRAs and TSAs may also be able to satisfy required minimum distributions using other IRAs or TSAs, and in that case, may delay the annuity payout start date for this contract. BENEFICIARY We will pay to your named beneficiary the death benefit if it becomes payable before the retirement date while the contract is in force and before annuity payouts begin. If there is more than one beneficiary, we will pay each beneficiary's designated share when we receive their completed claim. A beneficiary will bear the investment risk of the variable account until we receive the beneficiary's completed claim. If there is no named beneficiary, the default provisions of your contract will apply. (See "Benefits in Case of Death" for more about beneficiaries.) If you select the SecureSource - Joint Life rider, please consider carefully whether or not you wish to change the beneficiary of your annuity contract. The rider will terminate if the surviving covered spouse can not utilize the spousal continuation provision of the contract when the death benefit is payable. PURCHASE PAYMENTS Purchase payment amounts and purchase payment timing may vary by state and be limited under the terms of your contract. MINIMUM INITIAL PURCHASE PAYMENT $10,000 MINIMUM ADDITIONAL PURCHASE PAYMENTS $50 for SIPs $100 for all other payment types MAXIMUM TOTAL PURCHASE PAYMENTS*: $1,000,000 * This limit applies in total to all RiverSource Life annuities you own. We reserve the right to waive or increase the maximum limit. For qualified annuities, the Code's limits on annual contributions also apply. We also reserve the right to restrict cumulative additional purchase payments for contracts with a SecureSource rider or the Guarantor Withdrawal Benefit for Life rider. Additional purchase payments are restricted during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 31 HOW TO MAKE PURCHASE PAYMENTS 1 BY LETTER Send your check along with your name and contract number to: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 2 BY SIP Contact your investment professional to complete the necessary SIP paperwork. LIMITATIONS ON USE OF CONTRACT If mandated by applicable law, including, but not limited to, federal anti-money laundering laws, we may be required to reject a purchase payment. We may also be required to block an owner's access to contract values or to satisfy other statutory obligations. Under these circumstances, we may refuse to implement requests for transfers, withdrawals or death benefits until instructions are received from the appropriate governmental authority or a court of competent jurisdiction. CHARGES CONTRACT ADMINISTRATIVE CHARGE We charge this fee for establishing and maintaining your records. We deduct $40 from the contract value on your contract anniversary. We prorate this charge among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. Some states also limit any contract charge allocated to the fixed account. We will waive this charge when your contract value is $50,000 or more on the current contract anniversary. If you take a full withdrawal from your contract, we will deduct the charge at the time of withdrawal regardless of the contract value. We cannot increase the annual contract administrative charge and it does not apply after annuity payouts begin or when we pay death benefits. VARIABLE ACCOUNT ADMINISTRATIVE CHARGE We apply this charge daily to the subaccounts. It is reflected in the unit values of your subaccounts and it totals 0.15% of their average daily net assets on an annual basis. It covers certain administrative and operating expenses of the subaccounts such as accounting, legal and data processing fees and expenses involved in the preparation and distribution of reports and prospectuses. We cannot increase the variable account administrative charge. MORTALITY AND EXPENSE RISK FEE We charge these fees daily to the subaccounts. The unit values of your subaccounts reflect these fees. These fees cover the mortality and expense risk that we assume. These fees do not apply to the GPAs or the fixed account. We cannot increase these fees. The contract (either Option B or Option C) and the death benefit guarantee you select determines the mortality and expense risk fee you pay:
CONTRACT OPTION B CONTRACT OPTION C ROP Death Benefit 0.90% 1.55% MAV Death Benefit 1.10 1.75 5% Accumulation Death Benefit 1.25 1.90 Enhanced Death Benefit 1.30 1.95
Mortality risk arises because of our guarantee to pay a death benefit and our guarantee to make annuity payouts according to the terms of the contract, no matter how long a specific owner or annuitant lives and no matter how long our entire group of owners or annuitants live. If, as a group, owners or annuitants outlive the life expectancy we assumed in our actuarial tables, then we must take money from our general assets to meet our obligations. If, as a group, owners or annuitants do not live as long as expected, we could profit from the mortality risk fee. We deduct the mortality risk fee from the subaccounts during the annuity payout period even if the annuity payout plan does not involve a life contingency. Expense risk arises because we cannot increase the contract administrative charge or the variable account administrative charge and these charges may not cover our expenses. We would have to make up any deficit from our general assets. We could profit from the expense risk fee if future expenses are less than expected. - -------------------------------------------------------------------------------- 32 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS The subaccounts pay us the mortality and expense risk fee they accrued as follows: - - first, to the extent possible, the subaccounts pay this fee from any dividends distributed from the funds in which they invest; - - then, if necessary, the funds redeem shares to cover any remaining fees payable. We may use any profits we realize from the subaccounts' payment to us of the mortality and expense risk fee for any proper corporate purpose, including, among others, payment of distribution (selling) expenses. We do not expect that the withdrawal charge for contract Option B will cover sales and distribution expenses. WITHDRAWAL CHARGE You select either contract Option B or Option C at the time of application. Contract Option C has no purchase payment withdrawal charge schedule but carries a higher mortality and expense risk fee than contract Option B. If you select contract Option B and you withdraw all or part of your contract value before annuity payouts begin, we may deduct a withdrawal charge. As described below, a withdrawal charge schedule applies to each purchase payment you make. The withdrawal charge lasts for seven years (see "Expense Summary"). You may withdraw an amount during any contract year without a withdrawal charge. We call this amount the total free amount (TFA). The TFA varies depending on whether your Contract Option B includes a SecureSource rider or the Guarantor Withdrawal Benefit for Life rider. CONTRACT OPTION B WITHOUT SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The TFA is the greater of: - - 10% of the contract value on the prior contract anniversary(1); or - - current contract earnings. CONTRACT OPTION B WITH SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The TFA is the greatest of: - - 10% of the contract value on the prior contract anniversary(1); - - current contract earnings; or - - the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime Payment. (1) We consider your initial purchase payment to be the prior contract anniversary's contract value during the first contract year. Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as described below. A withdrawal charge will apply if the amount you withdraw includes any of your prior purchase payments that are still within their withdrawal charge schedule. To determine whether your withdrawal includes any of your prior purchase payments that are still within their withdrawal charge schedule, we withdraw amounts from your contract in the following order: 1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA. 2. We withdraw purchase payments not previously withdrawn, in the order you made them: the oldest purchase payment first, the next purchase payment second, etc. until all purchase payments have been withdrawn. By applying this "first-in, first-out" rule, we do not assess a withdrawal charge on purchase payments that we received prior to the number of years stated in the withdrawal charge schedule you select when you purchase the contract. We only assess a withdrawal charge on purchase payments that are still within the withdrawal charge schedule you selected. EXAMPLE: Each time you make a purchase payment under the contract Option B, a withdrawal charge schedule attaches to that purchase payment. The withdrawal charge percentage for each purchase payment declines according to the withdrawal charge schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 7-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY" ABOVE.) For example, if you select contract Option B, during the first two years after a purchase payment is made, the withdrawal charge percentage attached to that payment is 8%. The withdrawal charge percentage for that payment during the seventh year after it is made is 2%. At the beginning of the eighth year after that purchase payment is made, and thereafter, there is no longer a withdrawal charge as to that payment. We determine your withdrawal charge by multiplying each of your payments withdrawn by the applicable withdrawal charge percentage (see "Expense Summary"), and then adding the total withdrawal charges. For a partial withdrawal that is subject to a withdrawal charge, the amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. A partial withdrawal that includes contract value taken from the GPAs may also be subject to a Market Value Adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay you the amount you request. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 33 Note that the withdrawal charge is assessed against the original amount of your purchase payments that are subject to a withdrawal charge, even if your contract has lost value. This means that purchase payments withdrawn may be greater than the amount of contract value you withdraw. For an example, see Appendix B. WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION B We do not assess withdrawal charges for: - - withdrawals of any contract earnings; - - withdrawals of amounts totaling up to 10% of the contract value on the prior contract anniversary to the extent it exceeds contract earnings; - - if you elected a SecureSource rider or the Guarantor Withdrawal Benefit for Life rider, the greater of your contract's Remaining Benefit Payment or Remaining Annual Lifetime Payment to the extent it exceeds the greater of contract earnings or 10% of the contract value on the prior contract anniversary; - - required minimum distributions from a qualified annuity provided the amount is no greater than the required amount calculated under your specific contract currently in force; and - - contracts settled using an annuity payout plan (EXCEPTION: As described below, if you select annuity payout Plan E, and choose later to withdraw the value of your remaining annuity payments, we will assess a withdrawal charge. This exception also applies to Contract Option C.) - - withdrawals made as a result of one of the "Contingent events" described below to the extent permitted by state law (see your contract for additional conditions and restrictions); - - amounts we refund to you during the free look period; and - - death benefits. CONTINGENT EVENTS - - Withdrawals you make if you or the annuitant are confined to a hospital or nursing home and have been for the prior 60 days. Your contract will include this provision when you and the annuitant are under age 76 at contract issue. You must provide proof satisfactory to us of the confinement as of the date you request the withdrawal. - - To the extent permitted by state law, withdrawals you make if you or the annuitant are 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 the licensed physician's statement. You must provide us with a licensed physician's statement containing the terminal illness diagnosis and the date the terminal illness was initially diagnosed. WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIC PERIOD: Under this annuity payout plan, in most cases you can elect to take a withdrawal of the remaining variable payouts. If you take a withdrawal under this annuity payout plan we impose a withdrawal charge whether you have Contract Option B or Contract Option C. This charge will vary based on your contract option and the assumed investment rate (AIR) you selected for the variable payouts. The withdrawal charge equals the present value of the remaining variable payouts using an AIR of either 3.5% or 5.0% minus the present value of the remaining variable payouts using the applicable discount rate shown in a table in the "Expense Summary." (See "The Annuity Payout Period -- Annuity Payout Plans.") POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and administrative expenses due to the size of the group, the average contribution and the use of group enrollment procedures. In such cases, we may be able to reduce or eliminate the contract administrative and withdrawal charges. However, we expect this to occur infrequently. FUND FEES AND EXPENSES There are deductions from and expenses paid out of the assets of the funds that are described in the prospectuses for those funds. (See "Annual Operating Expenses of the Funds.") PREMIUM TAXES Certain state and local governments impose premium taxes on us (up to 3.5%). These taxes depend upon your state of residence or the state in which the contract was issued. Currently, we deduct any applicable premium tax when annuity payouts begin, but we reserve the right to deduct this tax at other times such as when you make purchase payments or when you make a full withdrawal from your contract. OPTIONAL LIVING BENEFIT CHARGES -- OFFERED UNDER CONTRACT OPTION B ACCUMULATION PROTECTOR BENEFIT RIDER FEE We charge an annual fee of 0.55% of the greater of your contract value or the minimum contract accumulation value on your contract anniversary for this optional benefit only if you select it. We deduct the fee from the contract value on the contract - -------------------------------------------------------------------------------- 34 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS anniversary. We prorate this fee among the GPAs, the one-year fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Accumulation Protector Benefit rider, you may not cancel it and the fee will continue to be deducted until the end of the waiting period. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. Currently, the Accumulation Protector Benefit rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Accumulation Protector Benefit rider charge will not exceed a maximum of 1.75%. We will not change the Accumulation Protector Benefit rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge; (b) you choose the spousal continuation step up after we have exercised our right to increase the rider charge; (c) you change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. We reserve the right to restart the waiting period whenever you elect to change your model portfolio to one that causes the rider charge to increase. The fee does not apply after annuity payouts begin. SECURESOURCE RIDER FEE We charge an annual fee based on the greater of the contract anniversary value or the total Remaining Benefit Amount (RBA) for this optional feature only if you select it as follows: - - SecureSource - Single Life rider, 0.65%; - - SecureSource - Joint Life rider, 0.85%. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect a SecureSource rider, you may not cancel it and the fee will continue to be deducted until the contract or rider is terminated, or the contract value reduces to zero. If the contract or rider is terminated for any reason, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the RBA reduces to zero but the contract value has not been depleted, you will continue to be charged. Currently the SecureSource rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The SecureSource - Single Life rider charge will not exceed a maximum charge of 1.50%. The SecureSource - Joint Life rider charge will not exceed a maximum charge of 1.75%. We will not change the SecureSource rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to exercise the annual elective step up before the end of the waiting period, the SecureSource rider charge will not change until the end of the waiting period. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective annual step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the elective spousal continuation step up after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 35 If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE We charge an annual fee of 0.65% of the greater of the contract anniversary value or the total Remaining Benefit Amount (RBA) for this optional feature only if you select it. We deduct the fee from your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion as your interest in each bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not cancel it and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero or annuity payouts begin. If the contract is terminated for any reason or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. If the RBA goes to zero but the contract value has not been depleted, you will continue to be charged. Currently the Guarantor Withdrawal Benefit for Life rider charge does not vary with the Portfolio Navigator model portfolio selected; however, we reserve the right to increase this charge and/or charge a separate rider charge for each model portfolio. The Guarantor Withdrawal Benefit for Life rider charge will not exceed a maximum charge of 1.50%. We will not change the Guarantor Withdrawal Benefit for Life rider charge after the rider effective date unless: (a) you choose the annual elective step up after we have exercised our rights to increase the rider charge. However, if you choose to exercise the annual elective step up before the end of the waiting period, the Guarantor Withdrawal Benefit for Life rider charge will not change until the end of the waiting period. The charge will be based on the charge in effect on the valuation date we received your last written request to exercise the elective annual step up or to elect to change your Portfolio Navigator model portfolio; (b) you choose the elective spousal continuation step up after we have exercised our rights to increase the rider charge; (c) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge; (d) you elect to change your Portfolio Navigator model portfolio after we have exercised our rights to charge a separate rider charge for each model portfolio. If you choose the elective step up, the elective spousal continuation step up, or change your Portfolio Navigator model portfolio after we have exercised our rights to increase the rider charge as described above, you will pay the charge that is in effect on the valuation date we receive your written request to step up or change your Portfolio Navigator model portfolio. On the next contract anniversary, we will calculate an average rider charge, for the preceding contract year only, that reflects the various different charges that were in effect that year, adjusted for the number of calendar days each charge was in effect. The fee does not apply after annuity payouts begin. OPTIONAL DEATH BENEFIT CHARGES BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.25% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE We charge a fee for the optional feature only if you select it. If selected, we deduct 0.40% of your contract value on your contract anniversary. We prorate this fee among the GPAs, the fixed account and the subaccounts in the same proportion your interest in each account bears to your total contract value. We will modify this prorated approach to comply with state regulations where necessary. - -------------------------------------------------------------------------------- 36 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS If the contract is terminated for any reason other than death or when annuity payouts begin, we will deduct the fee from the proceeds payable adjusted for the number of calendar days coverage was in place since we last deducted the fee. We cannot increase this annual charge after the rider effective date and it does not apply after annuity payouts begin or when we pay death benefits. VALUING YOUR INVESTMENT We value your accounts as follows: GPAS We value the amounts you allocated to the GPAs directly in dollars. The value of a GPA equals: - - the sum of your purchase payments and transfer amounts allocated to the GPAs; - - plus interest credited; - - minus the sum of amounts withdrawn after any applicable MVA (including any applicable withdrawal charges for contract Option B) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Benefit Protector rider; or - Benefit Protector Plus rider. THE FIXED ACCOUNT THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT IF AVAILABLE UNDER YOUR CONTRACT, AND THE DCA FIXED ACCOUNT. We value the amounts you allocate to the fixed account directly in dollars. The value of the fixed account equals: - - the sum of your purchase payments allocated to the one-year fixed account (if included) and the DCA fixed account, and transfer amounts to the one-year fixed account (if included); - - plus interest credited; - - minus the sum of amounts withdrawn (including any applicable withdrawal charges for Contract Option B) and amounts transferred out; - - minus any prorated portion of the contract administrative charge; and - - minus the prorated portion of the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Benefit Protector rider; or - Benefit Protector Plus rider. SUBACCOUNTS We convert amounts you allocated to the subaccounts into accumulation units. Each time you make a purchase payment or transfer amounts into one of the subaccounts, we credit a certain number of accumulation units to your contract for that subaccount. Conversely, we subtract a certain number of accumulation units from your contract each time you take a partial withdrawal, transfer amounts out of a subaccount, or we assess a contract administrative charge, a withdrawal charge or fee for any optional riders with annual charges (if applicable). The accumulation units are the true measure of investment value in each subaccount during the accumulation period. They are related to, but not the same as, the net asset value of the fund in which the subaccount invests. The dollar value of each accumulation unit can rise or fall daily depending on the variable account expenses, performance of the fund and on certain fund expenses. Here is how we calculate accumulation unit values: NUMBER OF UNITS: To calculate the number of accumulation units for a particular subaccount we divide your investment by the current accumulation unit value. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 37 ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount equals the last value times the subaccount's current net investment factor. WE DETERMINE THE NET INVESTMENT FACTOR BY: - - adding the fund's current net asset value per share, plus the per share amount of any accrued income or capital gain dividends to obtain a current adjusted net asset value per share; then - - dividing that sum by the previous adjusted net asset value per share; and - - subtracting the percentage factor representing the mortality and expense risk fee and the variable account administrative charge from the result. Because the net asset value of the fund may fluctuate, the accumulation unit value may increase or decrease. You bear all the investment risk in a subaccount. FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change in two ways -- in number and in value. The number of accumulation units you own may fluctuate due to: - - additional purchase payments you allocate to the subaccounts; - - transfers into or out of the subaccounts; - - partial withdrawals; - - withdrawal charges (for contract Option B); and the deduction of a prorated portion of: - - the contract administrative charge; and - - the fee for any of the following optional benefits you have selected: - Accumulation Protector Benefit rider; - SecureSource rider; - Guarantor Withdrawal Benefit for Life rider; - Benefit Protector rider; or - Benefit Protector Plus rider. Accumulation unit values will fluctuate due to: - - changes in fund net asset value; - - fund dividends distributed to the subaccounts; - - fund capital gains or losses; - - fund operating expenses; and - - mortality and expense risk fee and the variable account administrative charge. MAKING THE MOST OF YOUR CONTRACT AUTOMATED DOLLAR-COST AVERAGING Currently, you can use automated transfers to take advantage of dollar-cost averaging (investing a fixed amount at regular intervals). For example, you might transfer a set amount monthly from a relatively conservative subaccount to a more aggressive one, or to several others, or from the one-year fixed account or one-year GPA to one or more subaccounts. Automated transfers are not available for GPA terms of two or more years. You can also obtain the benefits of dollar-cost averaging by setting up regular automatic SIP payments or by establishing an interest sweep strategy. Interest sweeps are a monthly transfer of the interest earned from the one-year fixed account or one-year GPA into the subaccounts of your choice. If you participate in an interest sweep strategy the interest you earn on the one-year fixed account or one-year GPA will be less than the annual interest rate we apply because there will be no compounding. There is no charge for dollar-cost averaging. This systematic approach can help you benefit from fluctuations in accumulation unit values caused by fluctuations in the market values of the funds. Since you invest the same amount each period, you automatically acquire more units when the market value falls and fewer units when it rises. The potential effect is to lower your average cost per unit. - -------------------------------------------------------------------------------- 38 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS HOW DOLLAR-COST AVERAGING WORKS
NUMBER BY INVESTING AN EQUAL NUMBER AMOUNT ACCUMULATION OF UNITS OF DOLLARS EACH MONTH ... MONTH INVESTED UNIT VALUE PURCHASED Jan $100 $20 5.00 Feb 100 18 5.56 you automatically buy more units when the per unit market price is low... ARROW Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 Jun 100 18 5.56 Jul 100 17 5.88 and fewer units when the per unit market price is high. ARROW Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the average market price actually was $18.10. Dollar-cost averaging does not guarantee that any subaccount will gain in value nor will it protect against a decline in value if market prices fall. Because dollar-cost averaging involves continuous investing, your success will depend upon your willingness to continue to invest regularly through periods of low price levels. Dollar-cost averaging can be an effective way to help meet your long-term goals. For specific features contact your investment professional. Dollar-cost averaging as described in this section is not available when a Portfolio Navigator model portfolio is in effect. However, subject to certain restrictions, dollar-cost averaging is available through the DCA fixed account. See the "DCA Fixed Account" and "Portfolio Navigator Asset Allocation Program" sections in this prospectus for details. ASSET REBALANCING You can ask us in writing to automatically rebalance the subaccount portion of your contract value either quarterly, semiannually, or annually. The period you select will start to run on the date we record your request. On the first valuation date of each of these periods, we automatically will rebalance your contract value so that the value in each subaccount matches your current subaccount percentage allocations. These percentage allocations must be in whole numbers. There is no charge for asset rebalancing. The contract value must be at least $2,000. You can change your percentage allocations or your rebalancing period at any time by contacting us in writing. We will restart the rebalancing period you selected as of the date we record your change. You also can ask us in writing to stop rebalancing your contract value. You must allow 30 days for us to change any instructions that currently are in place. For more information on asset rebalancing, contact your investment professional. Different rules apply to asset rebalancing under a Portfolio Navigator model portfolio (see "Portfolio Navigator Asset Allocation Program"). As long as you are not participating in a Portfolio Navigator model portfolio, asset rebalancing is available for use with the DCA fixed account (see "DCA Fixed Account") only if your subaccount allocation for asset rebalancing is exactly the same as your subaccount allocation for transfers from the DCA fixed account. If you change your subaccount allocations under the asset rebalancing program or the DCA fixed account, we will automatically change the subaccount allocations so they match. If you do not wish to have the subaccount allocation be the same for the asset rebalancing program and the DCA fixed account, you must terminate the asset rebalancing program or the DCA fixed account, as you may choose. PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM The Portfolio Navigator Asset Allocation Program (PN program) described in this section is available for nonqualified annuities and for qualified annuities. The PN program allows you to allocate your contract value to a PN program model portfolio that consists of subaccounts, each of which invests in an underlying fund with a particular investment objective, and may include certain GPAs and/or the one-year fixed account (if available under the PN program) that represent various asset classes (allocation options). The PN program also allows you to periodically update your model portfolio or transfer to a new model portfolio. You are required to participate in the PN program if your contract includes an optional Accumulation Protector Benefit rider, SecureSource rider or the Guarantor Withdrawal Benefit for Life rider. If your contract does not include one of these riders, you also may elect to participate in the PN program at no additional charge. You should review any PN program information, including the terms of the PN program, - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 39 carefully. Your investment professional can provide you with additional information and can answer questions you may have on the PN program. SERVICE PROVIDERS TO THE PN PROGRAM. RiverSource Investments, an affiliate of ours, serves as non-discretionary investment adviser for the PN program solely in connection with the development of the model portfolios and periodic updates of the model portfolios. In this regard, RiverSource Investments enters into an investment advisory agreement with each contract owner participating in the PN program. In its role as investment adviser to the PN program, RiverSource Investments relies upon the recommendations of a third party service provider. In developing and updating the model portfolios, RiverSource Investments reviews the recommendations, and the third party's rationale for the recommendations, with the third party service provider. RiverSource Investments also conducts periodic due diligence and provides ongoing oversight with respect to the process utilized by the third party service provider. For more information on RiverSource Investment's role as investment adviser for the PN program, please see the Portfolio Navigator Asset Allocation Program Investment Adviser Disclosure Document, which is based on Part II of RiverSource Investment's Form ADV, the SEC investment adviser registration form. The Disclosure Document is delivered to contract owners at or before the time they enroll in the PN program. Currently, the PN program model portfolios are designed and periodically updated for RiverSource Investments by Morningstar Associates, LLC, a registered investment adviser and wholly owned subsidiary of Morningstar, Inc. RiverSource Investments may replace Morningstar Associates and may hire additional firms to assist with the development and periodic updates of the model portfolios in the future. Also, RiverSource Investments may elect to develop and periodically update the model portfolios without the assistance of a third party service provider. The criteria used in developing and updating the model portfolios do not guarantee or predict future performance. Neither Morningstar Associates nor RiverSource Investments, in connection with their respective roles, provides any individualized investment advice to contract owners regarding the application of a particular model portfolio to his or her circumstances. Contract owners are solely responsible for determining whether any model portfolio is appropriate. We identify to Morningstar Associates the universe of allocation options that can be included in the model portfolios and, in limited circumstances, underlying funds of such allocation options (the universe of allocation options). The universe of allocation options may not include all allocation options available under your contract. We may modify from time to time such universe of allocation options. These modifications may reflect instructions from, or respond to actions taken by, any party making an allocation option available to us. For example, we may modify the universe of allocation options in response to the liquidation, merger or other closure of a fund. Once we identify this universe of allocation options to Morningstar Associates, neither RiverSource Investments, nor any of its affiliates, including us, dictates to Morningstar Associates the number of allocation options that should be included in a model portfolio, the percentage that any allocation option represents in a model portfolio, or whether a particular allocation option may be included in a model portfolio. However, as described below under "Potential conflict of interest", there are certain conflicts of interest associated with RiverSource Investments and its affiliates' influence over the development and updating of the model portfolios. POTENTIAL CONFLICTS OF INTEREST. In identifying the universe of allocation options, we and our affiliates, including RiverSource Investments, are subject to competing interests that may influence the allocation options we propose. These competing interests involve compensation that RiverSource Investments or its affiliates may receive as the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options as well as compensation we or an affiliate of ours may receive for providing services in connection with the RiverSource Variable Series Trust funds and such allocation options or their underlying funds. These competing interests also involve compensation we or an affiliate of ours may receive if certain funds that RiverSource Investments does not advise are included in model portfolios. The inclusion of funds that pay compensation to RiverSource Investments or an affiliate may have a positive or negative impact on performance. As an affiliate of RiverSource Investments, the investment adviser to the RiverSource Variable Series Trust funds and certain allocation options, we may have an incentive to identify the RiverSource Variable Series Trust funds and such allocation options for consideration as part of a model portfolio over unaffiliated funds. In addition, RiverSource Investments, in its capacity as investment adviser to the RiverSource Variable Series Trust funds, monitors the performance of the RiverSource Variable Series Trust funds. In this role, RiverSource Investments may, from time to time, recommend certain changes to the board of directors of the RiverSource Variable Series Trust funds. These changes may include but not be limited to a change in portfolio management or fund strategy or the closure or merger of a RiverSource Variable Series Trust fund. RiverSource Investments also may believe that certain RiverSource Variable Series Trust funds may benefit from additional assets or could be harmed by redemptions. All of these factors may impact RiverSource Investment's view regarding the composition and allocation of a model portfolio. RiverSource Investments' role as investment adviser to the PN program in connection with the development and updating of the model portfolios, and our identification of the universe of allocation options to Morningstar Associates for consideration, may influence the allocation of assets to or away from allocation options that are affiliated with, or managed or advised by RiverSource Investments or its affiliates. - -------------------------------------------------------------------------------- 40 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS RiverSource Investments, we or another affiliate of ours may receive higher compensation from certain unaffiliated funds that RiverSource Investments does not advise or manage. (See "Expense Summary -- Annual Operating Expenses of the Funds" and "The Variable Account and the Funds -- The Funds.") Therefore, we may have an incentive to identify these unaffiliated funds to Morningstar Associates for inclusion in the model portfolios. In addition, we or an affiliate of ours may receive higher compensation from certain GPAs or the one-year fixed account than from other allocation options. We therefore may have an incentive to identify these allocation options to Morningstar Associates for inclusion in the model portfolios. Some officers and employees of RiverSource Investments are also officers or employees of us or our affiliates which may be involved in, and/or benefit from, your participation in the PN program. These officers and employees may have an incentive to make recommendations, or take actions, that benefit one or more of the entities they represent, rather than participants in the PN program. PARTICIPATING IN THE PN PROGRAM. If you choose or are required to participate in the PN program, you are responsible for determining which model portfolio is best for you. Your investment professional can help you make this determination. In addition, your investment professional may provide you with an investor questionnaire, a tool to help define your investing style which is based on factors such as your investment goals, your tolerance for risk and how long you intend to invest. Your responses to the investor questionnaire can help you determine which model portfolio most closely matches your investing style. While the scoring of the investor questionnaire is objective, there is no guarantee that your responses to the investor questionnaire accurately reflect your tolerance for risk. Similarly, there is no guarantee that the asset mix reflected in the model portfolio you select after completing the investor questionnaire is appropriate to your ability to withstand investment risk. Neither RiverSource Life nor RiverSource Investments is responsible for your decision to participate in the PN program, your selection of a specific model portfolio or your decision to change to an updated or different model portfolio. Currently, there are five PN model portfolios ranging from conservative to aggressive. You may not use more than one model portfolio at a time. Each model portfolio specifies allocation percentages to each of the subaccounts, any GPAs and/or the one-year fixed account that make up that model portfolio. By participating in the PN program, you instruct us to invest your contract value in the subaccounts, any GPAs and/or the one-year fixed account (if included) according to the allocation percentages stated for the specific model portfolio you have selected. By participating in the PN program, you also instruct us to automatically rebalance your contract value quarterly in order to maintain alignment with these allocation percentages. Special rules apply to the GPAs if they are included in a model portfolio. Under these rules: - - no MVA will apply when rebalancing occurs within a specific model portfolio (but an MVA may apply if you elect to transfer to a new model portfolio); - - no MVA will apply if you reallocate your contract value according to an updated model portfolio; and - - no MVA will apply when you elect an annuity payout plan while your contract value is invested in a model portfolio. (See "Guarantee Period Accounts -- Market Value Adjustment.") If you initially allocate qualifying purchase payments to the DCA fixed account, when available (see "DCA Fixed Account"), and you are participating in the PN program, we will make monthly transfers in accordance with your instructions from the DCA fixed account into the model portfolio you have chosen. Each model portfolio is evaluated periodically by Morningstar Associates, which may then provide updated recommendations to RiverSource Investments. As a result, the model portfolios may be updated from time to time (typically annually) with new allocation options and allocation percentages. When these reassessments are completed and changes to the model portfolios occur, you will receive a reassessment letter. This reassessment letter will notify you that the model portfolio has been reassessed and that, unless you instruct us not to do so, your contract value, less amounts allocated to the DCA fixed account, is scheduled to be reallocated according to the updated model portfolio. The reassessment letter will specify the scheduled reallocation date and will be sent to you at least 30 days prior to this date. Based on the written authorization you provided when you enrolled in the PN program, if you do not notify us otherwise, you will be deemed to have instructed us to reallocate your contract value, less amounts allocated to the DCA fixed account, according to the updated model portfolio. If you do not want your contract value, less amounts allocated to the DCA fixed account, to be reallocated according to the updated model portfolio, you must provide written or other authorized notification as specified in the reassessment letter. In addition to this periodic reassessment and reallocation of the model portfolios, you may also request a change to your model portfolio up to twice per contract year by written request on an authorized form or by another method agreed to by us. Such changes include changing to a different model portfolio at any time or requesting to reallocate according to the updated version of your existing model portfolio other than according to the reassessment process described above. If your contract includes an optional Accumulation Protector Benefit rider, SecureSource rider or Guarantor Withdrawal Benefit for Life rider and you make such a change (other than a scheduled periodic reallocation), we may charge you a higher fee for your rider. If your contract includes the SecureSource rider, we reserve the right to limit the number of model portfolio changes if required to comply with the written instructions of a Fund (see "Market Timing"). If your contract includes the SecureSource rider or the Guarantor - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 41 Withdrawal Benefit for Life rider, we reserve the right to limit the number of model portfolios from which you can select, subject to state restrictions. We reserve the right to change the terms and conditions of the PN program upon written notice to you. This includes but is not limited to the right to: - - limit your choice of models based on the amount of your initial purchase payment we accept or when you take a withdrawal; - - cancel required participation in the program after 30 days written notice; - - substitute a fund of funds for your current model portfolio if permitted under applicable securities law; and - - discontinue the PN program. We will give you 30 days' written notice of any such change. In addition, RiverSource Investments has the right to terminate its investment advisory agreement with you upon 30 days' written notice. If RiverSource Investments terminates its investment advisory agreement with you and other participants in the PN program, we would either have to find a replacement investment adviser or terminate the PN program unless otherwise permitted by applicable law, regulations or positions of the SEC staff. The investment advisory agreement will terminate automatically in the event that we are notified of a death which results in a death benefit becoming payable under the contract. In this case, your investment advisory relationship with RiverSource Investments and the notification of future reassessments will cease, but prior instructions provided by you in connection with your participation in the PN program will continue (e.g., rebalancing instructions provided to insurer). RISKS. Asset allocation through the PN program does not guarantee that your contract will increase in value nor will it protect against a decline in value if market prices fall. By spreading your contract value among various allocation options under the PN program, you may be able to reduce the volatility in your contract value, but there is no guarantee that this will happen. Although each model portfolio is intended to optimize returns given various levels of risk tolerance, a model portfolio may not perform as intended. A model portfolio, the allocation options and market performance may differ in the future from historical performance and from the assumptions upon which the model portfolio is based, which could cause the model portfolio to be ineffective or less effective in reducing volatility. Investment performance of your contract value could be better or worse by participating in the PN program than if you had not participated. A model portfolio may perform better or worse than any single fund or allocation option or any other combination of funds or allocation options. The performance of a model portfolio depends on the performance of the component funds. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of the model portfolios can cause their component funds to incur transactional expenses to raise cash for money flowing out of the funds or to buy securities with money flowing into the funds. Moreover, a large outflow of money from the funds may increase the expenses attributable to the assets remaining in the funds. These expenses can adversely affect the performance of the relevant funds and of the model portfolios. In addition, when a particular fund needs to buy or sell securities due to quarterly rebalancing or periodic updating of a model portfolio, it may hold a large cash position. A large cash position could detract from the achievement of the fund's investment objective in a period of rising market prices; conversely, a large cash position would reduce the fund's magnitude of loss in the event of falling market prices and provide the fund with liquidity to make additional investments or to meet redemptions. (See also the description of competing interests in the section titled "Service Providers to the PN Program" above.) For additional information regarding the risks of investing in a particular fund, see that fund's prospectus. PN PROGRAM UNDER THE ACCUMULATION PROTECTOR BENEFIT RIDER, SECURESOURCE RIDERS OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER If you purchase the optional Accumulation Protector Benefit rider, an optional SecureSource rider or the optional Guarantor Withdrawal Benefit for Life rider, you are required to participate in the PN program under the terms of each rider. - - ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation Protector Benefit rider. As long as the Accumulation Protector Benefit rider is in effect, your contract value must be invested in one of the model portfolios. The Accumulation Protector Benefit rider automatically ends at the end of the waiting period as does the requirement that you participate in the PN program. At all other times, if you do not want to participate in any of the model portfolios, you must terminate your contract by requesting a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD. - - SECURESOURCE RIDERS OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: In those states where the SecureSource riders are not available, you may purchase the Guarantor Withdrawal Benefit for Life rider if available in your state; see disclosure in Appendix I. The SecureSource riders and the Guarantor Withdrawal Benefit for Life rider require that your contract value be invested in one of the model portfolios for the life of the contract. Subject to state restrictions, we reserve the right to limit the - -------------------------------------------------------------------------------- 42 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS number of model portfolios from which you can select based on the dollar amount of purchase payments you make. Because you cannot terminate a SecureSource rider or the Guarantor Withdrawal Benefit for Life rider once you have selected it, you must terminate your contract by requesting a full withdrawal if you do not want to participate in any of the model portfolios. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT A SECURESOURCE RIDER OR THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT. OPTIONAL PN PROGRAM If you do not select the optional Accumulation Protector Benefit rider, an optional SecureSource rider or the optional Guarantor Withdrawal Benefit for Life rider with your contract, you may elect to participate in the PN program. You may elect the PN program at any time. You may cancel your participation in the PN program at any time by giving us written notice or by any other method authorized by us. Upon cancellation, automated rebalancing associated with the PN program will end. You may ask us in writing to allocate the variable subaccount portion of your contract value according to the percentage that you choose (see "Asset Rebalancing"). You can elect to participate in the PN program again at any time. You will also cancel the PN program if you initiate transfers other than transfers to one of the current model portfolios or transfers from the DCA fixed account (see "DCA Fixed Account"). Partial withdrawals do not cancel the PN program. Your participation in the PN program will terminate on the date you make a full withdrawal from your contract, on your retirement date or when your contract terminates for any reason. TRANSFERRING AMONG ACCOUNTS The transfer rights discussed in this section do not apply while a Portfolio Navigator model portfolio is in effect. You may transfer contract value from any one subaccount or GPAs, the one-year fixed account or the DCA fixed account to another subaccount before annuity payouts begin. Certain restrictions apply to transfers involving the GPAs and the one-year fixed account. You may not transfer contract value to a DCA fixed account. The date your request to transfer will be processed depends on when we receive it: - - If we receive your transfer request at our corporate office before the close of business, we will process your transfer using the accumulation unit value we calculate on the valuation date we received your transfer request. - - If we receive your transfer request at our corporate office at or after the close of business, we will process your transfer using the accumulation unit value we calculate on the next valuation date after we received your transfer request. There is no charge for transfers. Before making a transfer, you should consider the risks involved in changing investments. Transfers out of the GPAs will be subject to an MVA if done more than 30 days before the end of the guarantee period. We may suspend or modify transfer privileges at any time. For information on transfers after annuity payouts begin, see "Transfer policies" below. TRANSFER POLICIES - - Before annuity payouts begin, you may transfer contract values between the subaccounts, or from the subaccounts to the GPAs and the one-year fixed account (if included) at any time. However, if you made a transfer from the one-year fixed account to the subaccounts or the GPAs, you may not make a transfer from any subaccount or GPA back to the one-year fixed account for six months following that transfer. We reserve the right to limit transfers to the one-year fixed account if the interest rate we are then currently crediting to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from the one-year fixed account (if included) to the subaccounts or the GPAs once a year on or within 30 days before or after the contract anniversary (except for automated transfers, which can be set up at any time for certain transfer periods subject to certain minimums). Transfers from the one-year fixed account are not subject to an MVA. For Contract Option B, the amount of contract value transferred to the one-year fixed account cannot result in the value of the one-year fixed account being greater than 30% of the contract value; transfers out of the one-year fixed account are limited to 30% of one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. For Contract Option C, transfers to the one-year fixed account and transfers out of the one-year fixed account may not be available or may be significantly limited. See your contract for the actual terms of the one-year fixed account you purchased. For both Contract Option B and Contract Option C, we reserve the right to further limit transfers to or from the one-year fixed account if the interest rate we are then crediting on new purchase payments allocated to the one-year fixed account is equal to the minimum interest rate stated in the contract. - - You may transfer contract values from a GPA any time after 60 days of transfer or payment allocation to the account. Transfers made more than 30 days before the end of the guarantee period will receive an MVA, which may result in a gain or - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 43 loss of contract value, unless an exception applies (see "The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)"). - - If we receive your request on or within 30 days before or after the contract anniversary date, the transfer from the one-year fixed account to the GPAs will be effective on the valuation date we receive it. - - You may not transfer contract values from the subaccounts, the GPAs, or the one-year fixed account into the DCA fixed account. However, you may transfer contract values from the DCA fixed account to any of the investment options available under your contract, subject to investment minimums and other restrictions we may impose on investments in the one-year fixed account and the GPA, as described above. (See "DCA Fixed Account.") - - Once annuity payouts begin, you may not make transfers to or from the GPAs or the fixed account, but you may make transfers once per contract year among the subaccounts. During the annuity payout period, we reserve the right to limit the number of subaccounts in which you may invest. When annuity payments begin, you must transfer all contract value out of your GPAs and the DCA fixed account. MARKET TIMING Market timing can reduce the value of your investment in the contract. If market timing causes the returns of an underlying fund to suffer, contract value you have allocated to a subaccount that invests in that underlying fund will be lower too. Market timing can cause you, any joint owner of the contract and your beneficiary(ies) under the contract a financial loss. Funds available as investment options under the contract that invest in securities that trade in overseas securities markets may be at greater risk of loss from market timing, as market timers may seek to take advantage of changes in the values of securities between the close of overseas markets and the close of U.S. markets. Also, the risks of market timing may be greater for underlying funds that invest in securities such as small cap stocks, high yield bonds, or municipal securities, that may be traded infrequently. WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU. Market timing may hurt the performance of an underlying fund in which a subaccount invests in several ways, including but not necessarily limited to: - - diluting the value of an investment in an underlying fund in which a subaccount invests; - - increasing the transaction costs and expenses of an underlying fund in which a subaccount invests; and, - - preventing the investment adviser(s) of an underlying fund in which a subaccount invests from fully investing the assets of the fund in accordance with the fund's investment objectives. IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS OF THE VARIABLE ACCOUNT: We try to distinguish market timing from transfers that we believe are not harmful, such as periodic rebalancing for purposes of an asset allocation, dollar-cost averaging and asset rebalancing program that may be described in this prospectus. There is no set number of transfers that constitutes market timing. Even one transfer in related accounts may be market timing. We seek to restrict the transfer privileges of a contract owner who makes more than three subaccount transfers in any 90 day period. We also reserve the right to refuse any transfer request, if, in our sole judgment, the dollar amount of the transfer request would adversely affect unit values. If we determine, in our sole judgment, that your transfer activity constitutes market timing, we may modify, restrict or suspend your transfer privileges to the extent permitted by applicable law, which may vary based on the state law that applies to your contract and the terms of your contract. These restrictions or modifications may include, but not be limited to: - - requiring transfer requests to be submitted only by first-class U.S. mail; - - not accepting hand-delivered transfer requests or requests made by overnight mail; - - not accepting telephone or electronic transfer requests; - - requiring a minimum time period between each transfer; - - not accepting transfer requests of an agent acting under power of attorney; - -------------------------------------------------------------------------------- 44 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - - limiting the dollar amount that you may transfer at any one time; - - suspending the transfer privilege; or - - modifying instructions under an automated transfer program to exclude a restricted fund if you do not provide new instructions. Subject to applicable state law and the terms of each contract, we will apply the policy described above to all contract owners uniformly in all cases. We will notify you in writing after we impose any modification, restriction or suspension of your transfer rights. We cannot guarantee that we will be able to identify and restrict all market timing activity. Because we exercise discretion in applying the restrictions described above, we cannot guarantee that we will be able to restrict all market timing activity. In addition, state law and the terms of some contracts may prevent us from stopping certain market timing activity. Market timing activity that we are unable to identify and/or restrict may impact the performance of the underlying funds and may result in lower contract values. IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO: - - Each fund may restrict or refuse trading activity that the fund determines, in its sole discretion, represents market timing. - - Even if we determine that your transfer activity does not constitute market timing under the market timing policies described above which we apply to transfers you make under the contract, it is possible that the underlying fund's market timing policies and procedures, including instructions we receive from a fund may require us to reject your transfer request. For example, while we disregard transfers permitted under any asset allocation, dollar-cost averaging and asset rebalancing programs that may be described in this prospectus, we cannot guarantee that an underlying fund's market timing policies and procedures will do so. Orders we place to purchase fund shares for the variable account are subject to acceptance by the fund. We reserve the right to reject without prior notice to you any transfer request if the fund does not accept our order. - - Each underlying fund is responsible for its own market timing policies, and we cannot guarantee that we will be able to implement specific market timing policies and procedures that a fund has adopted. As a result, a fund's returns might be adversely affected, and a fund might terminate our right to offer its shares through the variable account. - - Funds that are available as investment options under the contract may also be offered to other intermediaries who are eligible to purchase and hold shares of the fund, including without limitation, separate accounts of other insurance companies and certain retirement plans. Even if we are able to implement a fund's market timing policies, we cannot guarantee that other intermediaries purchasing that same fund's shares will do so, and the returns of that fund could be adversely affected as a result. FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT FUND'S PROSPECTUS. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 45 HOW TO REQUEST A TRANSFER OR WITHDRAWAL 1 BY LETTER Send your name, contract number, Social Security Number or Taxpayer Identification Number* and signed request for a transfer or withdrawal to our corporate office: RIVERSOURCE LIFE INSURANCE COMPANY 829 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers or withdrawals: Contract value or entire account balance * Failure to provide a Social Security Number or Taxpayer Identification Number may result in mandatory tax withholding on the taxable portion of the distribution. 2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS Your investment professional can help you set up automated transfers among your subaccounts, the one-year fixed account or GPAs or automated partial withdrawals from the GPAs, one-year fixed account, DCA fixed account or the subaccounts. You can start or stop this service by written request or other method acceptable to us. You must allow 30 days for us to change any instructions that are currently in place. - - Automated transfers from the one-year fixed account to any one of the subaccounts may not exceed an amount that, if continued, would deplete the one-year fixed account within 12 months. - - Transfers out of the one-year fixed account are limited to 30% of the one-year fixed account values at the beginning of the contract year or $10,000, whichever is greater. - - Automated withdrawals may be restricted by applicable law under some contracts. - - You may not make additional purchase payments if automated partial withdrawals are in effect. - - If a Portfolio Navigator model portfolio is in effect, you are not allowed to set up automated transfers except in connection with a DCA fixed account (see "The Fixed Account -- DCA Fixed Account" and "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). - - Automated partial withdrawals may result in IRS taxes and penalties on all or part of the amount withdrawn. MINIMUM AMOUNT Transfers or withdrawals: $100 monthly $250 quarterly, semiannually or annually 3 BY PHONE Call between 8 a.m. and 7 p.m. Central time: (800) 333-3437 MINIMUM AMOUNT Transfers or withdrawals: $500 or entire account balance MAXIMUM AMOUNT Transfers: Contract value or entire account balance Withdrawals: $25,000 We answer telephone requests promptly, but you may experience delays when the call volume is unusually high. If you are unable to get through, use the mail procedure as an alternative. We will honor any telephone transfer or withdrawal requests that we believe are authentic and we will use reasonable procedures to confirm that they are. This includes asking identifying questions and recording calls. We will not allow a telephone withdrawal within 30 days of a phoned-in address change. As long as we follow the procedures, we (and our affiliates) will not be liable for any loss resulting from fraudulent requests. Telephone transfers and withdrawals are automatically available. You may request that telephone transfers and withdrawals not be authorized from your account by writing to us. - -------------------------------------------------------------------------------- 46 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS WITHDRAWALS You may withdraw all or part of your contract at any time before annuity payouts begin by sending us a written request or calling us. If we receive your withdrawal request at our corporate office before the close of business, we will process your withdrawal using the accumulation unit value we calculate on the valuation date we received your withdrawal request. If we receive your withdrawal request at our corporate office at or after the close of business, we will process your withdrawal using the accumulation unit value we calculate on the next valuation date after we received your withdrawal request. We may ask you to return the contract. You may have to pay administrative charges, withdrawal charges, or any applicable optional rider charges (see "Charges") and IRS taxes and penalties (see "Taxes"). You cannot make withdrawals after annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.") Any partial withdrawals you take under the contract will reduce your contract value. As a result, the value of your death benefit or any optional benefits you have elected will also be reduced. If you have elected a SecureSource rider or the Guarantor Withdrawal Benefit for Life rider and your partial withdrawals in any contract year exceed the permitted withdrawal amount under the terms of the rider, your benefits under the rider may be reduced (see "Optional Benefits"). In addition, withdrawals you are required to take to satisfy RMDs under the Code may reduce the value of certain death benefits and optional benefits (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). WITHDRAWAL POLICIES If you have a balance in more than one account and you request a partial withdrawal, we will automatically withdraw from all your subaccounts, GPAs, the DCA fixed account, and/or the one-year fixed account in the same proportion as your value in each account correlates to your total contract value, unless requested otherwise(1). After executing a partial withdrawal, the value in each subaccount, one-year fixed account or GPA must be either zero or at least $50. (1) If you elected a SecureSource rider, you do not have the option to request from which account to withdraw. RECEIVING PAYMENT By regular or express mail: - - payable to owner; - - mailed to address of record. NOTE: We will charge you a fee if you request express mail delivery. Normally, we will send the payment within seven days after receiving your request. However, we may postpone the payment if: - the withdrawal amount includes a purchase payment check that has not cleared; - the NYSE is closed, except for normal holiday and weekend closings; - trading on the NYSE is restricted, according to SEC rules; - an emergency, as defined by SEC rules, makes it impractical to sell securities or value the net assets of the accounts; or - the SEC permits us to delay payment for the protection of security holders. TSA -- SPECIAL PROVISIONS PARTICIPANTS IN TAX-SHELTERED ANNUITIES The contract is not intended for use in connection with an employer sponsored 403(b) plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the event that the employer either by affirmative election or inadvertent action causes contributions under a plan that is subject to ERISA to be made to this contract, we will not be responsible for any obligations and requirements under ERISA and the regulations thereunder. You should consult with your employer to determine whether your 403(b) plan is subject to ERISA. The employer must comply with certain nondiscrimination requirements for certain types of contributions under a TSA contract to be excluded from taxable income. You should consult your employer to determine whether the nondiscrimination rules apply to you. The Code imposes certain restrictions on your right to receive early distributions from a TSA: - - Distributions attributable to salary reduction contributions (plus earnings) made after Dec. 31, 1988, or to transfers or rollovers from other contracts, may be made from the TSA only if: - you are at least age 59 1/2; - you are disabled as defined in the Code; - you severed employment with the employer who purchased the contract; - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 47 - the distribution is because of your death; - effective Jan. 1, 2009, the distribution is due to plan termination; or - effective Jan. 1, 2009, you are a military reservist. - - If you encounter a financial hardship (as provided by the Code), you may be eligible to receive a distribution of all contract values attributable to salary reduction contributions made after Dec. 31, 1988, but not the earnings on them. - - Even though a distribution may be permitted under the above rules, it may be subject to IRS taxes and penalties (see "Taxes"). - - The above restrictions on distributions do not affect the availability of the amount credited to the contract as of Dec. 31, 1988. The restrictions also do not apply to transfers or exchanges of contract value within the contract, or to another registered variable annuity contract or investment vehicle available through the employer. CHANGING OWNERSHIP You may change ownership of your nonqualified annuity at any time by completing a change of ownership form we approve and sending it to our corporate office. The change will become binding on us when we receive and record it. We will honor any change of ownership request that we believe is authentic and we will use reasonable procedures to confirm authenticity. If we follow these procedures, we will not take any responsibility for the validity of the change. If you have a nonqualified annuity, you may incur income tax liability by transferring, assigning or pledging any part of it. (See "Taxes.") If you have a qualified annuity, you may not sell, assign, transfer, discount or pledge your contract as collateral for a loan, or as security for the performance of an obligation or for any other purpose except as required or permitted by the Code. However, if the owner is a trust or custodian, or an employer acting in a similar capacity, ownership of the contract may be transferred to the annuitant. Please consider carefully whether or not you wish to change ownership of your annuity contract. If you elected any optional contract features or riders, the new owner and annuitant will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. If you have a Benefit Protector Plus rider, the rider will terminate upon transfer of ownership of the annuity contract. The SecureSource - Joint Life rider, if selected, only allows transfer of the ownership of the annuity contract between covered spouses or their revocable trust(s); no other ownership changes are allowed while this rider is in force. The Accumulation Protector Benefit, the SecureSource - Single Life and the Guarantor Withdrawal Benefit for Life riders will continue upon transfer of ownership of your annuity contract. Continuance of the Benefit Protector(SM) is optional. (See "Optional Benefits.") BENEFITS IN CASE OF DEATH There are four death benefit options under your contract. You must select one of the following death benefits: - - ROP Death Benefit; - - MAV Death Benefit - - 5% Accumulation Death Benefit - - Enhanced Death Benefit. If it is available in your state and if both you and the annuitant are 79 or younger at contract issue, you can elect any one of the above death benefits. If either you or the annuitant are 80 or older at contract issue, the ROP Death Benefit will apply. Once you elect a death benefit, you cannot change it. We show the death benefit that applies in your contract. The death benefit you select determines the mortality and expense risk fee that is assessed against the subaccounts. (See "Charges -- Mortality and Expense Risk Fee.") Under each option, we will pay the death benefit to your beneficiary upon the earlier of your death or the annuitant's death. We will base the benefit paid on the death benefit coverage you chose when you purchased the contract. If a contract has more than one person as the owner, we will pay benefits upon the first to die of any owner or the annuitant. - -------------------------------------------------------------------------------- 48 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS: ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV = PW X DB DEATH BENEFITS) ------------ CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA. DB = the death benefit on the date of (but prior to) the partial withdrawal CV = contract value on the date of (but prior to) the partial withdrawal MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract anniversary after the effective date of the rider. On the first contract anniversary after the effective date of the rider, we set the MAV as the greater of these two values: (a) current contract value; or (b) total payments made to the contract minus adjusted partial withdrawals. Thereafter, we increase the MAV by any additional purchase payments and reduce the MAV by adjusted partial withdrawals. Every contract anniversary after that prior to the earlier of your or the annuitant's 81st birthday, we compare the MAV to the current contract value and we reset the MAV to the higher amount. 5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs, the one-year fixed account and the variable account floor. There is no variable account floor prior to the first contract anniversary. On the first contract anniversary, we establish the variable account floor as: - - the amounts allocated to the subaccounts and the DCA fixed account at issue increased by 5%; - - plus any subsequent amounts allocated to the subaccounts and the DCA fixed account; - - minus adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. Thereafter, we continue to add subsequent amounts allocated to the subaccounts or the DCA fixed account and subtract adjusted transfers and partial withdrawals from the subaccounts or the DCA fixed account. On each contract anniversary after the first, through age 80, we add an amount to the variable account floor equal to 5% of the prior anniversary's variable account floor. We stop adding this amount after you or the annuitant reach age 81. 5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED = PWT X VAF PARTIAL WITHDRAWALS --------------- SV
PWT = the amount transferred from the subaccounts or the DCA fixed account or the amount of the partial withdrawal (including any applicable withdrawal charge or MVA) from the subaccounts or the DCA fixed account. VAF = variable account floor on the date of (but prior to) the transfer or partial withdrawal. SV = value of the subaccounts or the DCA fixed account on the date of (but prior to) the transfer of partial withdrawal.
The amount of purchase payment withdrawn from or transferred from any subaccount or fixed account (if applicable) or GPA account is calculated as (a) times (b) where: (a) is the amount of purchase payment in the account or subaccount on the date of but prior to the current withdrawal or transfer; and (b) is the ratio of the amount transferred or withdrawn from the account or subaccount to the value in the account or subaccount on the date of (but prior to) the current withdrawal or transfer. For contracts issued in New Jersey, the cap on the variable account floor is 200% of the sum of the purchase payments allocated to the subaccounts and the DCA fixed account that have not been withdrawn or transferred out of the subaccounts or DCA fixed account. RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT The ROP Death Benefit is the basic death benefit to the contract that will pay your beneficiaries no less than your purchase payments, adjusted for withdrawals. If you or the annuitant die before annuity payouts begin and while this contract is in force, the death benefit will be the greater of these two values: 1. contract value; or 2. total purchase payments minus adjusted partial withdrawals. The ROP Death Benefit will apply unless you select one of the alternative death benefits described immediately below. IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 49 MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT The MAV Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the MAV on the date of death. 5% ACCUMULATION DEATH BENEFIT The 5% Accumulation Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these three values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; or 3. the 5% variable account floor. ENHANCED DEATH BENEFIT The Enhanced Death Benefit provides that if you or the annuitant die while the contract is in force and before annuity payouts begin, the death benefit will be the greatest of these four values: 1. contract value; 2. total purchase payments minus adjusted partial withdrawals; 3. the MAV on the date of death; or 4. the 5% variable account floor. For an example of how each death benefit is calculated, see Appendix C. IF YOU DIE BEFORE YOUR RETIREMENT DATE When paying the beneficiary, we will process the death claim on the valuation date our death claim requirements are fulfilled. We will determine the contract's value using the accumulation unit value we calculate on that valuation date. We pay interest, if any, at a rate no less than required by law. We will mail payment to the beneficiary within seven days after our death claim requirements are fulfilled. NONQUALIFIED ANNUITIES If your spouse is sole beneficiary and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. To do this your spouse must, within 60 days after our death claim requirements are fulfilled, give us written instructions to keep the contract in force. There will be no withdrawal charges on contract Option B from that point forward unless additional payments are made. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Benefit Protector Plus rider, if selected, will terminate. The SecureSource - Joint Life rider, if selected, will continue only if the spouse electing the spousal continuation provision of the contract is a covered spouse and continues the contract as the new owner. The Accumulation Protector Benefit, the SecureSource - Single Life and the Guarantor Withdrawal Benefit for Life riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits"). If your beneficiary is not your spouse, we will pay the beneficiary in a single sum unless you give us other written instructions. Generally, we must fully distribute the death benefit within five years of your death. However, the beneficiary may receive payouts under any annuity payout plan available under this contract if: - - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - - payouts begin no later than one year after your death, or other date as permitted by the IRS; and - - the payout period does not extend beyond the beneficiary's life or life expectancy. Additionally, the optional SecureSource riders, if one is selected, will terminate. QUALIFIED ANNUITIES - - SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if your spouse is the sole beneficiary, your spouse may either elect to treat the contract as his/her own or elect an annuity payout plan or another plan agreed to by us. If your - -------------------------------------------------------------------------------- 50 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS spouse elects a payout option, the payouts must begin no later than the year in which you would have reached age 70 1/2. If you attained age 70 1/2 at the time of death, payouts must begin no later than Dec. 31 of the year following the year of your death. Your spouse may elect to assume ownership of the contract at any time before annuity payouts begin. If your spouse elects to assume ownership of the contract, the contract value will be equal to the death benefit that would otherwise have been paid. There will be no withdrawal charges on contract Option B from that point forward unless additional payments are made. If you elected any optional contract features or riders, your spouse and the new annuitant (if applicable) will be subject to all limitations and/or restrictions of those features or riders just as if they were purchasing a new contract. The Benefit Protector Plus rider, if selected, will terminate. The SecureSource - Joint Life rider, if selected, will continue only if the spouse electing the spousal continuation provision of the contract is a covered spouse and continues the contract as the new owner. The Accumulation Protector Benefit, the SecureSource - Single Life and the Guarantor Withdrawal Benefit for Life riders, if selected, will continue. Continuance of the Benefit Protector is optional. (See "Optional Benefits.") - - NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if death occurs prior to the year you would have attained age 70 1/2, the beneficiary may elect to receive payouts from the contract over a five year period. If your beneficiary does not elect a five year payout or if your death occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum unless the beneficiary elects to receive payouts under any payout plan available under this contract if: - the beneficiary asks us in writing within 60 days after our death claim requirements are fulfilled; and - payouts begin no later than one year following the year of your death; and - the payout period does not extend beyond the beneficiary's life or life expectancy. Additionally, the optional SecureSource rider, if one is selected, will terminate. - - ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees payouts to a beneficiary after your death, the payouts to your beneficiary will continue pursuant to the annuity payout plan you elect. OPTIONAL BENEFITS OPTIONAL LIVING BENEFITS -- OFFERED UNDER CONTRACT OPTION B ACCUMULATION PROTECTOR BENEFIT RIDER The Accumulation Protector Benefit rider is an optional benefit that you may select for an additional charge. The Accumulation Protector Benefit rider may provide a guaranteed contract value at the end of the specified waiting period on the benefit date, but not until then, under the following circumstances:
ON THE BENEFIT DATE, IF: THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER BENEFIT IS: The Minimum Contract Accumulation Value The contract value is increased on the benefit date to (defined below) as determined under the equal the Minimum Contract Accumulation Value as Accumulation Protector Benefit rider is determined under the Accumulation Protector Benefit rider greater than your contract value, on the benefit date. The contract value is equal to or greater than Zero; in this case, the Accumulation Protector Benefit the Minimum Contract Accumulation Value as rider ends without value and no benefit is payable. determined under the Accumulation Protector Benefit rider,
If the contract value falls to zero as the result of adverse market performance or the deduction of fees and/or charges at any time during the waiting period and before the benefit date, the contract and all riders, including the Accumulation Protector Benefit rider will terminate without value and no benefits will be paid. EXCEPTION: If you are still living on the benefit date, we will pay you an amount equal to the Minimum Contract Accumulation Value as determined under the Accumulation Protector Benefit rider on the valuation date your contract value reached zero. If this rider is available in your state, you may elect the Accumulation Protector Benefit at the time you purchase your contract and the rider effective date will be the contract issue date. The Accumulation Protector Benefit rider may not be terminated once you have elected it, except as described in the "Terminating the Rider" section below. An additional charge for the Accumulation Protector Benefit rider will be assessed annually during the waiting period. The rider ends when the waiting period expires and no further benefit will be payable and no further fees for the rider will be deducted. The Accumulation Protector Benefit rider may not be purchased with an optional SecureSource(SM) rider or the Guarantor Withdrawal Benefit for Life(SM) rider. When the rider ends, you may be able to purchase another optional rider we then offer by written request received within 30 days of that contract anniversary date. The Accumulation Protector Benefit(SM) rider may not be available in all states. You should consider whether a Accumulation Protector Benefit rider is appropriate for you because: - - you must participate in the Portfolio Navigator program with this rider (see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program"). The Portfolio Navigator program limits your choice of subaccounts and GPAs (if - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 51 included) and one-year fixed account (if included) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, one-year fixed account (if included) and GPAs that are available under the contract to contract owners who do not elect this rider; - - you may not make additional purchase payments to your contract during the waiting period after the first 180 days immediately following the effective date of the Accumulation Protector Benefit rider; - - if you purchase this annuity as a qualified annuity, for example, an IRA, you may need to take partial withdrawals from your contract to satisfy the minimum distribution requirements of the Code (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Partial withdrawals, including those you take to satisfy RMDs, will reduce any potential benefit that the Accumulation Protector Benefit rider provides. You should consult your tax advisor if you have any questions about the use of this rider in your tax situation; - - if you think you may withdraw all of your contract value before you have held your contract with this benefit rider attached for 10 years, or you are considering selecting an annuity payout option within 10 years of the effective date of your contract, you should consider whether this optional benefit is right for you. You must hold the contract a minimum of 10 years from the effective date of the Accumulation Protector Benefit rider, which is the length of the waiting period under the Accumulation Protector Benefit rider, in order to receive the benefit, if any, provided by the Accumulation Protector Benefit rider. In some cases, as described below, you may need to hold the contract longer than 10 years in order to qualify for any benefit the Accumulation Protector Benefit rider may provide; - - the 10 year waiting period under the Accumulation Protector Benefit rider will restart if you exercise the elective step up option (described below) or your surviving spouse exercises the spousal continuation elective step up (described below); and - - the 10 year waiting period under the Accumulation Protector Benefit rider may be restarted if you elect to change model portfolios to one that causes the Accumulation Protector Benefit rider charge to increase (see "Charges"). Be sure to discuss with your investment professional whether a Accumulation Protector Benefit rider is appropriate for your situation. HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE ACCUMULATION PROTECTOR BENEFIT: BENEFIT DATE: This is the first valuation date immediately following the expiration of the waiting period. MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the Accumulation Protector Benefit rider. The contract value will be increased to equal the MCAV on the benefit date if the contract value on the benefit date is less than the MCAV on the benefit date. ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial withdrawal from the contract is equal to the amount derived from multiplying (a) and (b) where: (a) is 1 minus the ratio of the contract value on the date of (but immediately after) the partial withdrawal to the contract value on the date of (but immediately prior to) the partial withdrawal; and (b) is the MCAV on the date of (but immediately prior to) the partial withdrawal. WAITING PERIOD: The waiting period for the rider is 10 years. We reserve the right to restart the waiting period on the latest contract anniversary if you change your asset allocation model after we have exercised our rights to increase the rider charge for new contract owners, or if you change your asset allocation model after we have exercised our rights to charge a separate charge for each model. Your initial MCAV is equal to your initial purchase payment. It is increased by the amount of any subsequent purchase payments received within the first 180 days that the rider is effective. It is reduced by adjustments for any partial withdrawals made during the waiting period. AUTOMATIC STEP UP On each contract anniversary after the effective date of the rider, the MCAV will be set to the greater of: 1. 80% of the contract value on the contract anniversary; or 2. the MCAV immediately prior to the automatic step up. The automatic step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The automatic step up of the MCAV does not restart the waiting period or increase the charge (although the total fee for the rider may increase). - -------------------------------------------------------------------------------- 52 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS ELECTIVE STEP UP OPTION Within thirty days following each contract anniversary after the rider effective date, but prior to the benefit date, you may notify us in writing that you wish to exercise the annual elective step up option. You may exercise this elective step up option only once per contract year during this 30 day period. If your contract value on the valuation date we receive your written request to step up is greater than the MCAV on that date, your MCAV will increase to 100% of that contract value. When you exercise the annual elective step up, we may be charging more for the Accumulation Protector Benefit rider at that time. If your MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, you will pay the charge that is in effect on the valuation date we receive your written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. Failure to exercise this elective step up in subsequent years will not reinstate any prior waiting period. Rather, the waiting period under the rider will always commence from the most recent anniversary for which the elective step up option was exercised. The elective step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV, which is used to determine whether a benefit will be paid under the rider on the benefit date. The elective step up option is not available to non-spouse beneficiaries that continue the contract during the waiting period. SPOUSAL CONTINUATION If a spouse chooses to continue the contract under the spousal continuation provision, the rider will continue as part of the contract. Once, within the thirty days following the date of spousal continuation, the spouse may choose to exercise an elective step up. The spousal continuation elective step up is in addition to the annual elective step up. If the contract value on the valuation date we receive the written request to exercise this option is greater than the MCAV on that date, we will increase the MCAV to that contract value. If the MCAV is increased as a result of the elective step up and we have increased the charge for the Accumulation Protector Benefit rider, the spouse will pay the charge that is in effect on the valuation date we receive their written request to step up. In addition, the waiting period will restart as of the most recent contract anniversary. TERMINATING THE RIDER The rider will terminate under the following conditions: The rider will terminate before the benefit date without paying a benefit on the date: - you take a full withdrawal; or - annuitization begins; or - the contract terminates as a result of the death benefit being paid. The rider will terminate on the benefit date. For an example, see Appendix D. SECURESOURCE RIDERS There are two optional SecureSource riders available under your contract: - - SecureSource - Single Life; or - - SecureSource - Joint Life. The information in this section applies to both SecureSource riders, unless otherwise noted. The SecureSource - Single Life rider covers one person. The SecureSource - Joint Life Rider covers two spouses jointly who are named at contract issue. You may elect only the SecureSource - Single Life rider or the SecureSource - Joint Life rider, not both, and you may not switch riders later. You must elect the rider when you purchase your contract. The rider effective date will be the contract issue date. The SecureSource rider is an optional benefit that you may select for an additional annual charge if (1): - - SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract is issued; or - - JOINT LIFE: you and your spouse are 80 or younger on the date the contract is issued. (1) The SecureSource riders are not available under an inherited qualified annuity. The SecureSource rider guarantees (unless the rider is terminated. See "Rider Termination" heading below.) that regardless of the investment performance of your contract you will be able to withdraw up to a certain amount each year from the contract before the annuity payouts begin until: - - SINGLE LIFE: you have recovered at minimum all of your purchase payments or, if later, until death (see "At Death" heading below) -- even if the contract value is zero. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 53 - - JOINT LIFE: you have recovered at minimum all of your purchase payments or, if later, until the death of the last surviving covered spouse (see "Joint Life only: Covered Spouses" and "At Death" headings below), even if the contract value is zero. Your contract provides for annuity payouts to begin on the retirement date (see "Buying Your Contract -- The Retirement Date"). Before the retirement date, you have the right to withdraw some or all of your contract value, less applicable administrative, withdrawal and rider charges imposed under the contract at the time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals"). Because your contract value will fluctuate depending on the performance of the underlying funds in which the subaccounts invest, the contract itself does not guarantee that you will be able to take a certain withdrawal amount each year before the annuity payouts begin, nor does it guarantee the length of time over which such withdrawals can be made before the annuity payouts begin. The SecureSource rider may be appropriate for you if you intend to make periodic withdrawals from your annuity contract and wish to ensure that market performance will not adversely affect your ability to withdraw your principal over time. Under the terms of the SecureSource rider, the calculation of the amount which can be withdrawn in each contract year varies depending on several factors, including but not limited to the waiting period (see "Waiting period" heading below) and whether or not the lifetime withdrawal benefit has become effective: (1) The basic withdrawal benefit gives you the right to take limited withdrawals in each contract year and guarantees that over time the withdrawals will total an amount equal to, at minimum, your purchase payments (unless the rider is terminated. See "Rider Termination" heading below). Key terms associated with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)" and "Remaining Benefit Amount (RBA)." See these headings below for more information. (2) The lifetime withdrawal benefit gives you the right, under certain limited circumstances defined in the rider, to take limited withdrawals until the later of: - SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero (unless the rider is terminated. See "Rider Termination" heading below); - JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero (unless the rider is terminated. See "Rider Termination" heading below). Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only: Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for more information. Only the basic withdrawal benefit will be in effect prior to the date that the lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit becomes effective automatically on the rider anniversary date after the: - - SINGLE LIFE: covered person reaches age 65, or the rider effective date if the covered person is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" heading below); - - JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date if the younger covered spouse is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below). Provided annuity payouts have not begun, the SecureSource rider guarantees that you may take the following withdrawal amounts each contract year: - - Before the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RBP at the beginning of the contract year; - - After the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RALP or the RBP at the beginning of the contract year, but the rider does not guarantee withdrawal of the sum of both the RALP and the RBP in a contract year. If you withdraw less than the allowed withdrawal amount in a contract year, the unused portion cannot be carried over to the next contract year. As long as your withdrawals in each contract year do not exceed the annual withdrawal amount allowed under the rider: - - SINGLE LIFE: and there has not been a contract ownership change or spousal continuation of the contract, the guaranteed amounts available for withdrawal will not decrease; - - JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease. If you withdraw more than the allowed withdrawal amount in a contract year, we call this an "excess withdrawal" under the rider. Excess withdrawals trigger an adjustment of a benefit's guaranteed amount, which may cause it to be reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and "ALP Excess Withdrawal Processing" headings below). - -------------------------------------------------------------------------------- 54 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS Please note that basic withdrawal benefit and lifetime withdrawal benefit each has its own definition of the allowed annual withdrawal amount. Therefore a withdrawal may be considered an excess withdrawal for purposes of the lifetime withdrawal benefit only, the basic withdrawal benefit only, or both. If your withdrawals exceed the greater of the RBP or the RALP, withdrawal charges under the terms of the contract may apply (see "Charges -- Withdrawal Charges"). The amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Making the Most of Your Contract -- Withdrawals"). The rider's guaranteed amounts can be increased at the specified intervals if your contract value has increased. An annual step up feature is available at each contract anniversary, subject to certain conditions, and may be applied automatically to your contract or may require you to elect the step up (see "Annual Step Up" heading below). If you exercise the annual step up election, the spousal continuation step up election (see "Spousal Continuation Step Up" heading below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). If you take withdrawals during the waiting period, any prior steps ups applied will be reversed and step ups will not be available until the end of the waiting period. You may take withdrawals after the waiting period without reversal of prior step ups. You should consider whether a SecureSource rider is appropriate for you because: - - LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is subject to certain limitations, including but not limited to: (a) SINGLE LIFE: Once the contract value equals zero, payments are made for as long as the oldest owner or annuitant is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the first death of any owner or annuitant except as otherwise provided below (see "At Death" heading below). Therefore, if there are multiple contract owners or the annuitant is not an owner, the rider may terminate or the lifetime withdrawal benefit may be reduced. This possibility may present itself when: (i) There are multiple contract owners -- when one of the contract owners dies the benefit terminates even though other contract owners are still living (except if the contract is continued under the spousal continuation provision of the contact); or (ii) The owner and the annuitant are not the same persons -- if the annuitant dies before the owner, the benefit terminates even though the owner is still living. This could happen, for example, when the owner is younger than the annuitant. This risk increases as the age difference between owner and annuitant increases. JOINT LIFE: Once the contract value equals zero, payments are made for as long as either covered spouse is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the death of the last surviving covered spouse (see "At Death" heading below). (b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA, GBP and/or RBP values are greater than zero. If the both the ALP and the contract value are zero, the lifetime withdrawal benefit will terminate. (c) When the lifetime withdrawal benefit is first established, the initial ALP is based on (i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below), unless there has been a spousal continuation or ownership change; or (ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below). Any withdrawal you take before the ALP is established reduces the RBA and therefore may result in a lower amount of lifetime withdrawals you are allowed to take. (d) Withdrawals can reduce both the contract value and the RBA to zero prior to the establishment of the ALP. If this happens, the contract and the rider will terminate. - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect the rider. (See "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program.") You may make two elective model portfolio changes per contract year; we reserve the right to limit elective model portfolio changes if required to comply with the written instructions of a fund (see "Market Timing"). - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 55 You can allocate your contract value to any available model portfolio during the following times: (1) prior to your first withdrawal and (2) following a benefit reset as described below but prior to any subsequent withdrawal. During these accumulation phases, you may request to change your model portfolio to any available model portfolio. Immediately following a withdrawal your contract value will be reallocated to the target model portfolio as shown in your contract if your current model portfolio is more aggressive than the target model portfolio. This automatic reallocation is not included in the total number of allowed model changes per contract year and will not cause your rider fee to increase. The target model portfolio is currently the Moderate model. We reserve the right to change the target model portfolio to a model portfolio that is more aggressive than the current target model portfolio after 30 days written notice. After you have taken a withdrawal and prior to any benefit reset as described below, you are in a withdrawal phase. During withdrawal phases you may request to change your model portfolio to the target model portfolio or any model portfolio that is more conservative than the target model portfolio without a benefit reset as described below. If you are in a withdrawal phase and you choose to allocate your contract value to a model portfolio that is more aggressive than the target model portfolio, your rider benefit will be reset as follows: (a) the total GBA will be reset to the lesser of its current value or the contract value; and (b) the total RBA will be reset to the lesser of its current value or the contract value; and (c) the ALP, if established, will be reset to the lesser of its current value or 6% of the contract value; and (d) the GBP will be recalculated as described below, based on the reset GBA and RBA; and (e) the RBP will be recalculated as the reset GBP less all prior withdrawals made during the current contract year, but not be less than zero; and (f) the RALP will be recalculated as the reset ALP less all prior withdrawals made during the current contract year, but not be less than zero. You may request to change your model portfolio by written request on an authorized form or by another method agreed to by us. - - LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect only the SecureSource - Single Life rider or the SecureSource - Joint Life rider. If you elect the SecureSource rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled (except as provided under "Rider Termination" heading below) and the fee will continue to be deducted until the contract or rider is terminated or the contract value reduces to zero (described below). Dissolution of marriage does not terminate the SecureSource - Joint Life rider and will not reduce the fee we charge for this rider. The benefit under the SecureSource - Joint Life rider continues for the covered spouse who is the owner of the contract (or annuitant in the case of nonnatural ownership). The rider will terminate at the death of the contract owner (or annuitant in the case of nonnatural ownership) because the original spouse will be unable to elect the spousal continuation provision of the contract (see "Joint Life only: Covered Spouses" below). - - JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES: Since the joint life benefit will terminate unless the surviving covered spouse continues the contract under the spousal continuation provision of the contract upon the owner's death, only ownership arrangements that permit such continuation are allowed at rider issue. In general, the covered spouses should be joint owners, or one covered spouse should be the owner and the other covered spouse should be named as the sole primary beneficiary. For non-natural ownership arrangements that allow for spousal continuation one covered spouse should be the annuitant and the other covered spouse should be the sole primary beneficiary. For revocable trust ownerships, the grantor of the trust must be the annuitant and the beneficiary must either be the annuitant's spouse or a trust that names the annuitant's spouse as the sole primary beneficiary. You are responsible for establishing ownership arrangements that will allow for spousal continuation. If you select the SecureSource - Joint Life rider, please consider carefully whether or not you wish to change the beneficiary of your annuity contract. The rider will terminate if the surviving covered spouse can not utilize the spousal continuation provision of the contract when the death benefit is payable. - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw from the contract in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than the RBP or RALP under this rider. Any amount you withdraw under the contract's TFA provision that exceeds the RBP or RALP is subject to the excess withdrawal processing described below for the GBA, RBA and ALP. - -------------------------------------------------------------------------------- 56 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS You should consult your tax advisor before you select this optional rider if you have any questions about the use of the rider in your tax situation because: - - TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income tax law, withdrawals under nonqualified annuities, including withdrawals taken from the contract under the terms of the rider, are treated less favorably than amounts received as annuity payments under the contract (see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income. You should consult your tax advisor before you select this optional rider if you have any questions about the use of the rider in your tax situation. - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD that exceeds the guaranteed amount of withdrawal available under the rider and such withdrawals may reduce future benefits guaranteed under the rider. While the rider permits certain excess withdrawals to be made for the purpose of satisfying RMD requirements for your contract alone without reducing future benefits guaranteed under the rider, there can be no guarantee that changes in the federal income tax law after the effective date of the rider will not require a larger RMD to be taken, in which case, future guaranteed withdrawals under the rider could be reduced. See Appendix F for additional information. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, a SecureSource rider may be of limited value to you. KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW: WITHDRAWAL: The amount by which your contract value is reduced as a result of any withdrawal request. It may differ from the amount of your request due to any withdrawal charge and any market value adjustment. WAITING PERIOD: The period of time starting on the rider effective date during which the annual step up is not available if you take withdrawals. The current waiting period is three years. GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not payable as a death benefit. It is an interim value used to calculate the amount available for withdrawals each year under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of the individual GBAs associated with each purchase payment. THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBA that is associated with that RBA will also be set to zero. - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBA remains unchanged. If there have been multiple purchase payments, both the total GBA and each payment's GBA remain unchanged. (b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. GBA EXCESS WITHDRAWAL PROCESSING The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that is guaranteed by the rider as future withdrawals. At any point in time, the RBA equals the amount of GBA that remains available for withdrawals for the remainder of the contract's life, and total RBA is the sum of the individual RBAs associated with each purchase payment. The maximum RBA is $5,000,000. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 57 THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the RBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own RBA initially set equal to that payment's GBA (the amount of the purchase payment). - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the RBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the total RBA is reduced by the amount of the withdrawal. If there have been multiple purchase payments, each payment's RBA is reduced in proportion to its RBP. (b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. Please note that if the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. RBA EXCESS WITHDRAWAL PROCESSING The total RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the total RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, both the total RBA and each payment's RBA will be reset. The total RBA will be reset according to the excess withdrawal processing described above. Each payment's RBA will be reset in the following manner: 1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in proportion to its individual RBP at the time of the withdrawal; and 2. The withdrawal amount above the total RBP and any amount determined by the excess withdrawal processing are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for withdrawal in each contract year after the waiting period, until the RBA is reduced to zero, under the basic withdrawal benefit. At any point in time, each purchase payment has its own GBP, which is equal to the lesser of that payment's RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual GBPs. During the waiting period, the guaranteed annual withdrawal amount may be less than the GBP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual withdrawal amount during the waiting period is equal to the value of the RBP at the beginning of the contract year. THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBP is established as 7% of the GBA value. - - At each contract anniversary -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value. - - When you make additional purchase payments -- each additional purchase payment has its own GBP equal to 7% of the purchase payment amount. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBP associated with that RBA will also be reset to zero. - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA and the RBA associated with each purchase payment will be reset to the amount of that purchase payment. Each payment's GBP will be reset to 7% of that purchase payment. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBP remains unchanged. (b) is greater than the total RBP -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value, based on the RBA and GBA after the withdrawal. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the remainder of the contract year under the basic withdrawal benefit. At any point in time, the total RBP is the sum of the RBPs for each purchase payment. During the - -------------------------------------------------------------------------------- 58 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS waiting period, when the guaranteed amount may be less than the GBP, the value of the RBP at the beginning of the contract year will be that amount that is actually guaranteed each contract year. THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At the beginning of each contract year during the waiting period and prior to any withdrawal -- the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. - - At the beginning of any other contract year -- the RBP for each purchase payment is set equal to that purchase payment's GBP. - - When you make additional purchase payments -- each additional purchase payment has its own RBP equal to that payment's GBP. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At spousal continuation -- (see "Spousal Option to Continue the Contract" heading below). - - When an individual RBA is reduced to zero -- the RBP associated with that RBA will also be reset to zero. - - When you make any withdrawal -- the total RBP is reset to equal the total RBP immediately prior to the withdrawal less the amount of the withdrawal, but not less than zero. If there have been multiple purchase payments, each payment's RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for future withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in the excess withdrawal processing, the applicable RBP will not yet reflect the amount of the current withdrawal. SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine when the ALP is established, and the duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person is the oldest contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust or corporation, the covered person is the oldest annuitant. A spousal continuation or a change of contract ownership may reduce the amount of the lifetime withdrawal benefit and may change the covered person. JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally married spouse as defined under federal law, as named on the application and as shown in the contract for as long as the marriage is valid and in effect. If the contract owner is a nonnatural person (e.g., a trust), the covered spouses are the annuitant and the legally married spouse of the annuitant. The covered spouses lives are used to determine when the ALP is established, and the duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading below). The covered spouses are established on the rider effective date and cannot be changed. ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): - - SINGLE LIFE: The covered person's age after which time the lifetime benefit can be established. Currently, the lifetime benefit can be established on the later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65. - - JOINT LIFE: The age of the younger covered spouse at which time the lifetime benefit is established. ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime withdrawal benefit is at any time the amount available for withdrawals in each contract year after the waiting period until the later of: - - SINGLE LIFE: death; or - - JOINT LIFE: death of the last surviving covered spouse; or - - the RBA is reduced to zero. The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the ALP is zero. During the waiting period, the guaranteed annual lifetime withdrawal amount may be less than the ALP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual lifetime withdrawal amount during the waiting period is equal to the value of the RALP at the beginning of the contract year. THE ALP IS DETERMINED AT THE FOLLOWING TIMES: - - SINGLE LIFE: The later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65 -- the ALP is established as 6% of the total RBA. - - JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of the following dates: (a) the rider effective date if the younger covered spouse has already reached age 65. (b) the rider anniversary on/following the date the younger covered spouse reaches age 65. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 59 (c) upon the first death of a covered spouse, then (1) the date we receive written request when the death benefit is not payable and the surviving covered spouse has already reached age 65; or (2) the date spousal continuation is effective when the death benefit is payable and the surviving covered spouse has already reached age 65; or (3) the rider anniversary on/following the date the surviving covered spouse reaches age 65. (d) Following dissolution of marriage of the covered spouses, (1) the date we receive written request if the remaining covered spouse who is the owner (or annuitant in the case of nonnatural ownership) has already reached age 65; or (2) the rider anniversary on/following the date the remaining covered spouse who is the owner (or annuitant in the case of nonnatural ownership) reaches age 65. - - When you make additional purchase payments -- each additional purchase payment increases the ALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - SINGLE LIFE: At spousal continuation or contract ownership change -- (see "Spousal Option to Continue the Contract" and "Contract Ownership Change" headings below). - - When you make a withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the ALP will be reset to equal total purchase payments multiplied by 6%. The step up reversal will only happen once during the waiting period, when the first withdrawal is made. - - When you make a withdrawal at any time and the amount withdrawn is: (a) less than or equal to the RALP -- the ALP remains unchanged. (b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE ALP. If the withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. ALP EXCESS WITHDRAWAL PROCESSING The ALP is reset to the lesser of the ALP immediately prior to the withdrawal, or 6% of the contract value immediately following the withdrawal. REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal for the remainder of the contract year under the lifetime withdrawal benefit. During the waiting period, when the guaranteed annual withdrawal amount may be less than the ALP, the value of the RALP at the beginning of the contract year will be the amount that is actually guaranteed each contract year. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the RALP is zero. THE RALP IS DETERMINED AT THE FOLLOWING TIMES: - - The RALP is established at the same time as the ALP, and: (a) During the waiting period and prior to any withdrawals -- the RALP is established equal to 6% of purchase payments. (b) At any other time -- the RALP is established equal to the ALP less all prior withdrawals made in the contract year but not less than zero. - - At the beginning of each contract year during the waiting period and prior to any withdrawals -- the RALP is set equal to the total purchase payments, multiplied by 6%. - - At the beginning of any other contract year -- the RALP is set equal to ALP. - - When you make additional purchase payments -- each additional purchase payment increases the RALP by 6% of the purchase payment amount. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make any withdrawal -- the RALP equals the RALP immediately prior to the withdrawal less the amount of the withdrawal but not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available for future withdrawals. When determining if a withdrawal will result in excess withdrawal processing, the applicable RALP will not yet reflect the amount of the current withdrawal. REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract and the RMD calculated separately for your contract is greater than the RBP or the RALP on the most recent contract anniversary, the portion of the RMD that exceeds - -------------------------------------------------------------------------------- 60 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS the RBP or RALP on the most recent rider anniversary will not be subject to excess withdrawal processing provided that the following conditions are met: - - The RMD is for your contract alone; - - The RMD is based on your recalculated life expectancy taken from the Uniform Lifetime Table under the Code; and - - The RMD amount is otherwise based on the requirements of section 401(a)(9), related Code provisions and regulations thereunder that were in effect on the effective date of the rider. RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. Withdrawal amounts greater than the RBP or RALP on the contract anniversary date that do not meet these conditions will result in excess withdrawal processing as described above. See Appendix F for additional information. STEP UP DATE: The date any step up becomes effective, and depends on the type of step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment period or increase the allowable payment. The annual step up may be available as described below, subject to the following rules: - - The annual step up is effective on the step up date. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the waiting period, any previously applied step ups will be reversed and the Annual step up will not be available until the end of the waiting period. - - On any rider anniversary where the RBA or, if established, the ALP would increase and the application of the step up would not increase the rider charge, the annual step up will be automatically applied to your contract, and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary as long as either the contract value is greater than the total RBA or 6% of the contract value is greater than the ALP, if established, on the step-up date. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - The ALP and RALP are not eligible for step ups until they are established. Prior to being established, the ALP and RALP values are both zero. - - Please note it is possible for the ALP to step up even if the RBA or GBA do not step up, and it is also possible for the RBA and GBA to step up even if the ALP does not step up. The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as follows: - - The total RBA will be reset to the greater of the total RBA immediately prior to the step up date or the contract value on the step up date. - - The total GBA will be reset to the greater of the total GBA immediately prior to the step up date or the contract value on the step up date. - - The total GBP will be reset using the calculation as described above based on the increased GBA and RBA. - - The total RBP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset to the increased GBP less all prior withdrawals made in the current contract year, but not less than zero. - - The ALP will be reset to the greater of the ALP immediately prior to the step up date or 6% of the contract value on the step up date. - - The RALP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RALP will not be affected by the step up. (b) At any other time, the RALP will be reset to the increased ALP less all prior withdrawals made in the current contract year, but not less than zero. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 61 SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH: SINGLE LIFE: If a surviving spouse elects to continue the contract and continues the contract as the new owner under the spousal continuation provision of the contract, the SecureSource -- Single Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled and any waiting period limitations on withdrawals and step-ups terminate; if the covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP and RALP values are affected as follows: - - The GBA, RBA and GBP values remain unchanged. - - The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the date of continuation -- the ALP will be established on the contract anniversary following the date the covered person reaches age 65 as the lesser of the RBA or the contract anniversary value, multiplied by 6%. The RALP will be established on the same date equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the date of continuation -- the ALP will be established on the date of continuation as the lesser of the RBA or the contract value, multiplied by 6%. The RALP will be established on the same date in an amount equal to the ALP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the date of continuation -- the ALP and RALP will be automatically reset to zero for the period of time beginning with the date of continuation and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%, and the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the date of continuation -- the ALP will be automatically reset to the lesser of the current ALP or 6% of the contract value on the date of continuation. The RALP will be reset to the ALP less all prior withdrawals made in the current contract year, but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the spousal continuation. JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal continuation provision of the contract as the new owner, the SecureSource -- Joint Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled and any waiting period limitations on withdrawals and step-ups terminate. The surviving covered spouse can name a new beneficiary, however, a new covered spouse cannot be added to the rider. SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values following a withdrawal no longer apply to your contract. For withdrawals, the withdrawal will be made from the variable subaccounts, guarantee period accounts (where available), the one-year fixed account (if applicable) and the DCA fixed account in the same proportion as your interest in each bears to the contract value. You cannot specify from which accounts the withdrawal is to be made. IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the total RBA remains greater than zero, you will be paid in the following scenarios: 1) The ALP has not yet been established and the contract value is reduced to zero as a result of fees or charges or a withdrawal that is less than or equal to the RBP. In this scenario, you can choose to: (a) receive the remaining schedule of GBPs until the RBA equals zero; or (b) SINGLE LIFE: wait until the rider anniversary following the date the covered person reaches age 65, and then receive the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero; or (c) JOINT LIFE: wait until the rider anniversary following the date the younger covered spouse reaches age 65, and then receive the ALP annually until the latter of (i) the death of the last surviving covered spouse, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. - -------------------------------------------------------------------------------- 62 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 2) The ALP has been established and the contract value reduces to zero as a result of fees or charges, or a withdrawal that is less than or equal to both the RBP and the RALP. In this scenario, you can choose to receive: (a) the remaining schedule of GBPs until the RBA equals zero; or (b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero; or (c) JOINT LIFE: the ALP annually until the latter of (i) the death of the last surviving covered spouse, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 3) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP. In this scenario, the remaining schedule of GBPs will be paid until the RBA equals zero. 4) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RBP but less than or equal to the RALP. In this scenario, the ALP will be paid annually until the death of the: - SINGLE LIFE: covered person; - JOINT LIFE: last surviving covered spouse. Under any of these scenarios: - - The annualized amounts will be paid to you in the frequency you elect. You may elect a frequency offered by us at the time payments begin. Available payment frequencies will be no less frequent than annually; - - We will no longer accept additional purchase payments; - - You will no longer be charged for the rider; - - Any attached death benefit riders will terminate; and - - SINGLE LIFE: The death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. - - JOINT LIFE: If the owner had been receiving the ALP, upon the first death the ALP will continue to be paid annually until the later of: 1) the death of the last surviving covered spouse or 2) the RBA is reduced to zero. In all other situations the death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. The SecureSource rider and the contract will terminate under either of the following two scenarios: - - If the contract value falls to zero as a result of a withdrawal that is greater than both the RALP and the RBP. This is full withdrawal of the contract value. - - If the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP, and the total RBA is reduced to zero. AT DEATH: SINGLE LIFE: If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may: 1) elect to take the death benefit under the terms of the contract, 2) take the fixed payout option available under this rider, or 3) continue the contract under the spousal continuation provision of the contract above. If the contract value equals zero and the death benefit becomes payable, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person dies and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person is still alive and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the later of the death of the covered person or the RBA equals zero. - - If the covered person is still alive and the RBA equals zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the death of the covered person. - - If the covered person dies and the RBA equals zero, the benefit terminates. No further payments will be made. JOINT LIFE: If the death benefit becomes payable at the death of a covered spouse, the surviving covered spouse must utilize the spousal continuation provision of the contract and continue the contract as the new owner to continue the joint benefit. If spousal continuation is not available under the terms of the contract, the rider terminates. The lifetime benefit of this rider ends at the death of the last surviving covered spouse. If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may: 1) elect to take the death benefit under the terms of the contract, 2) take the fixed payout option available under this rider, or 3) continue the contract under the spousal continuation provision of the contract above. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 63 If the contract value equals zero at the first death of a covered spouse, the ALP will continue to be paid annually until the later of: 1) the death of the last surviving covered spouse or 2) the RBA is reduced to zero. If the contract value equals zero at the death of the last surviving covered spouse, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the RBA equals zero, the benefit terminates. No further payments will be made. CONTRACT OWNERSHIP CHANGE: SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the GBA, RBA, GBP, RBP values will remain unchanged. If the covered person changes due to the ownership change, the ALP and RALP will be reset as follows: - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be established on the contract anniversary following the date the covered person reaches age 65. The ALP will be set equal to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the anniversary date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the anniversary date occurs at any other time, the RALP will be set to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be established on the ownership change date. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be set to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be set to the ALP less all prior withdrawals made in the current contract year but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be reset to zero for the period of time beginning with the ownership change date and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the time period ends during the waiting period and prior to any withdrawals, the RALP will be reset to equal the lesser of the ALP or total purchase payments multiplied by 6%. If the time period ends at any other time, the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be reset on the ownership change date. The ALP will be reset to the lesser of the current ALP or 6% of the contract value. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be reset to the ALP less all prior withdrawals made in the current contract year but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the ownership change. JOINT LIFE: Ownership changes are only allowed between the covered spouses or their revocable trust(s). No other ownership changes are allowed as long as the rider is in force. GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the SecureSource rider. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity payout option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This option may not be available if the contract is issued to qualify under section 403 or 408 of the Code, as amended. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the remaining schedule of GBPs if necessary to comply with the Code. - -------------------------------------------------------------------------------- 64 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS RIDER TERMINATION The SecureSource rider cannot be terminated either by you or us except as follows: 1. SINGLE LIFE: After the death benefit is payable the rider will terminate if: (a) any one other than your spouse continues the contract, or (b) your spouse does not use the spousal continuation provision of the contract to continue the contract. 2. JOINT LIFE: After the death benefit is payable the rider will terminate if: (a) any one other than a covered spouse continues the contract, or (b) a covered spouse does not use the spousal continuation provision of the contract to continue the contract. 3. Annuity payouts under an annuity payout plan will terminate the rider. 4. Termination of the contract for any reason will terminate the rider. OPTIONAL DEATH BENEFITS BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) The Benefit Protector is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector provides reduced benefits if you or the annuitant are age 70 or older at the rider effective date and it does not provide any additional benefit before the first rider anniversary. If this rider is available in your state and both you and the annuitant are age 75 or younger at contract issue, you may choose to add the Benefit Protector to your contract. You must elect the Benefit Protector at the time you purchase your contract and your rider effective date will be the contract issue date. You may not select this rider if you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector is appropriate for your situation. The Benefit Protector provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the applicable death benefit, plus: - - 40% of your earnings at death if you and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old; or - - 15% of your earnings at death if you or the annuitant were age 70 or older on the rider effective date, up to a maximum of 37.5% of purchase payments not previously withdrawn that are one or more years old. EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector Plus riders, this is an amount equal to the applicable death benefit minus purchase payments not previously withdrawn. The earnings at death may not be less than zero and may not be more than 250% of the purchase payments not previously withdrawn that are one or more years old. TERMINATING THE BENEFIT PROTECTOR - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner. Your spouse and the new annuitant will be subject to all the limitations and restrictions of the rider just as if they were purchasing a new contract. If your spouse and the new annuitant do not qualify for the rider on the basis of age we will terminate the rider. If they do qualify for the rider on the basis of age we will set the contract value equal to the death benefit that would otherwise have been paid and we will substitute this new contract value on the date of death for "purchase payments not previously withdrawn" used in calculating earnings at death. Your spouse also has the option of discontinuing the Benefit Protector Death Benefit Rider within 30 days of the date of death. For an example, see Appendix G. BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) The Benefit Protector Plus is intended to provide an additional benefit to your beneficiary to help offset expenses after your death such as funeral expenses or federal and state taxes. This is an optional benefit that you may select for an additional annual charge (see "Charges"). The Benefit Protector Plus provides reduced benefits if you or the annuitant are age 70 or older at the - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 65 rider effective date. It does not provide any additional benefit before the first rider anniversary and it does not provide any benefit beyond what is offered under the Benefit Protector rider during the second rider year. If this rider is available in your state and both you and the annuitant are age 75 or younger at contract issue, you may choose to add the Benefit Protector Plus to you contract. You must elect the Benefit Protector Plus at the time you purchase your contract and your rider effective date will be the contract issue date. This rider is only available for transfers, exchanges or rollovers from another annuity or life insurance policy. You may not select this rider if you select the Benefit Protector Rider, 5% Accumulation Death Benefit or the Enhanced Death Benefit. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Since the benefit paid by the rider is determined by the amount of earnings at death, the amount of the benefit paid may be reduced as a result of taking RMDs. Be sure to discuss with your investment professional and tax advisor whether or not the Benefit Protector Plus is appropriate for your situation. The Benefit Protector Plus provides that if you or the annuitant die after the first contract anniversary, but before annuity payouts begin, and while this contract is in force, we will pay the beneficiary: - - the benefits payable under the Benefit Protector described above, plus - - a percentage of purchase payments made within 60 days of contract issue not previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE One and Two 0% 0% Three and Four 10% 3.75% Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus rider is as follows: - - the ROP death benefit (see "Benefits in Case of Death") plus:
CONTRACT IF YOU AND THE ANNUITANT ARE UNDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 40% X earnings at death (see above) Three & Four 40% X (earnings at death + 25% of initial purchase payment*) Five or more 40% X (earnings at death + 50% of initial purchase payment*) CONTRACT IF YOU OR THE ANNUITANT ARE AGE 70 YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . . One Zero Two 15% X earnings at death Three & Four 15% X (earnings at death + 25% of initial purchase payment*) Five or more 15% X (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue not previously withdrawn. TERMINATING THE BENEFIT PROTECTOR PLUS - - You may terminate the rider within 30 days of the first rider anniversary. - - You may terminate the rider within 30 days of any rider anniversary beginning with the seventh rider anniversary. - - The rider will terminate when you make a full withdrawal from the contract or when annuity payouts begin. IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your spouse may keep the contract as owner with the contract value equal to the death benefit that would otherwise have been paid. We will then terminate the Benefit Protector Plus and substitute the applicable death benefit (see "Benefits in Case of Death"). For an example, see Appendix H. THE ANNUITY PAYOUT PERIOD As owner of the contract, you have the right to decide how and to whom annuity payouts will be made starting at the retirement date. You may select one of the annuity payout plans outlined below, or we may mutually agree on other payout arrangements. We do not deduct any withdrawal charges under the payout plans listed below, except under annuity payout Plan E. You also decide whether we will make annuity payouts on a fixed or variable basis, or a combination of fixed and variable. The amount available to purchase payouts under the plan you select is the contract value on your retirement date (less any applicable premium tax). You may reallocate this contract value to the subaccounts to provide variable annuity payouts. If you select a variable annuity payout, we reserve the right to limit the number of subaccounts in which you may invest. The GPAs and the DCA fixed account are not available during this payout period. AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON: - - the annuity payout plan you select; - -------------------------------------------------------------------------------- 66 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - - the annuitant's age and, in most cases, sex; - - the annuity table in the contract; and - - the amounts you allocated to the accounts at settlement. In addition, for variable annuity payouts only, amounts depend on the investment performance of the subaccounts you select. These payouts will vary from month to month because the performance of the funds will fluctuate. Fixed payouts remain the same from month to month. For information with respect to transfers between accounts after annuity payouts begin (see "Making the Most of Your Contract -- Transfer policies"). ANNUITY TABLES The annuity tables in your contract (Table A and Table B) show the amount of the monthly payout for each $1,000 of contract value according to the age and, when applicable, the sex of the annuitant. (Where required by law, we will use a unisex table of settlement rates.) Table A shows the amount of the first monthly variable annuity payout assuming that the contract value is invested at the beginning of the annuity payout period and earns a 5% rate of return, which is reinvested and helps to support future payouts. If you ask us at least 30 days before the retirement date, we will substitute an annuity table based on an assumed 3.5% investment rate for the 5% Table A in the contract. The assumed investment rate affects both the amount of the first payout and the extent to which subsequent payouts increase or decrease. For example, annuity payouts will increase if the investment return is above the assumed investment rate and payouts will decrease if the return is below the assumed investment rate. Using a 5% assumed interest rate results in a higher initial payout, but later payouts will increase more slowly when annuity unit values rise and decrease more rapidly when they decline. Table B shows the minimum amount of each fixed annuity payout. We declare current payout rates that we use in determining the actual amount of your fixed annuity payout. The current payout rates will equal or exceed the guaranteed payout rates shown in Table B. We will furnish these rates to you upon request. ANNUITY PAYOUT PLANS You may choose an annuity payout plan by giving us written instructions at least 30 days before contract values are used to purchase the payout plan. Generally, you may select one of the Plans A through E below or another plan agreed to by us. - - PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the annuitant's death. Payouts end with the last payout before the annuitant's death. We will not make any further payouts. This means that if the annuitant dies after we made only one monthly payout, we will not make any more payouts. - - PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: We make monthly payouts for a guaranteed payout period of five, ten, 15 or 20 years that you elect. This election will determine the length of the payout period to the beneficiary if the annuitant should die before the elected period expires. We calculate the guaranteed payout period from the retirement date. If the annuitant outlives the elected guaranteed payout period, we will continue to make payouts until the annuitant's death. - - PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the annuitant's death, with our guarantee that payouts will continue for some period of time. We will make payouts for at least the number of months determined by dividing the amount applied under this option by the first monthly payout, whether or not the annuitant is living. - - PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts while both the annuitant and a joint annuitant are living. If either annuitant dies, we will continue to make monthly payouts at the full amount until the death of the surviving annuitant. Payouts end with the death of the second annuitant. - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly annuity payouts during the lifetime of the annuitant and joint annuitant. When either the annuitant or joint annuitant dies, we will continue to make monthly payouts during the lifetime of the survivor. If the survivor dies before we have made payouts for 20 years, we continue to make payouts to the named beneficiary for the remainder of the 20-year period which begins when the first annuity payout is made. - - PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific payout period of ten to 30 years that you elect. We will make payouts only for the number of years specified whether the annuitant is living or not. Depending on the selected time period, it is foreseeable that an annuitant can outlive the payout period selected. During the payout period, you can elect to have us determine the present value of any remaining variable payouts and pay it to you in a lump sum. We determine the present value of the remaining annuity payouts which are assumed to remain level at the amount of the payout that would have been made 7 days prior to the date we determine the present value. The discount rate we use in the calculation will vary between 5.90% and 8.15% depending on the applicable contract option and the applicable assumed investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take a portion of the - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 67 discounted value once a year. If you do so, your monthly payouts will be reduced by the proportion of your withdrawal to the full discounted value. A 10% IRS penalty tax could apply if you take a withdrawal. (See "Taxes.") - - GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH A SECURESOURCE OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER): This fixed annuity payout option is an alternative to the above annuity payout plans. This option may not be available if the contract is a qualified annuity. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed using a life expectancy table published by the IRS. Under this option, the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the total RBA at the time you begin this fixed payout option (see "Optional Benefits -- SecureSource Riders" or "Appendix I: Guarantor Withdrawal Benefit for Life Rider"). These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at the time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary. ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a qualified annuity, you must select a payout plan as of the retirement date set forth in your contract. You have the responsibility for electing a payout plan under your contract that complies with applicable law. Your contract describes your payout plan options. The options will meet certain IRS regulations governing RMDs if the payout plan meets the incidental distribution benefit requirements, if any, and the payouts are made: - - in equal or substantially equal payments over a period not longer than your life or over the joint life of you and your designated beneficiary; or - - in equal or substantially equal payments over a period not longer than your life expectancy, or over the joint life expectancy of you and your designated beneficiary; or - - over a period certain not longer than your life expectancy or over the joint life expectancy of you and your designated beneficiary. IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the annuity payouts at least 30 days before the annuitant's retirement date. If you do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed. IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of monthly payouts at the time the contract value is used to purchase a payout plan. If the calculations show that monthly payouts would be less than $20, we have the right to pay the contract value to the owner in a lump sum or to change the frequency of the payouts. DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity payouts begin, we will pay any amount payable to the beneficiary as provided in the annuity payout plan in effect. TAXES Under current law, your contract has a tax-deferral feature. Generally, this means you do not pay federal income tax until there is a distribution from the contract. Certain exceptions apply. We will send a tax information reporting form for any year in which we made a distribution according to our records. NONQUALIFIED ANNUITIES Generally, only the increase in the value of a non-qualified annuity contract over the investment in the contract is taxable. Certain exceptions apply. Tax law requires that all nonqualified deferred annuity contracts issued by the same company (and possibly its affiliates) to the same owner during a calendar year be taxed as a single, unified contract when distributions are taken from any one of those contracts. ANNUITY PAYOUTS: Generally, a portion of each payout will be ordinary income and subject to tax, and a portion of each payout will be considered a return of part of your investment in the contract and will not be taxed. All amounts you receive after your investment in the contract is fully recovered will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund, where the annuitant dies before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the owner for the last taxable year. Under all other annuity payout plans, where the annuity payouts end before your investment in the contract is fully recovered, the remaining portion of the unrecovered investment may be available as a federal income tax deduction to the taxpayer for the tax year in which the payouts end. (See "The Annuity Payout Period -- Annuity Payout Plans.") WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity before your annuity payouts begin, including withdrawals under any optional withdrawal benefit rider, your withdrawal will be taxed to the extent that the contract value immediately before the withdrawal exceeds the investment in the contract. Different rules may apply if you exchange another contract into this contract. - -------------------------------------------------------------------------------- 68 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS You also may have to pay a 10% IRS penalty for withdrawals of taxable income you make before reaching age 59 1/2 unless certain exceptions apply. WITHHOLDING: If you receive taxable income as a result of an annuity payout or withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as partial or full withdrawal) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract is not exempt from estate (federal or state) or income taxes. Any amount your beneficiary receives that exceeds the investment in the contract is taxable as ordinary income to the beneficiary in the year he or she receives the payments. ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For nonqualified annuities, any annual increase in the value of annuities held by such entities (nonnatural persons) generally will be treated as ordinary income received during that year. However, if the trust was set up for the benefit of a natural person only, the income will generally remain tax-deferred. PENALTIES: If you receive amounts from your nonqualified annuity before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty will not apply to any amount received: - - because of your death or in the event of nonnatural ownership, the death of the annuitant; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments, made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if it is allocable to an investment before Aug. 14, 1982; or - - if annuity payouts are made under immediate annuities as defined by the Code. TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified annuity without receiving adequate consideration, the transfer may be treated as a withdrawal for federal income tax purposes. If the transfer is a currently taxable event for income tax purposes, the original owner will be taxed on the amount of deferred earnings at the time of the transfer and also may be subject to the 10% IRS penalty discussed earlier. In this case, the new owner's investment in the contract will be the value of the contract at the time of the transfer. In general, this rule does not apply to transfers between spouses or former spouses. Please consult your tax advisor for further details. ASSIGNMENT: If you assign or pledge your contract as collateral for a loan, earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you like a withdrawal and you may have to pay a 10% IRS penalty. QUALIFIED ANNUITIES Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions under the contract comply with the law. Qualified annuities have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan's Summary Plan Description, your IRA disclosure statement, or consult a tax advisor for additional information about the distribution rules applicable to your situation. When you use your contract to fund a retirement plan or IRA that is already tax-deferred under the Code, the contract will not provide any necessary or additional tax deferral. If your contract is used to fund an employer sponsored plan, your right to benefits may be subject to the terms and conditions of the plan regardless of the terms of the contract. ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire payout generally is includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth 403(b), the entire withdrawal will generally be includable as ordinary income and is subject to tax unless: (1) the contract is an IRA to which you made non-deductible - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 69 contributions; or (2) you rolled after-tax dollars from a retirement plan into your IRA; or (3) the contract is used to fund a retirement plan and you or your employer have contributed after-tax dollars. WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be free from income and penalty taxes if you have attained age 59 1/2 and meet the five year holding period. REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans are subject to required withdrawals called required minimum distributions ("RMDs") beginning at age 70 1/2. In addition, a new tax regulation, effective for RMDs calculated in 2006 and after, may cause the RMDs for some contracts with certain death benefits and optional riders to increase. RMDs may reduce the value of certain death benefits and optional benefits. You should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable income as a result of an annuity payout or a withdrawal, including withdrawals under any optional withdrawal benefit rider, we may deduct withholding against the payment. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. As long as you have provided us with a valid Social Security Number or Taxpayer Identification Number, you can elect not to have any withholding occur. If the payment is part of an annuity payout plan, we generally compute the amount of withholding using payroll tables. You may provide us with a statement of how many exemptions to use in calculating the withholding. If the distribution is any other type of payment (such as a partial or full surrender) we compute withholding using 10% of the taxable portion. The withholding requirements differ if we deliver payment outside the United States and/or you are a non-resident alien. Some states also may impose withholding requirements similar to the federal withholding described above. If this should be the case, we may deduct state withholding from the payment. WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or part of the contract value from a qualified annuity, mandatory 20% federal income tax withholding (and possibly state income tax withholding) generally will be imposed at the time the payout is made from the plan. Any withholding represents a prepayment of your tax due for the year. You take credit for these amounts on your annual income tax return. This mandatory withholding will not be imposed if instead of receiving the distribution check, you elect to have the distribution rolled over directly to an IRA or another eligible plan; In the below situations, the distribution is subject to an optional 10% withholding. We will withhold 10% of the distribution amount unless you elect otherwise. - - the payout is one in a series of substantially equal periodic payouts, made at least annually, over your life or life expectancy (or the joint lives or life expectancies of you and your designated beneficiary) or over a specified period of 10 years or more; - - the payout is a RMD as defined under the Code; - - the payout is made on account of an eligible hardship; or - - the payout is a corrective distribution. Payments made to a surviving spouse instead of being directly rolled over to an IRA are subject to mandatory 20% income tax withholding. State withholding also may be imposed on taxable distributions. PENALTIES: If you receive amounts from your qualified contract before reaching age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in your ordinary income. However, this penalty generally will not apply to any amount received: - - because of your death; - - because you become disabled (as defined in the Code); - - if the distribution is part of a series of substantially equal periodic payments made at least annually, over your life or life expectancy (or joint lives or life expectancies of you and your beneficiary); - - if the distribution is made following severance from employment during the calendar year in which you attain age 55 (TSAs and annuities funding 401(a) plans only); or - - to pay certain medical or education expenses (IRAs only). DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable as ordinary income to the beneficiary in the year he/she receives the payments from the qualified annuity. If you made non-deductible contributions to a traditional IRA, the portion of any distribution from the contract that represents after-tax contributions is not taxable as ordinary income to your beneficiary. You are responsible for keeping all records tracking your non-deductible contributions to an IRA. Death benefits under a Roth IRA generally are not taxable as ordinary income to the beneficiary if certain distribution requirements are met. ASSIGNMENT: You may not assign or pledge your qualified contract as collateral for a loan. - -------------------------------------------------------------------------------- 70 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS OTHER SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this prospectus, we believe that charges related to these riders are not subject to current taxation. Therefore, we will not report these charges as partial withdrawals from your contract. However, the IRS may determine that these charges should be treated as partial withdrawals subject to taxation to the extent of any gain as well as the 10% tax penalty for withdrawals before the age of 59 1/2, if applicable. We reserve the right to report charges for these riders as partial withdrawals if we, as a withholding and reporting agent, believe that we are required to report them. In addition, we will report any benefits attributable to these riders on the death of you or the annuitant as an annuity death benefit distribution, not as proceeds from life insurance. IMPORTANT: Our discussion of federal tax laws is based upon our understanding of current interpretations of these laws. Federal tax laws or current interpretations of them may change. For this reason and because tax consequences are complex and highly individual and cannot always be anticipated, you should consult a tax advisor if you have any questions about taxation of your contract. RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under the Code. For federal income tax purposes, the subaccounts are considered a part of our company, although their operations are treated separately in accounting and financial statements. Investment income is reinvested in the fund in which each subaccount invests and becomes part of that subaccount's value. This investment income, including realized capital gains, is not taxed to us, and therefore no charge is made against the subaccounts for federal income taxes and there is no withholding. We reserve the right to make such a charge in the future if there is a change in the tax treatment of variable annuities. TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal income tax purposes. To that end, the provisions of the contract are to be interpreted to ensure or maintain such tax qualification, in spite of any other provisions of the contract. We reserve the right to amend the contract to reflect any clarifications that may be needed or are appropriate to maintain such qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will send you a copy of any amendments. VOTING RIGHTS As a contract owner with investments in the subaccounts, you may vote on important fund policies until annuity payouts begin. Once they begin, the person receiving them has voting rights. We will vote fund shares according to the instructions of the person with voting rights. Before annuity payouts begin, the number of votes you have is determined by applying your percentage interest in each subaccount to the total number of votes allowed to the subaccount. After annuity payouts begin, the number of votes you have is equal to: - - the reserve held in each subaccount for your contract; divided by - - the net asset value of one share of the applicable fund. As we make annuity payouts, the reserve for the contract decreases; therefore, the number of votes also will decrease. We calculate votes separately for each subaccount. We will send notice of shareholders' meetings, proxy materials and a statement of the number of votes to which the voter is entitled. We will vote shares for which we have not received instructions in the same proportion as the votes for which we received instructions. We also will vote the shares for which we have voting rights in the same proportion as the votes for which we received instructions. SUBSTITUTION OF INVESTMENTS We may substitute the funds in which the subaccounts invest if: - - laws or regulations change; - - the existing funds become unavailable; or - - in our judgment, the funds no longer are suitable (or are not the most suitable) for the subaccounts. If any of these situations occur, and if we believe it is in the best interest of persons having voting rights under the contract, we have the right to substitute a fund currently listed in this prospectus (existing fund) for another fund (new fund). The new fund may have higher fees and/or operating expenses than the existing fund. Also, the new fund may have investment objectives and policies and/or investment advisers which differ from the existing fund. We may also: - - add new subaccounts; - - combine any two or more subaccounts; - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 71 - - transfer assets to and from the subaccounts or the variable account; and - - eliminate or close any subaccounts. We will notify you of any substitution or change. If we notify you that a subaccount will be eliminated or closed, you will have a certain period of time to tell us where to reallocate purchase payments or contract value currently allocated to that subaccount. If we do not receive your reallocation instructions by the due date, we automatically will reallocate to the subaccount investing in the RiverSource Variable Portfolio -- Cash Management Fund. You may then transfer this reallocated amount in accordance with the transfer provisions of your contract (see "Transferring Between Accounts" above). In the event of substitution or any of these changes, we may amend the contract and take whatever action is necessary and appropriate without your consent or approval. However, we will not make any substitution or change without the necessary approval of the SEC and state insurance departments. ABOUT THE SERVICE PROVIDERS PRINCIPAL UNDERWRITER RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves as the principal underwriter and general distributor of the contract. Its offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc. SALES OF THE CONTRACT - - Only securities broker-dealers ("selling firms") registered with the SEC and members of the FINRA may sell the contract. - - The contracts are continuously offered to the public through authorized selling firms. We and RiverSource Distributors have a sales agreement with the selling firm to offer the contracts to the public. We agree to pay the selling firm (or an affiliated insurance agency) for contracts its investment professional sell. The selling firm may be required to return sales commissions under certain circumstances including but not limited to when contracts are returned under the free look period. PAYMENTS WE MAKE TO SELLING FIRMS - - We may use compensation plans which vary by selling firm. For example, some of these plans pay selling firms a commission of up to 5.00% each time a purchase payment is made for contract Option B and 1% for contract Option C. We may also pay ongoing trail commissions of up to 1.25% of the contract value for contract Option B and 1.00% of the contract value for Contract Option C. We do not pay or withhold payment of trail commissions based on which investment options you select. - - We may pay selling firms a temporary additional sales commission of up to 1% of purchase payments for both contract options offered for a period of time we select. For example, we may offer to pay a temporary additional sales commission to get selling firms to market a new or enhanced contract or to increase sales during the period. - - In addition to commissions, we may, in order to promote sales of the contracts, and as permitted by applicable laws and regulation, pay or provide selling firms with other promotional incentives in cash, credit or other compensation. We generally (but may not) offer these promotional incentives to all selling firms. The terms of such arrangements differ between selling firms. These promotional incentives may include but are not limited to: - sponsorship of marketing, educational, due diligence and compliance meetings and conferences we or the selling firm may conduct for investment professionals, including subsidy of travel, meal, lodging, entertainment and other expenses related to these meetings; - marketing support related to sales of the contract including for example, the creation of marketing materials, advertising and newsletters; - providing service to contract owners; and - funding other events sponsored by a selling firm that may encourage the selling firm's investment professionals to sell the contract. These promotional incentives or reimbursements may be calculated as a percentage of the selling firm's aggregate, net or anticipated sales and/or total assets attributable to sales of the contract, and/or may be a fixed dollar amount. As noted below this additional compensation may cause the selling firm and its investment professionals to favor the contracts. SOURCES OF PAYMENTS TO SELLING FIRMS We pay the commissions and other compensation described above from our assets. Our assets may include: - - revenues we receive from fees and expenses that you will pay when buying, owning and making a withdrawal from the contract (see "Expense Summary"); - - compensation we or an affiliate receive from the underlying funds in the form of distribution and services fees (see "The Variable Account and the Funds -- The Funds"); - -------------------------------------------------------------------------------- 72 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - - compensation we or an affiliate receive from a fund's investment adviser, subadviser, distributor or an affiliate of any of these (see "The Variable Account and the Funds -- The Funds"); and - - revenues we receive from other contracts we sell that are not securities and other businesses we conduct. You do not directly pay the commissions and other compensation described above as the result of a specific charge or deduction under the contract. However, you may pay part or all of the commissions and other compensation described above indirectly through: - - fees and expenses we collect from contract owners, including withdrawal charges; and - - fees and expenses charged by the underlying subaccount funds in which you invest, to the extent we or one of our affiliates receive revenue from the funds or an affiliated person. POTENTIAL CONFLICTS OF INTEREST Compensation payment arrangements with selling firms can potentially: - - give selling firms a heightened financial incentive to sell the contract offered in this prospectus over another investment with lower compensation to the selling firm. - - cause selling firms to encourage their investment professionals to sell you the contract offered in this prospectus instead of selling you other alternative investments that may result in lower compensation to the selling firm. - - cause selling firms to grant us access to its investment professionals to promote sales of the contract offered in this prospectus, while denying that access to other firms offering similar contracts or other alternative investments which may pay lower compensation to the selling firm. PAYMENTS TO INVESTMENT PROFESSIONALS - - The selling firm pays its investment professionals. The selling firm decides the compensation and benefits it will pay its investment professionals. - - To inform yourself of any potential conflicts of interest, ask the investment professional before you buy, how the selling firm and its investment professionals are being compensated and the amount of the compensation that each will receive if you buy the contract. ISSUER RiverSource Life issues the contracts. We are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of Ameriprise Financial, Inc. We conduct a conventional life insurance business. We are licensed to do business in 49 states, the District of Columbia and American Samoa. Our primary products currently include fixed and variable annuity contracts and life insurance policies. LEGAL PROCEEDINGS RiverSource Life is involved in the normal course of business in legal and regulatory proceedings, or regulatory requests for information, concerning matters arising in connection with the conduct of our general business activities as well as generally applicable to business practices in the insurance industry. From time to time, we receive requests for information from, or have been subject to examination by, the SEC, the Financial Industry Regulatory Authority, commonly referred to as FINRA, and several state authorities concerning our business activities and practices. These requests generally include suitability, late trading, market timing, compensation and disclosure of revenue sharing arrangements with respect to our annuity and insurance products. We have cooperated with and will continue to cooperate with the applicable regulators regarding their inquiries and examinations. RiverSource Life is involved in other proceedings concerning matters arising in connection with the conduct of its business activities. RiverSource Life believes that it is not a party to, nor are any of its properties the subject of, any pending legal, arbitration or regulatory proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or liquidity. However, it is possible that the outcome of any such proceedings could have a material adverse impact on results of operations in any particular reporting period as the proceedings are resolved. ADDITIONAL INFORMATION INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE To the extent and only to the extent that any statement in a document incorporated by reference into this prospectus is modified or superseded by a statement in this prospectus or in a later-filed document, such statement is hereby deemed so modified or superseded and not part of this prospectus. The Annual Report on Form 10-K for the year ended Dec. 31, 2007 that we previously filed with the SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by reference into this prospectus. To access this document, see "SEC Filings" under "Investors Relations" on our website at www.ameriprise.com. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 73 RiverSource Life will furnish you without charge a copy of any or all of the documents incorporated by reference into this prospectus, including any exhibits to such documents which have been specifically incorporated by reference. We will do so upon receipt of your written or oral request. You can contact RiverSource Life at the telephone number and address listed on the first page of this prospectus. AVAILABLE INFORMATION This prospectus is part of a registration statement we file with the SEC. Additional information on RiverSource Life and on this offering is available in the registration statement. You can obtain copies of these materials at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. In addition to this prospectus, the SAI and information about the contract, information incorporated by reference is available on the EDGAR Database on the SEC's Internet site at (http://www.sec.gov). INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors and officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - -------------------------------------------------------------------------------- 74 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS APPENDICES TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE # Appendix A: Example -- Market Value Adjustment (MVA) p. 76 Guarantee Period Accounts (GPAs) p. 26 Appendix B: Example -- Withdrawal Charges for Charges -- Withdrawal Charges Contract Option B p. 78 p. 32 Appendix C: Example -- Death Benefits p. 81 Benefits in Case of Death p. 47 Appendix D: Example -- Accumulation Protector Benefit Optional Benefits -- Accumulation Protector Benefit Rider p. 84 Rider p. 50 Appendix E: Example -- SecureSource Riders p. 86 Optional Benefits -- SecureSource Riders p. 52 Appendix F: SecureSource Riders -- Additional RMD Optional Benefits -- SecureSource Riders Disclosure p. 90 p. 52 Appendix G: Example -- Benefit Protector Death Optional Benefits -- Benefit Protector Death Benefit Benefit Rider p. 91 Rider p. 64 Appendix H: Example -- Benefit Protector Plus Death Optional Benefits -- Benefit Protector Plus Death Benefit Rider p. 93 Benefit Rider p. 64 Appendix I: Guarantor Withdrawal Benefit for Life N/A Rider Disclosure p. 95 Appendix J: Condensed Financial Information p. 107 Condensed Financial Information (unaudited) p. 13 (Unaudited)
The purpose of these appendices is first to illustrate the operation of various contract features and riders; second, to provide additional disclosure regarding various contract features and riders; and lastly, to provide condensed financial history (unaudited) of the subaccounts. In order to demonstrate the contract features and riders, an example may show hypothetical contract values. These contract values do not represent past or future performance. Actual contract values may be more or less than those shown and will depend on a number of factors, including but not limited to the investment experience of the subaccounts, GPAs, DCA fixed account, and one-year fixed account and the fees and charges that apply to your contract. The examples of death benefits and optional riders in appendices C through E and appendix I include a partial withdrawal to illustrate the effect of a partial withdrawal on the particular benefit. These examples are intended to show how the optional riders operate, and do not take into account whether the rider is part of a qualified contract. Qualified contracts are subject to required minimum distributions at certain ages which may require you to take partial withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you are considering the addition of certain death benefits and/or optional riders to a qualified contract, you should consult your tax advisor prior to making a purchase for an explanation of the potential tax implications to you. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 75 APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA) As the examples below demonstrate, the application of an MVA may result in either a gain or a loss of principal. We refer to all of the transactions described below as "early withdrawals." ASSUMPTIONS: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; and - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a withdrawal from your GPA. In other words, there are seven years left in your guarantee period. Remember that the MVA depends partly on the interest rate of a new GPA for the same number of years as the guarantee period remaining on your GPA. In this case, that is seven years. EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year guarantee period are earning 3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less than the 3.6% rate and, so the MVA will be negative. EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add 0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate is greater than the 2.6% rate, the MVA will be positive. To determine that adjustment precisely, you will have to use the formula described below. SAMPLE MVA CALCULATIONS The precise MVA formula we apply is as follows: 1 + I EARLY WITHDRAWAL AMOUNT X [( ------------ )(N/12) - 1] = MVA 1 + J + .001
Where i = rate earned in the GPA from which amounts are being transferred or withdrawn. j = current rate for a new guaranteed period equal to the remaining term in the current Guarantee Period. n = number of months remaining in the current guarantee period (rounded up). EXAMPLES -- MVA Using assumptions similar to those we used in the examples above: - - You purchase a contract and allocate part of your purchase payment to the ten-year GPA; - - we guarantee an interest rate of 3.0% annually for your ten-year guarantee period; and - - after three years, you decide to make a $1,000 withdrawal from your GPA. In other words, there are seven years left in your guarantee period. EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year guarantee period are earning 3.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = -$39.84 1 + .035 + .001
In this example, the MVA is a negative $39.84. EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA earning a guaranteed interest rate of 3.0%. Assume at the time of your withdrawal new GPAs that we offer with a seven-year guarantee period are earning 2.5%. Using the formula above, we determine the MVA as follows: 1.030 $1,000 X [( ----------------- )(84/12) - 1] = $27.61 1 + .025 + .001
In this example, the MVA is a positive $27.61. - -------------------------------------------------------------------------------- 76 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS Please note that when you allocate your purchase payment to the ten-year GPA and your purchase payment is in its fourth year from receipt at the beginning of the Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal charge schedule under contract Option B. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct the withdrawal charge from your early withdrawal after we applied the MVA. Also note that when you request an early withdrawal, we withdraw an amount from your GPA that will give you the net amount you requested after we apply the MVA (and any applicable withdrawal charge under contract Option B), unless you request otherwise. The current interest rate we offer on the GPA will change periodically at our discretion. It is the rate we are then paying on purchase payments, renewals and transfers paid under this class of contracts for guarantee period durations equaling the remaining guarantee period of the GPA to which the formula is being applied. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 77 APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION B For purposes of calculating any withdrawal charge, including the examples illustrated below, we treat amounts withdrawn from your contract value in the following order: 1. First, in each contract year, we withdraw amounts totaling up to 10% of your prior anniversary's contract value or the greater of your contract's remaining benefit payment or remaining annual lifetime payment if you elected a SecureSource(SM) rider or the Guarantor Withdrawal Benefit for Life rider, and the greater of your remaining annual lifetime payment and your remaining benefit payment is greater than 10% of your prior anniversary's contract value. We do not assess a withdrawal charge on this amount. 2. Next, we withdraw contract earnings, if any, that are greater than the amount described in number one above. We do not assess a withdrawal charge on contract earnings. 3. Next we withdraw purchase payments received prior to the withdrawal charge period shown in your contract. We do not assess a withdrawal charge on these purchase payments. 4. Finally, if necessary, we withdraw purchase payments received that are still within the withdrawal charge period you selected and shown in your contract. We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do assess a withdrawal charge on these payments. After withdrawing earnings in numbers one and two above, we next withdraw enough additional contract value (ACV) to meet your requested withdrawal amount. If the amount described in number one above was greater than contract earnings prior to the withdrawal, the excess (XSF) will be excluded from the purchase payments being withdrawn that were received most recently when calculating the withdrawal charge. We determine the amount of purchase payments being withdrawn (PPW) in numbers three and four above as: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) If the additional contract value withdrawn is less than XSF, then PPW will equal ACV. We determine current contract earnings (CE) by looking at the entire contract value (CV), not the earnings of any particular subaccount, GPA, the one-year fixed account or the DCA fixed account. If the contract value is less than purchase payments received and not previously withdrawn (PPNPW) then contract earnings are zero. The examples below show how the withdrawal charge for a full and partial withdrawal is calculated for Contract Option B with a seven-year withdrawal charge schedule. Each example illustrates the amount of the withdrawal charge for both a contract that experiences gains and a contract that experiences losses, given the same set of assumptions. - -------------------------------------------------------------------------------- 78 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS FULL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a seven-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - you withdraw the contract for its total value during the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - you have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00 WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS: - ------------------------------------------------------------------------------------------------------------------------------ STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract Value just prior to withdrawal (CV): 60,000.00 40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contract (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 60,000.00 40,000.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 50,000.00 40,000.00 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 50,000.00 40,000.00 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 50,000.00 50,000.00 STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 50,000.00 50,000.00 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 3,000.00 2,748.00 STEP 7. The dollar amount you will receive as a result of your full withdrawal is determined as: Contract value withdrawn: 60,000.00 40,000.00 WITHDRAWAL CHARGE: (3,000.00) (2,748.00) Contract charge (assessed upon full withdrawal): (40.00) (40.00) ---------- ---------- NET FULL WITHDRAWAL PROCEEDS: $56,960.00 $37,212.00
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 79 PARTIAL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE: This is an example of how we calculate the withdrawal charge on a contract with a seven-year (from the date of EACH purchase payment) withdrawal charge schedule and the following history: ASSUMPTIONS: - - We receive a single $50,000 purchase payment; and - - you request a net partial withdrawal of $15,000.00 during the fourth contract year after you made the single purchase payment. The withdrawal charge percentage in the fourth year after a purchase payment is 6.0%; and - - you have made no prior withdrawals. WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER WHERE THERE IS A LOSS: - --------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS Contract value just prior to withdrawal: $60,000.00 $40,000.00 Contract value on prior anniversary: 58,000.00 42,000.00 We determine the amount of contract value that must be withdrawn in order for the net partial withdrawal proceeds to match the amount requested. We start with an estimate of the amount of contract value to withdraw and calculate the resulting withdrawal charge and net partial withdrawal proceeds as illustrated below. We then adjust our estimate and repeat until we determine the amount of contract value to withdraw that generates the desired net partial withdrawal proceeds. WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS FOLLOWS: - ------------------------------------------------------------------------------------------------------------------------------ STEP 1. First, we determine the amount of earnings available in the contract at the time of withdrawal as: Contract value just prior to withdrawal (CV): $60,000.00 $40,000.00 Less purchase payments received and not previously withdrawn (PPNPW): 50,000.00 50,000.00 ---------- ---------- Earnings in the contract (but not less than zero): 10,000.00 0.00 STEP 2. Next, we determine the Total Free Amount (TFA) available in the contract as the greatest of the following values: Earnings in the contract: 10,000.00 0.00 10% of the prior anniversary's contract value: 5,800.00 4,200.00 ---------- ---------- TFA (but not less than zero): 10,000.00 4,200.00 STEP 3. Next we determine ACV, the amount by which the contract value withdrawn exceeds earnings. Contract value withdrawn: 15,319.15 15,897.93 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- ACV (but not less than zero): 5,319.15 15,897.93 STEP 4. Next we determine XSF, the amount by which 10% of the prior anniversary's contract value exceeds earnings. 10% of the prior anniversary's contract value: 5,800.00 4,200.00 Less earnings in the contract: 10,000.00 0.00 ---------- ---------- XSF (but not less than zero): 0.00 4,200.00 STEP 5. Now we can determine how much of the PPNPW is being withdrawn (PPW) as follows: PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF) XSF from Step 4 = 0.00 4,200.00 ACV from Step 3 = 5,319.15 15,897.93 CV from Step 1 = 60,000.00 40,000.00 TFA from Step 2 = 10,000.00 4,200.00 PPNPW from Step 1 = 50,000.00 50,000.00 ---------- ---------- PPW = 5,319.15 19,165.51 STEP 6. We then calculate the withdrawal charge as a percentage of PPW. Note that for a contract with a loss, PPW may be greater than the amount you request to withdraw: PPW: 5,319.15 19,165.51 less XSF: 0.00 4,200.00 ---------- ---------- amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51 multiplied by the withdrawal charge rate: X 6.0% X 6.0% ---------- ---------- withdrawal charge: 319.15 897.93 STEP 7. The dollar amount you will receive as a result of your partial withdrawal is determined as: Contract value withdrawn: 15,319.15 15,897.93 WITHDRAWAL CHARGE: (319.15) (897.93) ---------- ---------- NET PARTIAL WITHDRAWAL PROCEEDS: $15,000.00 $15,000.00
- -------------------------------------------------------------------------------- 80 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS APPENDIX C: EXAMPLE -- DEATH BENEFITS EXAMPLE -- ROP DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $20,000. You select contract Option B; and - - on the first contract anniversary you make an additional purchase payment of $5,000; and - - during the second contract year the contract value falls to $22,000 and you take a $1,500 partial withdrawal, including withdrawal charge; and - - during the third contract year the contract value grows to $23,000. WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $23,000.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45 EXAMPLE -- MAV DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000. You select contract Option B; and - - on the first contract anniversary the contract value grows to $26,000; and - - during the second contract year the contract value falls to $22,000, at which point you take a $1,500 (including withdrawal charge) partial withdrawal, leaving a contract value of $20,500. WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $20,500.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,704.55 $22,000 ---------- for a death benefit of: $23,295.45 ---------- 3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH: Greatest of your contract anniversary values: $26,000.00 plus purchase payments made since the prior anniversary: minus the death benefit adjusted partial withdrawals, calculated as: +0.00 $1,500 X $26,000 ---------------- = -1,772.73 $22,000 ---------- for a death benefit of: $24,227.27 ----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE MAV: $24,227.27 - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 81 EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option B; and - - on the first contract anniversary, the GPA value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - during the second contract year the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a death benefit of: $23,456.79 ---------- 3. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: 1.05 $21,000.00 x $20,000 = plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 5% variable account floor (value of the GPAs, one-year fixed account and the variable account floor): $24,642.11 ----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- 82 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS EXAMPLE -- ENHANCED DEATH BENEFIT ASSUMPTIONS: - - You purchase the contract with a payment of $25,000 with $5,000 allocated to the GPAs and $20,000 allocated to the subaccounts. You select Contract Option B; and - - on the first contract anniversary, the GPAs value is $5,200 and the subaccount value is $17,000. Total contract value is $23,200; and - - during the second contract year, the GPA value is $5,300 and the subaccount value is $19,000. Total contract value is $24,300. You take a $1,500 partial withdrawal (including withdrawal charges) all from the subaccounts, leaving the contract value at $22,800. THE DEATH BENEFIT DURING THE SECOND CONTRACT YEAR, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS: 1. CONTRACT VALUE AT DEATH: $22,800.00 ---------- 2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS: Total purchase payments: $25,000.00 minus adjusted partial withdrawals, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a ROP Death Benefit of: $23,456.79 ---------- 3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH: The MAV on the immediately preceding anniversary: $25,000.00 plus purchase payments made since that anniversary: +0.00 minus adjusted partial withdrawals made since that anniversary, calculated as: $1,500 X $25,000 ---------------- = -1,543.21 $24,300 ---------- for a MAV Death Benefit of: $23,456.79 ---------- 4. THE 5% VARIABLE ACCOUNT FLOOR: The variable account floor on the first contract anniversary, calculated as: 1.05 x $20,000 $21,000.00 plus amounts allocated to the subaccounts since that anniversary: +0.00 minus the 5% variable account floor adjusted partial withdrawal from the subaccounts, calculated as: $1,500 X $21,000 ---------------- = -$1,657.89 $19,000 ---------- variable account floor benefit: $19,342.11 plus the GPA value: +5,300.00 5% variable account floor (value of the GPAs and the variable account floor): $24,642.11 ----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11 - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 83 APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER AUTOMATIC STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) in the second, third and seventh contract anniversaries. These increases occur because of the automatic step up feature of the rider. The automatic step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the automatic step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a seven-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - - you take partial withdrawals from the contract on the fifth and eighth contract anniversaries in the amounts of $2,000 and $5,000, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and - - you do not exercise the elective step up option available under the rider; and - - you do not change model portfolios. Based on these assumptions, the waiting period expires at the end of the 10th contract year. The rider then ends. On the benefit date the hypothetical assumed contract value is $108,118 and the MCAV is $136,513, so the contract value would be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT ADJUSTED ASSUMED ASSUMED DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 0 0 0 12.0% 140,000 125,000 2 0 0 0 15.0% 161,000 128,800(2) 3 0 0 0 3.0% 165,830 132,664(2) 4 0 0 0 -8.0% 152,564 132,664 5 0 2,000 2,046 -15.0% 127,679 130,618 6 0 0 0 20.0% 153,215 130,618 7 0 0 0 15.0% 176,197 140,958(2) 8 0 5,000 4,444 -10.0% 153,577 136,513 9 0 0 0 -20.0% 122,862 136,513 10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date. (2) These values indicate where the automatic step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. ELECTIVE STEP UP This example shows increases in the Minimum Contract Accumulation Value (MCAV) on the first, second, third and seventh contract anniversaries. These increases occur only if you exercise the elective step up option within 30 days following the contract anniversary. The contract value on the date we receive your written request to step up must be greater than the MCAV on that date. The elective step up does not create contract value, guarantee the performance of any underlying fund in which a subaccount invests, or provide a benefit that can be withdrawn or paid upon death. Rather, the elective step up is an interim calculation used to arrive at the final MCAV which determines whether a benefit will be paid under the rider on the benefit date. ASSUMPTIONS: - - You purchase a contract with a seven-year withdrawal schedule with a payment of $125,000; and - - you make no additional purchase payments to the contract; and - -------------------------------------------------------------------------------- 84 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - - you take partial withdrawals from the contract on the fifth, eighth and thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500, respectively; and - - contract values increase or decrease according to the hypothetical assumed net rate of return; and, - - the elective step up is exercised on the first, second, third and seventh contract anniversaries; and - - you do not change model portfolios. Based on these assumptions, the 10 year waiting period restarts each time you exercise the elective step up option (on the first, second, third and seventh contract anniversaries in this example). The waiting period expires at the end of the 10th contract year following the last exercise of the elective step up option. When the waiting period expires, the rider ends. On the benefit date the hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000 1 10(2) 0 0 0 12.0% 140,000 140,000(3) 2 10(2) 0 0 0 15.0% 161,000 161,000(3) 3 10(2) 0 0 0 3.0% 165,830 165,830(3) 4 9 0 0 0 -8.0% 152,564 165,830 5 8 0 2,000 2,558 -15.0% 127,679 163,272 6 7 0 0 0 20.0% 153,215 163,272 7 10(2) 0 0 0 15.0% 176,197 176,197(3) 8 9 0 5,000 5,556 -10.0% 153,577 170,642 9 8 0 0 0 -20.0% 122,862 170,642 10 7 0 0 0 -12.0% 108,118 170,642 11 6 0 0 0 3.0% 111,362 170,642 12 5 0 0 0 4.0% 115,817 170,642 13 4 0 7,500 10,524 5.0% 114,107 160,117 14 3 0 0 0 6.0% 120,954 160,117 15 2 0 0 0 -5.0% 114,906 160,117 16 1 0 0 0 -11.0% 102,266 160,117 17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB benefit date. (2) The waiting period restarts when the elective step up is exercised. (3) These values indicate when the elective step up feature increased the MCAV. IMPORTANT INFORMATION ABOUT THIS EXAMPLE: - - If the actual rate of return during the waiting period causes the contract value to equal or exceed the MCAV on the benefit date, no benefit is paid under this rider. - - Exercising the elective step up provision may result in an increase in the charge that you pay for this rider. - - Even if a benefit is paid under the rider on the benefit date, contract value allocated to the variable account after the benefit date continues to vary with the market and may go up or go down. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 85 APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a seven-year withdrawal charge schedule with a payment of $100,000 and make no additional payments to the contract. - - You are the sole owner and also the annuitant. You are age 60. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD. - - You elect the Moderate model portfolio at issue. On the 1st contract anniversary, you elect to change to the Moderately Aggressive model portfolio. The target model portfolio under the contract is the Moderate model portfolio.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 2 0 0 81,000 90,000 90,000 6,300 6,300 5 0 0 75,000 90,000 90,000 6,300 6,300 5.5 0 5,400 70,000 90,000 84,600 6,300 900 6 0 0 69,000 90,000 84,600 6,300 6,300 6.5 0 6,300 62,000 90,000 78,300 6,300 0 7 0 0 64,000 90,000 78,300 6,300 6,300 7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 8 0 0 55,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 2 N/A N/A 5 5,400(2) 5,400(2) 5.5 5,400 0 6 5,400 5,400 6.5 3,720(3) 0 7 3,840 3,840 7.5 3,060(4) 0 8 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation, contract ownership change, or model portfolio changes), you can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your death or the RBA is reduced to zero. (1) Allocation to the Moderately Aggressive model portfolio during a withdrawal phase will reset the benefit. The GBA is reset to the lesser of the prior GBA or the contract value. The RBA is reset to the lesser of the prior RBA or the contract value. The ALP (if established) is reset to the lesser of the prior ALP or 6% of the contract value. Any future withdrawals will reallocate your contract value to the Moderate model portfolio if you are invested more aggressively than the Moderate model portfolio. (2) The ALP and RALP are established on the contract anniversary date following the date the Covered Person reaches age 65 as 6% of the RBA. (3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the basic withdrawal benefit and the $3,840 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 86 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a seven-year withdrawal charge schedule with a payment of $100,000 and make no additional payments to the contract. - - You are the sole owner and also the annuitant. You are age 65. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD. - - Your death occurs after 6 1/2 contract years and your spouse continues the contract and rider. Your spouse is over age 65 and is the new covered person.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 6.5 0 0 110,000 125,000 125,000 8,750 8,750 7 0 0 105,000 125,000 125,000 8,750 8,750 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500 6.5 6,600(5) 6,600(5) 7 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, contract ownership change, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $6,600 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The annual step-up has not been applied to the RBP or RALP because any withdrawal after step up during the waiting period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the waiting period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the waiting period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or 6% of the contract value and the RALP is reset to the ALP. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 87 EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a seven-year withdrawal charge schedule with a payment of $100,000 and make no additional payments to the contract. - - You are age 59 and your spouse is age 60. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD. - - You elect the Moderate model portfolio at issue. On the 1st contract anniversary, you elect to change to the Moderately Aggressive model portfolio. The target model portfolio under the contract is the Moderate model portfolio. - - Your death occurs after 9 1/2 contract years and your spouse continues the contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 2 0 0 81,000 90,000 90,000 6,300 6,300 6 0 0 75,000 90,000 90,000 6,300 6,300 6.5 0 5,400 70,000 90,000 84,600 6,300 900 7 0 0 69,000 90,000 84,600 6,300 6,300 7.5 0 6,300 62,000 90,000 78,300 6,300 0 8 0 0 64,000 90,000 78,300 6,300 6,300 8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 9 0 0 55,000 55,000 55,000 3,850 3,850 9.5 0 0 54,000 55,000 55,000 3,850 3,850 10 0 0 52,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 2 N/A N/A 6 5,400(2) 5,400(2) 6.5 5,400 0 7 5,400 5,400 7.5 3,720(3) 0 8 3,840 3,840 8.5 3,060(4) 0 9 3,300 3,300 9.5 3,300 3,300 10 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The ALP and RALP are established on the contract anniversary date following the date the younger covered spouse reaches age 65 as 6% of the RBA. (2) Allocation to the Moderately Aggressive model portfolio during a withdrawal phase will reset the benefit. The GBA is reset to the lesser of the prior GBA or the contract value. The RBA is reset to the lesser of the prior RBA or the contract value. The ALP is reset to the lesser of the prior ALP or 6% of the contract value. Any future withdrawals will reallocate your contract value to the Moderate model portfolio if you are invested more aggressively than the Moderate model portfolio. (3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the basic withdrawal benefit and the $3,840 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 88 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a seven-year withdrawal charge schedule with a payment of $100,000 and make no additional payments to the contract - - You are age 71 and your spouse is age 70. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD. - - Your death occurs after 6 1/2 contract years and your spouse continues the contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL ASSUMED BASIC WITHDRAWAL BENEFIT CONTRACT PURCHASE PARTIAL CONTRACT ---------------------------------------- DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 6.5 0 0 110,000 125,000 125,000 8,750 8,750 7 0 0 105,000 125,000 125,000 8,750 8,750 LIFETIME WITHDRAWAL BENEFIT CONTRACT ---------------------------- DURATION ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500 6.5 7,500 7,500 7 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, or model portfolio changes), your spouse can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $7,500 each year until the later of your spouse's death or the RBA is reduced to zero. (1) The annual step-up has not been applied to the RBP or RALP because any withdrawal after step up during the waiting period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the waiting period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the waiting period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 89 APPENDIX F: SECURESOURCE RIDERS -- ADDITIONAL RMD DISCLOSURE This appendix describes our current administrative practice for determining the amount of withdrawals in any contract year which an owner may take under a SecureSource rider to satisfy the RMD rules under 401(a)(9) of the Code without application of the excess withdrawal processing described in the rider. We reserve the right to modify this administrative practice at any time upon 30 days' written notice to you. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If on the date we calculated your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA), it is greater than the RBP from the beginning of the current contract year, - Basic Additional Benefit Amount (BABA) will be set equal to that portion of your ALERMDA that exceeds the RBP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. - Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the BABA. These withdrawals will not be considered excess withdrawals with regard to the GBA and RBA as long as they do not exceed the remaining BABA. - Once the BABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the GBA and RBA and will subject them all to the excess withdrawal processing described in the SecureSource rider. (2) If on the date we calculated your ALERMDA, it is greater than the RALP from the beginning of the current Contract Year, - A Lifetime Additional Benefit Amount (LABA) will be set equal to that portion of your ALERMDA that exceeds the RALP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RALP for that contract year. - Once the RALP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the LABA. These withdrawals will not be considered excess withdrawals with regard to the ALP as long as they do not exceed the remaining LABA. - Once the LABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the ALP and will subject the ALP to the excess withdrawal processing described by the SecureSource rider. (3) If the ALP is established on a policy anniversary where your current ALERMDA is greater than the new RALP, - An initial LABA will be set equal to that portion of your ALERMDA that exceeds the new RALP. - This new LABA will be immediately reduced by the amount that total withdrawals in the current calendar year exceed the new RALP, but shall not be reduced to less than zero. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the SecureSource rider is attached as of the date we make the determination; (3) based on your recalculated life expectancy taken from the Uniform Lifetime Table under the Code; and (4) based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable on the effective date of this prospectus, to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a SIMPLE IRA (Section 408(p)); 4. a Simplified Employee Pension plan (Section 408(k)); 5. a tax-sheltered annuity rollover (Section 403(b)). 6. Custodial and investment only plans (Section 401(a)); In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your SecureSource rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your available RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP as described under the excess withdrawal provision of the rider. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g., ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. Please contact your tax advisor about the impact of those rules prior to purchasing the SecureSource rider. - -------------------------------------------------------------------------------- 90 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option B with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. The death benefit equals: MAV death benefit (contract value): $110,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV death benefit (MAV): $110,000 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option B. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619 plus the Benefit Protector benefit (40% of earnings at death): 0.40 X ($57,619 - $55,000) = +1,048 -------- Total death benefit of: $58,667 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $255,000 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old) +55,000 -------- Total death benefit of: $305,000
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 91 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old and the value of the Benefit Protector changes. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector benefit which equals 40% of earnings at death (MAV death benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 -------- Total death benefit of: $308,000
- -------------------------------------------------------------------------------- 92 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER EXAMPLE OF THE BENEFIT PROTECTOR PLUS ASSUMPTIONS: - - You purchase the contract with a payment of $100,000 and you and the annuitant are under age 70; and - - you select contract Option B with the MAV Death Benefit. During the first contract year the contract value grows to $105,000. The MAV Death Benefit equals the contract value. You have not reached the first contract anniversary so the Benefit Protector Plus does not provide any additional benefit at this time. On the first contract anniversary the contract value grows to $110,000. You have not reached the second contract anniversary so the Benefit Protector Plus does not provide any benefit beyond what is provided by the Benefit Protector at this time. The death benefit equals: MAV Death Benefit (contract value): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($110,000 - $100,000) = +4,000 -------- Total death benefit of: $114,000 On the second contract anniversary the contract value falls to $105,000. The death benefit equals: MAV Death Benefit (MAV): $110,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($110,000 - $100,000) = +4,000 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $100,000 = +10,000 -------- Total death benefit of: $124,000 During the third contract year the contract value remains at $105,000 and you request a partial withdrawal of $50,000, including the applicable 7% withdrawal charge for contract Option B. We will withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's contract value). The remainder of the withdrawal is subject to a 7% withdrawal charge because your payment is in the third year of the withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is contract earnings). The death benefit equals: MAV Death Benefit (MAV adjusted for partial withdrawals): $ 57,619 plus the Benefit Protector Plus benefit which equals 40% of earnings at death: 0.40 X ($57,619 - $55,000) = +1,048 plus 10% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.10 X $55,000 = +5,500 -------- Total death benefit of: $ 64,167 On the third contract anniversary the contract value falls to $40,000. The death benefit equals the previous death benefit. The reduction in contract value has no effect. On the ninth contract anniversary the contract value grows to a new high of $200,000. Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn that are one or more years old. Because we are beyond the fourth contract anniversary the Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals: MAV Death Benefit (contract value): $200,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $266,000
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 93 During the tenth contract year you make an additional purchase payment of $50,000. Your new contract value is now $250,000. The new purchase payment is less than one year old and so it has no effect on the Benefit Protector Plus value. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death, up to a maximum of 100% of purchase payments not previously withdrawn that are one or more years old +55,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $316,000 During the eleventh contract year the contract value remains $250,000 and the "new" purchase payment is one year old. The value of the Benefit Protector Plus remains constant. The death benefit equals: MAV Death Benefit (contract value): $250,000 plus the Benefit Protector Plus benefit which equals 40% of earnings at death (MAV Death Benefit minus payments not previously withdrawn): 0.40 X ($250,000 - $105,000) = +58,000 plus 20% of purchase payments made within 60 days of contract issue and not previously withdrawn: 0.20 X $55,000 = +11,000 -------- Total death benefit of: $319,000
- -------------------------------------------------------------------------------- 94 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you may select for an additional annual charge if(1): - - the rider is available in your state; and - - you and the annuitant are 80 or younger on the date the contract is issued. (1) The Guarantor Withdrawal Benefit for Life rider is not available under an inherited qualified annuity. You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase your contract. The rider effective date will be the contract issue date. The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able to withdraw up to a certain amount each year from the contract, regardless of the investment performance of your contract before the annuity payments begin, until you have recovered at minimum all of your purchase payments. And, under certain limited circumstances defined in the rider, you have the right to take a specified amount of partial withdrawals in each contract year until death (see "At Death" heading below) -- even if the contract value is zero. Your contract provides for annuity payouts to begin on the retirement date (see "Buying Your Contract -- The Retirement Date"). Before the retirement date, you have the right to withdraw some or all of your contract value, less applicable administrative, withdrawal and rider charges imposed under the contract at the time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals"). Because your contract value will fluctuate depending on the performance of the underlying funds in which the subaccounts invest, the contract itself does not guarantee that you will be able to take a certain withdrawal amount each year before the annuity payouts begin, nor does it guarantee the length of time over which such withdrawals can be made before the annuity payouts begin. The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if you intend to make periodic withdrawals from your annuity contract and wish to ensure that market performance will not adversely affect your ability to withdraw your principal over time. Under the terms of the Guarantor Withdrawal Benefit for Life rider, the calculation of the amount which can be withdrawn in each contract year varies depending on several factors, including but not limited to the waiting period (see "Waiting period" heading below) and whether or not the lifetime withdrawal benefit has become effective: (1) The basic withdrawal benefit gives you the right to take limited partial withdrawals in each contract year and guarantees that over time the withdrawals will total an amount equal to, at minimum, your purchase payments. Key terms associated with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP)," "Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See these headings below for more information. (2) The lifetime withdrawal benefit gives you the right, under certain limited circumstances defined in the rider, to take limited partial withdrawals until the later of death (see "At Death" heading below) or until the RBA (under the basic withdrawal benefit) is reduced to zero. Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime Payment (ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and "Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for more information. Only the basic withdrawal benefit will be in effect prior to the date that the lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit becomes effective automatically on the rider anniversary date after the covered person reaches age 65, or the rider effective date if the covered person is age 65 or older on the rider effective date (see "Annual Lifetime Payment Attained Age (ALPAA)" heading below). Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for Life rider guarantees that you may take the following partial withdrawal amounts each contract year: - - After the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the GBP; - - During the waiting period and before the establishment of the ALP, the rider guarantees that each year you can cumulatively withdraw an amount equal to the value of the RBP at the beginning of the contract year; - - After the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal the ALP or the GBP, but the rider does not guarantee withdrawals of the sum of both the ALP and the GBP in a contract year; - - During the waiting period and after the establishment of the ALP, the rider guarantees that each year you have the option to cumulatively withdraw an amount equal to the value of the RALP or the RBP at the beginning of the contract year, but the rider does not guarantee withdrawals of the sum of both the RALP and the RBP in a contract year. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 95 If you withdraw less than the allowed partial withdrawal amount in a contract year, the unused portion cannot be carried over to the next contract year. As long as your partial withdrawals in each contract year do not exceed the annual partial withdrawal amount allowed under the rider, and there has not been a contract ownership change or spousal continuation of the contract, the guaranteed amounts available for partial withdrawals are protected (i.e., will not decrease). If you withdraw more than the allowed partial withdrawal amount in a contract year, we call this an "excess withdrawal" under the rider. Excess withdrawals trigger an adjustment of a benefit's guaranteed amount, which may cause it to be reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and "ALP Excess Withdrawal Processing" headings below). Please note that each of the two benefits has its own definition of the allowed annual withdrawal amount. Therefore a partial withdrawal may be considered an excess withdrawal for purposes of the lifetime withdrawal benefit only, the basic withdrawal benefit only, or both. If your withdrawals exceed the greater of the RBP or the RALP, withdrawal charges under the terms of the contract may apply (see "Charges -- Withdrawal Charges"). The amount we actually deduct from your contract value will be the amount you request plus any applicable withdrawal charge. Market value adjustments, if applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any partial withdrawals you take under the contract will reduce the value of the death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the contract, you will receive the remaining contract value less any applicable charges (see "Making the Most of Your Contract -- Withdrawals"). The rider's guaranteed amounts can be increased at the specified intervals if your contract value has increased. An annual step up feature is available at each contract anniversary, subject to certain conditions, and may be applied automatically to your contract or may require you to elect the step up (see "Annual Step Up" heading below). If you exercise the annual step up election, the spousal continuation step up election (see "Spousal Continuation Step Up" heading below) or change your Portfolio Navigator model portfolio, the rider charge may change (see "Charges"). If you take withdrawals during the waiting period, any prior steps ups applied will be reversed and step ups will not be available until the third rider anniversary. You may take withdrawals after the waiting period without reversal of prior step ups. You should consider whether the Guarantor Withdrawal Benefit for Life rider is appropriate for you because: - - LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is subject to certain limitations, including but not limited to: (a) Once the contract value equals zero, payments are made for as long as the oldest owner or annuitant is living (see "If Contract Value Reduces to Zero" heading below). However, if the contract value is greater than zero, the lifetime withdrawal benefit terminates at the first death of any owner or annuitant except as otherwise provided below (see "At Death" heading below). Therefore, if there are multiple contract owners or the annuitant is not an owner, the rider may terminate or the lifetime withdrawal benefit may be reduced. This possibility may present itself when: (i) There are multiple contract owners -- when one of the contract owners dies the benefit terminates even though other contract owners are still living (except if the contract is continued under the spousal continuation provision of the contact); or (ii) The owner and the annuitant are not the same persons -- if the annuitant dies before the owner, the benefit terminates even though the owner is still living. This is could happen, for example, when the owner is younger than the annuitant. This risk increases as the age difference between owner and annuitant increases. (b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA, GBP and/or RBP values are greater than zero. If the both the ALP and the contract value are zero, the lifetime withdrawal benefit will terminate. (c) When the lifetime withdrawal benefit is first established, the initial ALP is based on the basic withdrawal benefit's RBA at that time (see "Annual Lifetime Payment (ALP)" heading below), unless there has been a spousal continuation or ownership change. Any withdrawal you take before the ALP is established reduces the RBA and therefore may result in a lower amount of lifetime withdrawals you are allowed to take. (d) Withdrawals can reduce both the contract value and the RBA to zero prior to the establishment of the ALP. If this happens, the contract and the Guarantor Withdrawal Benefit for Life rider will terminate. - - USE OF PORTFOLIO NAVIGATOR ASSET ALLOCATION PROGRAM REQUIRED: You must elect one of the model portfolios of the Portfolio Navigator. This requirement limits your choice of subaccounts, one-year fixed account and GPAs (if available) to those that are in the model portfolio you select. This means you will not be able to allocate contract value to all of the subaccounts, GPAs or the one-year fixed account that are available under the contract to contract owners who do not elect this rider. (See "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation Program.") Subject to state restrictions, we - -------------------------------------------------------------------------------- 96 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS reserve the right to limit the number of model portfolios from which you can select based on the dollar amount of purchase payments you make. - - LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the Guarantor Withdrawal Benefit for Life rider, you may not elect the Accumulation Protector Benefit rider. - - NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider may not be cancelled and the fee will continue to be deducted until the contract is terminated, the contract value reduces to zero (described below) or annuity payouts begin. - - LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative amount of purchase payments, subject to state restrictions. - - INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the amount you are allowed to withdraw from the contract in each contract year without incurring a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be greater than the RBP or RALP under this rider. Any amount you withdraw under the contract's TFA provision that exceeds the RBP or RALP is subject to the excess withdrawal processing described below for the GBA, RBA and ALP. You should consult your tax advisor before you select this optional rider if you have any questions about the use of this rider in your tax situation: - - TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income tax law, withdrawals under nonqualified annuities, including partial withdrawals taken from the contract under the terms of this rider, are treated less favorably than amounts received as annuity payments under the contract (see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may incur a 10% IRS early withdrawal penalty and may be considered taxable income. - - TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum distribution rules that govern the timing and amount of distributions from the annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you have a qualified annuity, you may need to take an RMD that exceeds the guaranteed amount of withdrawal available under the rider and such withdrawals may reduce future benefits guaranteed under the rider. While the rider permits certain excess withdrawals to be made for the purpose of satisfying RMD requirements for this contract alone without reducing future benefits guaranteed under the rider, there can be no guarantee that changes in the federal income tax law after the effective date of the rider will not require a larger RMD to be taken, in which case, future guaranteed withdrawals under the rider could be reduced. Additionally, RMD rules follow the calendar year which most likely does not coincide with your contract year and therefore may limit when you can take your RMD and not be subject to excess withdrawal processing. For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the amounts you withdraw each year from this contract to satisfy these rules are not subject to excess withdrawal processing under the terms of the rider subject to the following rules and our current administrative practice: (1) If on the date we calculated your Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA), it is greater than the RBP from the beginning of the current contract year, - Basic Additional Benefit Amount (BABA) will be set equal to that portion of your ALERMDA that exceeds the RBP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RBP for that contract year. - Once the RBP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the BABA. These withdrawals will not be considered excess withdrawals with regard to the GBA and RBA as long as they do not exceed the remaining BABA. - Once the BABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the GBA and RBA and will subject them all to the excess withdrawal processing described in the Guarantor Withdrawal Benefit for Life rider. (2) If on the date we calculated your ALERMDA, it is greater than the RALP from the beginning of the current Contract Year, - A Lifetime Additional Benefit Amount (LABA) will be set equal to that portion of your ALERMDA that exceeds the RALP from the beginning of the current contract year. - Any withdrawals taken in a contract year will count first against and reduce the RALP for that contract year. - Once the RALP for the current contract year has been depleted, any additional amounts withdrawn will count against and reduce the LABA. These withdrawals will not be considered excess withdrawals with regard to the ALP as long as they do not exceed the remaining LABA. - Once the LABA has been depleted, any additional withdrawal amounts will be considered excess withdrawals with regard to the ALP and will subject the ALP to the excess withdrawal processing described by the Guarantor Withdrawal Benefit for Life rider. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 97 (3) If the ALP is established on a policy anniversary where your current ALERMDA is greater than the new RALP, - An initial LABA will be set equal to that portion of your ALERMDA that exceeds the new RALP. - This new LABA will be immediately reduced by the amount that total withdrawals in the current calendar year exceed the new RALP, but shall not be reduced to less than zero. The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is: (1) determined by us each calendar year; (2) based solely on the value of the contract to which the Guarantor Withdrawal Benefit for Life rider is attached as of the date we make the determination; and (3) is otherwise based on the company's understanding and interpretation of the requirements for life expectancy distributions intended to satisfy the required minimum distribution rules under Code Section 401(a)(9) and the Treasury Regulations promulgated thereunder, as applicable on the effective date of this prospectus, to: 1. an individual retirement annuity (Section 408(b)); 2. a Roth individual retirement account (Section 408A); 3. a Simplified Employee Pension plan (Section 408(k)); 4. a tax-sheltered annuity rollover (Section 403(b)). We reserve the right to modify our administrative practice described above and will give you 30 days' written notice of any such change. In the future, the requirements under the Code for such distributions may change and the life expectancy amount calculation provided under your Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy the requirements under the Code for these types of distributions. In such a situation, amounts withdrawn to satisfy such distribution requirements will exceed your available RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP as described under the excess withdrawal provision of the rider. In cases where the Code does not allow the life expectancy of a natural person to be used to calculate the required minimum distribution amount (e.g., ownership by a trust or a charity), we will calculate the life expectancy RMD amount calculated by us as zero in all years. The life expectancy required minimum distribution amount calculated by us will also equal zero in all years. - - LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor Withdrawal Benefit for Life rider may be of limited value to you. For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below. KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE DESCRIBED BELOW: PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a surrender of the contract. The partial withdrawal amount is a gross amount and will include any withdrawal charge and any market value adjustment. WAITING PERIOD: The period of time starting on the rider effective date during which the annual step up is not available if you take withdrawals. The current waiting period is three years. GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for partial withdrawals over the life of the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not payable as a death benefit. Rather, the GBA is an interim value used to calculate the amount available for withdrawals each year under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of the individual GBAs associated with each purchase payment. THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own GBA equal to the amount of the purchase payment. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBA that is associated with that RBA will also be set to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - -------------------------------------------------------------------------------- 98 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBA remains unchanged. If there have been multiple purchase payments, both the total GBA and each payment's GBA remain unchanged. (b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. GBA EXCESS WITHDRAWAL PROCESSING The total GBA will automatically be reset to the lesser of (a) the total GBA immediately prior to the withdrawal; or (b) the contract value immediately following the withdrawal. If there have been multiple purchase payments, each payment's GBA after the withdrawal will be reset to equal that payment's RBA after the withdrawal plus (a) times (b), where: (a) is the ratio of the total GBA after the withdrawal less the total RBA after the withdrawal to the total GBA before the withdrawal less the total RBA after the withdrawal; and (b) is each payment's GBA before the withdrawal less that payment's RBA after the withdrawal. REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that is guaranteed by this rider as future withdrawals. At any point in time, the RBA equals the amount of GBA that remains available for withdrawals for the remainder of the contract's life, and total RBA is the sum of the individual RBAs associated with each purchase payment. The maximum RBA is $5,000,000. THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the RBA is equal to the initial purchase payment. - - When you make additional purchase payments -- each additional purchase payment has its own RBA initially set equal to that payment's GBA (the amount of the purchase payment). - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the RBA associated with each purchase payment will be reset to the amount of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the total RBA is reduced by the amount of the withdrawal. If there have been multiple purchase payments, each payment's RBA is reduced in proportion to its RBP. (b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. RBA EXCESS WITHDRAWAL PROCESSING The total RBA will automatically be reset to the lesser of (a) the contract value immediately following the withdrawal, or (b) the total RBA immediately prior to the withdrawal, less the amount of the withdrawal. If there have been multiple purchase payments, both the total RBA and each payment's RBA will be reset. The total RBA will be reset according to the excess withdrawal processing described above. Each payment's RBA will be reset in the following manner: 1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in proportion to its individual RBP at the time of the withdrawal; and 2. The withdrawal amount above the total RBP and any amount determined by the excess withdrawal processing are taken out of each RBA bucket in proportion to its RBA at the time of the withdrawal. GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial withdrawals in each contract year after the waiting period, until the RBA is reduced to zero, under the basic withdrawal benefit. At any point in time, each purchase payment has its own GBP, which is equal to the lesser of that payment's RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual GBPs. During the waiting period, the guaranteed annual withdrawal amount may be less than the GBP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual withdrawal amount during the waiting period is equal to the value of the RBP at the beginning of the contract year. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 99 THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At contract issue -- the GBP is established as 7% of the GBA value. - - At each contract anniversary -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value. - - When you make additional purchase payments -- each additional purchase payment has its own GBP equal to 7% of the purchase payment amount. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When an individual RBA is reduced to zero -- the GBP associated with that RBA will also be reset to zero. - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the GBA and the RBA associated with each purchase payment will be reset to the amount of that purchase payment. Each payment's GBP will be reset to 7% of that purchase payment. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the total RBP -- the GBP remains unchanged. (b) is greater than the total RBP -- each payment's GBP is reset to the lesser of that payment's RBA or 7% of that payment's GBA value, based on the RBA and GBA after the withdrawal. If the partial withdrawal is made during the waiting period, the excess withdrawal processing is applied AFTER any previously applied annual step ups have been reversed. REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals for the remainder of the contract year under the basic withdrawal benefit. At any point in time, the total RBP is the sum of the RBPs for each purchase payment. During the waiting period, when the guaranteed amount maybe less than the GBP, the value of the RBP at the beginning of the contract year will be that amount that is actually guaranteed each contract year. THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED: - - At the beginning of each contract year during the waiting period and prior to any withdrawal -- the RBP for each purchase payment is set equal to that purchase payment multiplied by 7%. - - At the beginning of any other contract year -- the RBP for each purchase payment is set equal to that purchase payment's GBP. - - When you make additional purchase payments -- each additional purchase payment has its own RBP equal to that payment's GBP. - - At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At spousal continuation -- (see "Spousal Option to Continue the Contract" heading below). - - When an individual RBA is reduced to zero -- the RBP associated with that RBA will also be reset to zero. - - When you make any partial withdrawal -- the total RBP is reset to equal the total RBP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. If there have been multiple purchase payments, each payment's RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in the excess withdrawal processing, the applicable RBP will not yet reflect the amount of the current withdrawal. COVERED PERSON: The person whose life is used to determine when the ALP is established, and the duration of the ALP payments. The Covered Person is the oldest contract owner or annuitant. The covered person may change during the contract's life if there is a spousal continuation or a change of contract ownership. If the covered person changes, we recompute the benefits guaranteed by the rider, based on the life of the new covered person, which may reduce the amount of the lifetime withdrawal benefit. ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after which time the lifetime benefit can be established. Currently, the lifetime benefit can be established on the later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65. ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the amount available for withdrawals in each contract year after the waiting period until the later of death (see "At Death" heading below), or the RBA is reduced to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the ALP is zero. - -------------------------------------------------------------------------------- 100 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS During the waiting period, the guaranteed annual lifetime withdrawal amount may be less than the ALP due to the limitations the waiting period imposes on your ability to utilize both annual step-ups and withdrawals (see "Waiting Period" heading above). The guaranteed annual lifetime withdrawal amount during the waiting period is equal to the value of the RALP at the beginning of the contract year. THE ALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date on/following the date the covered person reaches age 65 -- the ALP is established as 6% of the total RBA. - - When you make additional purchase payments -- each additional purchase payment increases the ALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - At contract ownership change -- (see "Spousal Option to Continue the Contract" and "Contract Ownership Change" headings below). - - When you make a partial withdrawal during the waiting period and after a step up -- Any prior annual step ups will be reversed. Step up reversal means that the ALP will be reset to equal total purchase payments multiplied by 6%. The step up reversal will only happen once during the waiting period, when the first partial withdrawal is made. - - When you make a partial withdrawal at any time and the amount withdrawn is: (a) less than or equal to the RALP -- the ALP remains unchanged. (b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED TO THE ALP. If the partial withdrawal is made during the waiting period, the excess withdrawal processing are applied AFTER any previously applied annual step ups have been reversed. ALP EXCESS WITHDRAWAL PROCESSING The ALP is reset to the lesser of the ALP immediately prior to the withdrawal, or 6% of the contract value immediately following the withdrawal. REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial withdrawals for the remainder of the contract year under the lifetime withdrawal benefit. During the waiting period, when the guaranteed annual withdrawal amount may be less than the ALP, the value of the RALP at the beginning of the contract year will be the amount that is actually guaranteed each contract year. Prior to establishment of the ALP, the lifetime withdrawal benefit is not in effect and the RALP is zero. THE RALP IS DETERMINED AT THE FOLLOWING TIMES: - - The later of the contract effective date or the contract anniversary date following the date the covered person reaches age 65, and: (a) During the waiting period and prior to any withdrawals -- the RALP is established equal to 6% of purchase payments. (b) At any other time -- the RALP is established equal to the ALP. - - At the beginning of each contract year during the waiting period and prior to any withdrawals -- the RALP is set equal to the total purchase payments, multiplied by 6%. - - At the beginning of any other contract year -- the RALP is set equal to ALP. - - When you make additional purchase payments -- each additional purchase payment increases the RALP by 6% of the amount of the purchase payment. - - At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). - - When you make any partial withdrawal -- the RALP equals the RALP immediately prior to the partial withdrawal less the amount of the partial withdrawal, but not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future partial withdrawals for the remainder of the contract's life may be reduced by more than the amount of withdrawal. When determining if a withdrawal will result in excess withdrawal processing, the applicable RALP will not yet reflect the amount of the current withdrawal. STEP UP DATE: The date any step up becomes effective, and depends on the type of step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up" headings below). ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does not create contract value, guarantee the performance of any investment option, or provide a benefit that can be withdrawn or paid upon death. Rather, a step up determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may extend the payment period or increase the allowable payment. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 101 The annual step up is subject to the following rules: - - The annual step up is available when the RBA or, if established, the ALP, would increase on the step up date. - - Only one step up is allowed each contract year. - - If you take any withdrawals during the waiting period, any previously applied step ups will be reversed and the Annual step up will not be available until the end of the waiting period. - - If the application of the step up does not increase the rider charge, the annual step up will be automatically applied to your contract, and the step up date is the contract anniversary date. - - If the application of the step up would increase the rider charge, the annual step up is not automatically applied. Instead, you have the option to step up for 30 days after the contract anniversary. If you exercise the elective annual step up option, you will pay the rider charge in effect on the step up date. If you wish to exercise the elective annual step up option, we must receive a request from you or your investment professional. The step up date is the date we receive your request to step up. If your request is received after the close of business, the step up date will be the next valuation day. - - The ALP and RALP are not eligible for step ups until they are established. Prior to being established, the ALP and RALP values are both zero. - - Please note it is possible for the ALP and RALP to step up even if the RBA or GBA do not step up, and it is also possible for the RBA and GBA to step up even if the ALP or RALP do not step up. The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as follows: - - The total RBA will be reset to the greater of the total RBA immediately prior to the step up date or the contract value on the step up date. - - The total GBA will be reset to the greater of the total GBA immediately prior to the step up date or the contract value on the step up date. - - The total GBP will be reset using the calculation as described above based on the increased GBA and RBA. - - The total RBP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RBP will not be affected by the step up. (b) At any other time, the RBP will be reset as the increased GBP less all prior withdrawals made in the current contract year, but never less than zero. - - The ALP will be reset to the greater of the ALP immediately prior to the step up date or 6% of the contract value on the step up date. - - The RALP will be reset as follows: (a) During the waiting period and prior to any withdrawals, the RALP will not be affected by the step up. (b) At any other time, the RALP will be reset as the increased ALP less all prior withdrawals made in the current contract year, but not less than zero. SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to continue the contract, the Guarantor Withdrawal Benefit for Life rider also continues. When the spouse elects to continue the contract, any remaining waiting period is cancelled; the covered person will be re-determined and is the covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP values are affected as follows: - - The GBA, RBA, and GBP values remain unchanged. - - The RBP is automatically reset to the GBP less all prior withdrawals made in the current contract year, but not less than zero. - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the date of continuation -- the ALP will be established on the contract anniversary following the date the covered person reaches age 65 as the lesser of the RBA or the contract anniversary value, multiplied by 6%. The RALP will be established on the same date equal to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the date of continuation -- the ALP will be established on the date of continuation as the lesser of the RBA or the contract value, multiplied by 6%. The RALP will be established on the same date in an amount equal to the ALP less all prior partial withdrawals made in the current contract year, but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the date of continuation -- the ALP and RALP will be automatically reset to zero for the period of time beginning with the date of continuation and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%, and the RALP will be reset to equal the ALP. - -------------------------------------------------------------------------------- 102 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS - - If the ALP has been established and the new covered person is age 65 or older as of the date of continuation -- the ALP will be automatically reset to the lesser of the current ALP or 6% of the contract value on the date of continuation. The RALP will be reset to the ALP less all prior withdrawals made in the current contract year, but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the spousal continuation. SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the contract, another elective step up option becomes available. To exercise the step up, the spouse or the spouse's investment professional must submit a request within 30 days of the date of continuation. The step up date is the date we receive the spouse's request to step up. If the request is received after the close of business, the step up date will be the next valuation day. The GBA, RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step up. The spousal continuation step up is subject to the following rules: - - If the spousal continuation step up option is exercised and we have increased the charge for the rider, the spouse will pay the charge that is in effect on the step up date. It is our current administrative practice to process the spousal continuation step up as described in the next paragraph; however, we reserve the right to discontinue our administrative practice and will give you 30 days' written notice of any such change. At the time of spousal continuation, a step-up may be available. All annual step-up rules (see "Annual Step-Up" heading above), other than those that apply to the waiting period, also apply to the spousal continuation step-up. If the spousal continuation step-up is processed automatically, the step-up date is the valuation date spousal continuation is effective. If not, the spouse must elect the step up and must do so within 30 days of the spousal continuation date. If the spouse elects the spousal continuation step up, the step-up date is the valuation date we receive the spouse's written request to step-up if we receive the request by the close of business on that day, otherwise the next valuation date. IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the total RBA remains greater than zero, you will be paid in the following scenarios: 1) The ALP has not yet been established and the contract value is reduced to zero for any reason other than full withdrawal of the contract. In this scenario, you can choose to: (a) receive the remaining schedule of GBPs until the RBA equals zero; or (b) wait until the rider anniversary following the date the covered person reaches age 65, and then receive the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 2) The ALP has been established and the contract value reduces to zero as a result of fees or charges, or a withdrawal that is less than or equal to both the RBP and the RALP. In this scenario, you can choose to receive: (a) the remaining schedule of GBPs until the RBA equals zero; or (b) the ALP annually until the latter of (i) the death of the covered person, or (ii) the RBA is reduced to zero. We will notify you of this option. If no election is made, the ALP will be paid. 3) The ALP has been established and the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP. In this scenario, the remaining schedule of GBPs will be paid until the RBA equals zero. 4) The ALP has been established and the contract value falls to zero as a result of a partial withdrawal that is greater than the RBP but less than or equal to the RALP. In this scenario, the ALP will be paid annually until the death of the covered person. Under any of these scenarios: - - The annualized amounts will be paid to you in the frequency you elect. You may elect a frequency offered by us at the time payments begin. Available payment frequencies will be no less frequent than annually; - - We will no longer accept additional purchase payments; - - You will no longer be charged for the rider; - - Any attached death benefit riders will terminate; and - - The death benefit becomes the remaining payments, if any, until the RBA is reduced to zero. The Guarantor Withdrawal Benefit for Life rider and the contract will terminate under either of the following two scenarios: - - If the contract value falls to zero as a result of a withdrawal that is greater than both the RALP and the RBP. This is full withdrawal of the contract. - - If the contract value falls to zero as a result of a withdrawal that is greater than the RALP but less than or equal to the RBP, and the total RBA is reduced to zero. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 103 AT DEATH: If the contract value is greater than zero when the death benefit becomes payable, the beneficiary may elect to take the death benefit as a lump sum under the terms of the contract (see "Benefits in Case of Death") or the annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option" heading below). If the contract value equals zero and the death benefit becomes payable, the following will occur: - - If the RBA is greater than zero and the owner has been receiving the GBP each year, the GBP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person dies and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the RBA equals zero. - - If the covered person is still alive and the RBA is greater than zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the later of the death of the covered person or the RBA equals zero. - - If the covered person is still alive and the RBA equals zero and the owner has been receiving the ALP each year, the ALP will continue to be paid to the beneficiary until the death of the covered person. - - If the covered person dies and the RBA equals zero, the benefit terminates. No further payments will be made. CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing Ownership"), the covered person will be redetermined and is the covered person referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP and RALP will be reset as follows: - - If the ALP has not yet been established and the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be established on the contract anniversary following the date the covered person reaches age 65. The ALP will be set equal to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the anniversary date occurs during the waiting period and prior to a withdrawal, the RALP will be set to the lesser of the ALP or total purchase payments multiplied by 6%. If the anniversary date occurs at any other time, the RALP will be set to the ALP. - - If the ALP has not yet been established but the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be established on the ownership change date. The ALP will be set equal to the lesser of the RBA or the contract value, multiplied by 6%. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be set equal to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be set equal to the ALP less all prior withdrawals made in the current contract year but not less than zero. - - If the ALP has been established but the new covered person has not yet reached age 65 as of the ownership change date -- the ALP and the RALP will be reset to zero for the period of time beginning with the ownership change date and ending with the contract anniversary following the date the covered person reaches age 65. At the end of this time period, the ALP will be reset to the lesser of the RBA or the anniversary contract value, multiplied by 6%. If the time period ends during the waiting period and prior to any withdrawals, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the time period ends at any other time, the RALP will be reset to the ALP. - - If the ALP has been established and the new covered person is age 65 or older as of the ownership change date -- the ALP and the RALP will be reset on the ownership change date. The ALP will be reset to the lesser of the current ALP or 6% of the contract value. If the ownership change date occurs during the waiting period and prior to a withdrawal, the RALP will be reset to the lesser of the ALP or total purchase payments multiplied by 6%. If the ownership change date occurs at any other time, the RALP will be reset to the ALP less all prior withdrawals made in the current contract year but not less than zero. Please note that the lifetime withdrawal benefit amount may be reduced as a result of the ownership change. GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout plans are available under the contract. As an alternative to these annuity payout plans, a fixed annuity payout option is available under the Guarantor Withdrawal Benefit for Life rider. Under this option the amount payable each year will be equal to the remaining schedule of GBPs, but the total amount paid over the life of the annuity will not exceed the current total RBA at the time you begin this fixed annuity payout option. These annualized amounts will be paid in the frequency that you elect. The frequencies will be among those offered by us at that time but will be no less frequent than annually. If, at the death of the owner, total payouts have been made for less than the RBA, the remaining payouts will be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes"). This option may not be available if the contract is issued to qualify under Section 403 or 408 of the Code, as amended. For such contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the owner at the time the option becomes effective. Such life expectancy will be computed under the mortality table we then use to determine current life annuity purchase rates under the contract to which this rider is attached. This annuity payout option may also be elected by the beneficiary of a contract as a settlement option. - -------------------------------------------------------------------------------- 104 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS Whenever multiple beneficiaries are designated under the contract, each such beneficiary's share of the proceeds if they elect this option will be in proportion to their applicable designated beneficiary percentage. Beneficiaries of nonqualified contracts may elect this settlement option subject to the distribution requirements of the contract. We reserve the right to adjust the future schedule of GBPs if necessary to comply with the Code. RIDER TERMINATION The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by you or us except as follows: 1. Annuity payouts under an annuity payout plan will terminate the rider. 2. Termination of the contract for any reason will terminate the rider. EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 60. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 0.5 0 7,000 92,000 100,000 93,000 7,000 0 1 0 0 91,000 100,000 93,000 7,000 7,000 1.5 0 7,000 83,000 100,000 86,000 7,000 0 2 0 0 81,000 100,000 86,000 7,000 7,000 5 0 0 75,000 100,000 86,000 7,000 7,000 5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 6 0 0 69,000 100,000 80,840 7,000 7,000 6.5 0 7,000 62,000 100,000 73,840 7,000 0 7 0 0 70,000 100,000 73,840 7,000 7,000 7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 8 0 0 55,000 55,000 55,000 3,850 3,850 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $ N/A $ N/A 0.5 N/A N/A 1 N/A N/A 1.5 N/A N/A 2 N/A N/A 5 5,160(1) 5,160(1) 5.5 5,160 0 6 5,160 5,160 6.5 3,720(2) 0 7 4,200 4,200 7.5 3,060(3) 0 8 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of $3,300 each year until the later of your death or the RBA is reduced to zero. (1) The ALP and RALP are established on the contract anniversary date following the date the covered person reaches age 65. (2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the basic withdrawal benefit and the $4,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 105 EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE PURCHASED. ASSUMPTIONS: - - You purchase the contract with a payment of $100,000. - - You are the sole owner and also the annuitant. You are age 65. - - You make no additional payments to the contract. - - Automatic annual step-ups are applied each anniversary when available, where the contract value is greater than the RBA and/or 6% of the contract value is greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 1 0 0 105,000 105,000 105,000 7,350 7,000(1) 2 0 0 110,000 110,000 110,000 7,700 7,000(1) 3 0 0 110,000 110,000 110,000 7,700 7,700(2) 3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 4 0 0 115,000 115,000 115,000 8,050 8,050 4.5 0 8,050 116,000 115,000 106,950 8,050 0 5 0 0 120,000 120,000 120,000 8,400 8,400 5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 6 0 0 125,000 125,000 125,000 8,750 8,750 CONTRACT LIFETIME WITHDRAWAL BENEFIT DURATION ---------------------------- IN YEARS ALP RALP At Issue $6,000 $6,000 1 6,300 6,000(1) 2 6,600 6,000(1) 3 6,600 6,600(2) 3.5 6,600 0 4 6,900 6,900 4.5 6,900(3) 0 5 7,200 7,200 5.5 7,200(4) 0 6 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals, purchase payments, spousal continuation or contract ownership change), you can continue to withdraw up to either the GBP of $8,750 each year until the RBA is reduced to zero, or the ALP of $7,500 each year until the later of your death or the RBA is reduced to zero. (1) The annual step-up has not been applied to the RBP or RALP because any withdrawal after step up during the waiting period would reverse any prior step ups prior to determining if the withdrawal is excess. Therefore, during the waiting period, the RBP is the amount you can withdraw without incurring the GBA and RBA excess withdrawal processing, and the RALP is the amount you can withdraw without incurring the ALP excess withdrawal processing. (2) On the third anniversary (after the end of the waiting period), the RBP and RALP are set equal to the GBP and ALP, respectively. (3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the ALP, resetting the ALP to the lesser of the prior ALP or 6% of the contract value following the withdrawal. (4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the basic withdrawal benefit and the $7,200 RALP allowed under the lifetime withdrawal benefit and therefore the excess withdrawal processing is applied to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or the contract value following the withdrawal. The RBA is reset to the lesser of the prior RBA less the withdrawal or the contract value following the withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the contract value following the withdrawal. - -------------------------------------------------------------------------------- 106 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS APPENDIX J: CONDENSED FINANCIAL INFORMATION (Unaudited) The following tables give per-unit information about the financial history of the subaccounts representing the lowest and highest total annual variable account expense combinations. The date in which operations commenced in each price level is noted in parentheses. The SAI contains tables that give per-unit information about the financial history of each existing subaccount. You may obtain a copy of the SAI without charge by contacting us at the telephone number or address listed on the first page of the prospectus.
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 - ----------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (05/01/2006) Accumulation unit value at beginning of period $0.99 $1.00 Accumulation unit value at end of period $1.09 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 1,210 493 - ----------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (05/01/2006) Accumulation unit value at beginning of period $1.01 $1.00 Accumulation unit value at end of period $1.11 $1.01 Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------- AIM V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.03 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------- AIM V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.05 -- Number of accumulation units outstanding at end of period (000 omitted) 4,018 -- - ----------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.16 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/01/2006) Accumulation unit value at beginning of period $1.11 $1.00 Accumulation unit value at end of period $1.15 $1.11 Number of accumulation units outstanding at end of period (000 omitted) 9 3 - ----------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (05/01/2006) Accumulation unit value at beginning of period $1.12 $1.00 Accumulation unit value at end of period $1.17 $1.12 Number of accumulation units outstanding at end of period (000 omitted) 6,819 2,227 - ----------------------------------------------------------------------------------- AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $0.90 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (05/01/2006) Accumulation unit value at beginning of period $0.97 $1.00 Accumulation unit value at end of period $1.15 $0.97 Number of accumulation units outstanding at end of period (000 omitted) 22 4,219 - ----------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (05/01/2006) Accumulation unit value at beginning of period $1.12 $1.00 Accumulation unit value at end of period $1.05 $1.12 Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------- COLUMBIA HIGH YIELD FUND, VARIABLE SERIES, CLASS B (05/01/2006) Accumulation unit value at beginning of period $1.07 $1.00 Accumulation unit value at end of period $1.08 $1.07 Number of accumulation units outstanding at end of period (000 omitted) 27 1,524 - ----------------------------------------------------------------------------------- COLUMBIA MARSICO GROWTH FUND, VARIABLE SERIES, CLASS A (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.13 -- Number of accumulation units outstanding at end of period (000 omitted) 9,765 -- - -----------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 107
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 - ----------------------------------------------------------------------------------------------- COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES FUND, VARIABLE SERIES, CLASS B (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.14 -- Number of accumulation units outstanding at end of period (000 omitted) 20 -- - ----------------------------------------------------------------------------------------------- COLUMBIA SMALL CAP VALUE FUND, VARIABLE SERIES, CLASS B (05/01/2006) Accumulation unit value at beginning of period $1.04 $1.00 Accumulation unit value at end of period $1.00 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 7,836 5 - ----------------------------------------------------------------------------------------------- CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.10 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.10 -- Number of accumulation units outstanding at end of period (000 omitted) 2 -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (05/01/2006) Accumulation unit value at beginning of period $1.07 $1.00 Accumulation unit value at end of period $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $0.99 -- Number of accumulation units outstanding at end of period (000 omitted) 4,857 -- - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/01/2006) Accumulation unit value at beginning of period $1.03 $1.00 Accumulation unit value at end of period $1.20 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 12,765 9,751 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (05/01/2006) Accumulation unit value at beginning of period $1.04 $1.00 Accumulation unit value at end of period $1.07 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 8,725 859 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2006) Accumulation unit value at beginning of period $0.99 $1.00 Accumulation unit value at end of period $1.13 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 4,921 1,866 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (05/01/2006) Accumulation unit value at beginning of period $1.05 $1.00 Accumulation unit value at end of period $1.22 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 1,053 434 - ----------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (05/01/2006) Accumulation unit value at beginning of period $1.11 $1.00 Accumulation unit value at end of period $1.14 $1.11 Number of accumulation units outstanding at end of period (000 omitted) 132 6 - ----------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (05/01/2006) Accumulation unit value at beginning of period $1.05 $1.00 Accumulation unit value at end of period $1.15 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 9,216 3,787 - ----------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (05/01/2006) Accumulation unit value at beginning of period $1.11 $1.00 Accumulation unit value at end of period $1.12 $1.11 Number of accumulation units outstanding at end of period (000 omitted) 116 1 - ----------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (05/01/2006) Accumulation unit value at beginning of period $1.08 $1.00 Accumulation unit value at end of period $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 5,921 3,150 - ----------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $0.94 -- Number of accumulation units outstanding at end of period (000 omitted) 2 -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 108 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 - ----------------------------------------------------------------------------------------------- JANUS ASPEN SERIES LARGE CAP GROWTH PORTFOLIO: SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.06 -- Number of accumulation units outstanding at end of period (000 omitted) 11,694 -- - ----------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE SMALL CAP GROWTH PORTFOLIO, CLASS I (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.03 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/01/2006) Accumulation unit value at beginning of period $1.07 $1.00 Accumulation unit value at end of period $1.10 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (05/01/2006) Accumulation unit value at beginning of period $1.22 $1.00 Accumulation unit value at end of period $1.54 $1.22 Number of accumulation units outstanding at end of period (000 omitted) 9 2 - ----------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 Accumulation unit value at end of period $1.15 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 32 12 - ----------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2006) Accumulation unit value at beginning of period $1.07 $1.00 Accumulation unit value at end of period $1.12 $1.07 Number of accumulation units outstanding at end of period (000 omitted) 10 1 - ----------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (05/01/2006) Accumulation unit value at beginning of period $1.00 $1.00 Accumulation unit value at end of period $0.98 $1.00 Number of accumulation units outstanding at end of period (000 omitted) 24 20 - ----------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (05/01/2006) Accumulation unit value at beginning of period $1.04 $1.00 Accumulation unit value at end of period $1.13 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 13,059 3,108 - ----------------------------------------------------------------------------------------------- PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.04 -- Number of accumulation units outstanding at end of period (000 omitted) 11,741 -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND (05/01/2007) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $0.99 -- Number of accumulation units outstanding at end of period (000 omitted) 7,996 -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (05/01/2006) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.05 $1.00 Accumulation unit value at end of period $1.10 $1.05 Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (05/01/2006) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.05 $1.00 Accumulation unit value at end of period $0.99 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 639 -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 Accumulation unit value at end of period $1.06 $1.02 Number of accumulation units outstanding at end of period (000 omitted) 321 67 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 3.44% and 3.50%, respectively. - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (05/01/2006) Accumulation unit value at beginning of period $1.04 $1.00 Accumulation unit value at end of period $1.09 $1.04 Number of accumulation units outstanding at end of period (000 omitted) 19,798 8,562 - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 109
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (05/01/2006) Accumulation unit value at beginning of period $1.06 $1.00 Accumulation unit value at end of period $1.14 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 12,478 5,812 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.03 $1.00 Accumulation unit value at end of period $1.10 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 9,543 6,089 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (05/01/2006) Accumulation unit value at beginning of period $1.05 $1.00 Accumulation unit value at end of period $1.08 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 997 -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (05/01/2006) Accumulation unit value at beginning of period $1.06 $1.00 Accumulation unit value at end of period $1.07 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 517 761 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.05 $1.00 Accumulation unit value at end of period $1.07 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 7,039 2,214 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (05/01/2006) Accumulation unit value at beginning of period $1.08 $1.00 Accumulation unit value at end of period $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP VALUE FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.00 -- Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (05/01/2006) Accumulation unit value at beginning of period $1.09 $1.00 Accumulation unit value at end of period $1.13 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 4 2 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (05/01/2006) Accumulation unit value at beginning of period $1.03 $1.00 Accumulation unit value at end of period $1.07 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 711 239 - ----------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (05/01/2006) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $1.13 $1.00 Accumulation unit value at end of period $1.55 $1.13 Number of accumulation units outstanding at end of period (000 omitted) 3,593 1,590 - ----------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (05/01/2006) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND) Accumulation unit value at beginning of period $1.07 $1.00 Accumulation unit value at end of period $1.19 $1.07 Number of accumulation units outstanding at end of period (000 omitted) -- -- - ----------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (05/01/2006) Accumulation unit value at beginning of period $1.09 $1.00 Accumulation unit value at end of period $1.06 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 7,163 5,339 - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $0.85 -- Number of accumulation units outstanding at end of period (000 omitted) 2,329 -- - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- Accumulation unit value at end of period $1.13 -- Number of accumulation units outstanding at end of period (000 omitted) 12 -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 110 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 - ----------------------------------------------------------------------------------------------- WANGER INTERNATIONAL SMALL CAP* (05/01/2006) Accumulation unit value at beginning of period $1.09 $1.00 Accumulation unit value at end of period $1.26 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 4,011 2,127 *Effective June 1, 2008, the Fund will change its name to Wanger International. - ----------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (05/01/2006) Accumulation unit value at beginning of period $1.00 $1.00 Accumulation unit value at end of period $1.05 $1.00 Number of accumulation units outstanding at end of period (000 omitted) 3,212 306 *Effective June 1, 2008, the Fund will change its name to Wanger USA. - -----------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.17 $1.13 $1.06 $1.00 Accumulation unit value at end of period $1.28 $1.17 $1.13 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 127 126 -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.34 $1.18 $1.10 $1.00 Accumulation unit value at end of period $1.45 $1.34 $1.18 $1.10 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.03 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AIM V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.04 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,537 -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GLOBAL TECHNOLOGY PORTFOLIO (CLASS B) (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.15 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.26 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.30 $1.26 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 1 1 2 19 - ----------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004) Accumulation unit value at beginning of period $1.80 $1.36 $1.19 $1.00 Accumulation unit value at end of period $1.86 $1.80 $1.36 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 2,568 1,868 1,180 367 - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.89 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.00 $1.06 $1.06 $1.00 Accumulation unit value at end of period $1.18 $1.00 $1.06 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 1,098 3,076 1,002 303 - ----------------------------------------------------------------------------------------------- AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.12 $1.09 $1.00 Accumulation unit value at end of period $1.20 $1.29 $1.12 $1.09 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- COLUMBIA HIGH YIELD FUND, VARIABLE SERIES, CLASS B (04/28/2006) Accumulation unit value at beginning of period $1.06 $1.00 -- -- Accumulation unit value at end of period $1.06 $1.06 -- -- Number of accumulation units outstanding at end of period (000 omitted) 840 1,798 -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 111
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- COLUMBIA MARSICO GROWTH FUND, VARIABLE SERIES, CLASS A (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.12 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,253 -- -- -- - ----------------------------------------------------------------------------------------------- COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES FUND, VARIABLE SERIES, CLASS B (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.13 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- COLUMBIA SMALL CAP VALUE FUND, VARIABLE SERIES, CLASS B (04/30/2004) Accumulation unit value at beginning of period $1.41 $1.20 $1.16 $1.00 Accumulation unit value at end of period $1.34 $1.41 $1.20 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 2,205 4 -- -- - ----------------------------------------------------------------------------------------------- CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.10 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 5 -- -- -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.09 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.49 $1.24 $1.14 $1.00 Accumulation unit value at end of period $1.52 $1.49 $1.24 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.98 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 1,799 -- -- -- - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.38 $1.26 $1.10 $1.00 Accumulation unit value at end of period $1.58 $1.38 $1.26 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 6,113 6,881 2,677 818 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.07 $1.05 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 5,217 2,104 1,449 257 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.54 $1.40 $1.21 $1.00 Accumulation unit value at end of period $1.74 $1.54 $1.40 $1.21 Number of accumulation units outstanding at end of period (000 omitted) 1,493 1,028 275 36 - ----------------------------------------------------------------------------------------------- FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.28 $1.10 $1.00 Accumulation unit value at end of period $1.69 $1.47 $1.28 $1.10 Number of accumulation units outstanding at end of period (000 omitted) 620 854 742 388 - ----------------------------------------------------------------------------------------------- FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.29 $1.11 $1.12 $1.00 Accumulation unit value at end of period $1.31 $1.29 $1.11 $1.12 Number of accumulation units outstanding at end of period (000 omitted) 291 261 59 12 - ----------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GLOBAL INCOME SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.21 $1.10 $1.16 $1.00 Accumulation unit value at end of period $1.32 $1.21 $1.10 $1.16 Number of accumulation units outstanding at end of period (000 omitted) 4,169 3,093 1,162 295 - ----------------------------------------------------------------------------------------------- FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004) Accumulation unit value at beginning of period $1.42 $1.19 $1.12 $1.00 Accumulation unit value at end of period $1.42 $1.42 $1.19 $1.12 Number of accumulation units outstanding at end of period (000 omitted) 120 44 7 -- - ----------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004) Accumulation unit value at beginning of period $1.50 $1.32 $1.19 $1.00 Accumulation unit value at end of period $1.51 $1.50 $1.32 $1.19 Number of accumulation units outstanding at end of period (000 omitted) 2,412 2,053 924 317 - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 112 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.93 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- JANUS ASPEN SERIES LARGE CAP GROWTH PORTFOLIO: SERVICE SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.05 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,863 -- -- -- - ----------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE SMALL CAP GROWTH PORTFOLIO, CLASS I (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.03 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.09 $1.09 $1.00 Accumulation unit value at end of period $1.21 $1.19 $1.09 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 30 30 33 41 - ----------------------------------------------------------------------------------------------- MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004) Accumulation unit value at beginning of period $1.81 $1.41 $1.24 $1.00 Accumulation unit value at end of period $2.26 $1.81 $1.41 $1.24 Number of accumulation units outstanding at end of period (000 omitted) 63 29 -- -- - ----------------------------------------------------------------------------------------------- OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.14 $1.09 $1.06 $1.00 Accumulation unit value at end of period $1.28 $1.14 $1.09 $1.06 Number of accumulation units outstanding at end of period (000 omitted) 1,209 1,390 1,125 320 - ----------------------------------------------------------------------------------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.47 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.53 $1.47 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 22 22 14 -- - ----------------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.40 $1.25 $1.16 $1.00 Accumulation unit value at end of period $1.35 $1.40 $1.25 $1.16 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- OPPENHEIMER STRATEGIC BOND FUND/VA, SERVICE SHARES (04/30/2004) Accumulation unit value at beginning of period $1.12 $1.07 $1.07 $1.00 Accumulation unit value at end of period $1.21 $1.12 $1.07 $1.07 Number of accumulation units outstanding at end of period (000 omitted) 6,179 3,663 1,908 552 - ----------------------------------------------------------------------------------------------- PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.03 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 4,060 -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND (05/01/2007) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - FUNDAMENTAL VALUE FUND) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.99 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,056 -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SELECT VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SELECT VALUE FUND) Accumulation unit value at beginning of period $1.22 $1.08 $1.09 $1.00 Accumulation unit value at end of period $1.27 $1.22 $1.08 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 3 3 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) PARTNERS VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - SMALL CAP VALUE FUND) Accumulation unit value at beginning of period $1.40 $1.19 $1.15 $1.00 Accumulation unit value at end of period $1.30 $1.40 $1.19 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 1,737 1,608 1,538 533 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND* (04/30/2004) Accumulation unit value at beginning of period $1.02 $1.00 $0.99 $1.00 Accumulation unit value at end of period $1.05 $1.02 $1.00 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 883 744 237 4 *The 7-day simple and compound yields for RVST RiverSource(R) Variable Portfolio - Cash Management Fund at Dec. 31, 2007 were 2.38% and 2.41%, respectively. - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 113
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.05 $1.03 $1.03 $1.00 Accumulation unit value at end of period $1.08 $1.05 $1.03 $1.03 Number of accumulation units outstanding at end of period (000 omitted) 7,791 5,167 31 20 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (04/30/2004) Accumulation unit value at beginning of period $1.50 $1.28 $1.15 $1.00 Accumulation unit value at end of period $1.59 $1.50 $1.28 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 4,403 3,648 1,145 12 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (05/01/2006) Accumulation unit value at beginning of period $1.02 $1.00 -- -- Accumulation unit value at end of period $1.08 $1.02 -- -- Number of accumulation units outstanding at end of period (000 omitted) 3,486 3,284 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - GROWTH FUND (04/30/2004) Accumulation unit value at beginning of period $1.24 $1.14 $1.07 $1.00 Accumulation unit value at end of period $1.25 $1.24 $1.14 $1.07 Number of accumulation units outstanding at end of period (000 omitted) 203 -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (04/30/2004) Accumulation unit value at beginning of period $1.19 $1.10 $1.08 $1.00 Accumulation unit value at end of period $1.19 $1.19 $1.10 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 899 1,062 683 196 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (06/01/2004) Accumulation unit value at beginning of period $1.17 $1.11 $1.09 $1.00 Accumulation unit value at end of period $1.18 $1.17 $1.11 $1.09 Number of accumulation units outstanding at end of period (000 omitted) 2,246 1,168 -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - LARGE CAP EQUITY FUND (04/30/2004) Accumulation unit value at beginning of period $1.23 $1.09 $1.05 $1.00 Accumulation unit value at end of period $1.24 $1.23 $1.09 $1.05 Number of accumulation units outstanding at end of period (000 omitted) 1,699 1,950 2,164 1,042 - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - MID CAP VALUE FUND (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.99 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - S&P 500 INDEX FUND (04/30/2004) Accumulation unit value at beginning of period $1.25 $1.11 $1.08 $1.00 Accumulation unit value at end of period $1.28 $1.25 $1.11 $1.08 Number of accumulation units outstanding at end of period (000 omitted) 30 63 7 -- - ----------------------------------------------------------------------------------------------- RVST RIVERSOURCE(R) VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (04/30/2004) Accumulation unit value at beginning of period $1.01 $0.99 $0.99 $1.00 Accumulation unit value at end of period $1.04 $1.01 $0.99 $0.99 Number of accumulation units outstanding at end of period (000 omitted) 951 794 390 75 - ----------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - EMERGING MARKETS FUND) Accumulation unit value at beginning of period $2.00 $1.53 $1.17 $1.00 Accumulation unit value at end of period $2.71 $2.00 $1.53 $1.17 Number of accumulation units outstanding at end of period (000 omitted) 1,273 1,208 706 264 - ----------------------------------------------------------------------------------------------- RVST THREADNEEDLE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (04/30/2004) (PREVIOUSLY RIVERSOURCE(R) VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND) Accumulation unit value at beginning of period $1.54 $1.27 $1.14 $1.00 Accumulation unit value at end of period $1.70 $1.54 $1.27 $1.14 Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST COMSTOCK PORTFOLIO, CLASS II SHARES (04/30/2004) Accumulation unit value at beginning of period $1.31 $1.15 $1.13 $1.00 Accumulation unit value at end of period $1.25 $1.31 $1.15 $1.13 Number of accumulation units outstanding at end of period (000 omitted) 5,631 5,950 3,199 890 - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $0.84 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) 771 -- -- -- - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 114 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED) YEAR ENDED DEC. 31, 2007 2006 2005 2004 - ----------------------------------------------------------------------------------------------- VAN KAMPEN UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007) Accumulation unit value at beginning of period $1.00 -- -- -- Accumulation unit value at end of period $1.12 -- -- -- Number of accumulation units outstanding at end of period (000 omitted) -- -- -- -- - ----------------------------------------------------------------------------------------------- WANGER INTERNATIONAL SMALL CAP* (04/30/2004) Accumulation unit value at beginning of period $1.92 $1.43 $1.20 $1.00 Accumulation unit value at end of period $2.18 $1.92 $1.43 $1.20 Number of accumulation units outstanding at end of period (000 omitted) 1,224 1,154 648 213 *Effective June 1, 2008, the Fund will change its name to Wanger International. - ----------------------------------------------------------------------------------------------- WANGER U.S. SMALLER COMPANIES* (04/30/2004) Accumulation unit value at beginning of period $1.32 $1.25 $1.15 $1.00 Accumulation unit value at end of period $1.37 $1.32 $1.25 $1.15 Number of accumulation units outstanding at end of period (000 omitted) 1,633 1,011 769 250 *Effective June 1, 2008, the Fund will change its name to Wanger USA. - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 115 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Calculating Annuity Payouts..................... p. 3 Rating Agencies................................. p. 4 Revenues Received During Calendar Year 2007..... p. 4 Principal Underwriter........................... p. 5 Independent Registered Public Accounting Firm... p. 5 Condensed Financial Information (Unaudited)..... p. 6 Financial Statements
- -------------------------------------------------------------------------------- 116 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 117 THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- 118 RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS THIS PAGE LEFT BLANK INTENTIONALLY - -------------------------------------------------------------------------------- RIVERSOURCE ENDEAVOR PLUS VARIABLE ANNUITY -- PROSPECTUS 119 (RIVERSOURCE INSURANCE LOGO) RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 (800) 333-3437 RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company. (C)2008 RiverSource Life Insurance Company. All rights reserved. 274562 C (5/08) PART B. The combined Statement of Additional Information and Financial Statements for RiverSource Variable Annuity Account dated May 1, 2008 filed electronically as Part B to Post-Effective Amendment No. 2 to Registration Statement No. 333-139760 on or about Apr. 24, 2008, is incorporated by reference. Part C. Item 24. Financial Statements and Exhibits (a) Financial Statements included in Part B of this Registration Statement: The audited financial statements of the RiverSource Variable Annuity Account including: Report of Independent Registered Public Accounting Firm dated April 24, 2008 Statements of Assets and Liabilities for the year ended Dec. 31, 2007 Statements of Operations for the year ended Dec. 31, 2007 Statements of Changes in Net Assets for the two years ended Dec. 31, 2007 Notes to Financial Statements The audited financial statements of the RiverSource Life Insurance Company including: Report of Independent Registered Public Accounting Firm dated April 24, 2008 Consolidated Statements of Assets and Liabilities the two years ended Dec. 31, 2007 Consolidated Statements of Operations for the three years ended Dec. 31, 2007 Consolidated Statements of Changes in Net Assets for the three years ended Dec. 31, 2007 Notes to Consolidated Financial Statements (b) Exhibits: 1.1 Resolution of the Executive Committee of the Board of Directors of American Enterprise Life Insurance Company establishing the American Enterprise Variable Annuity Account dated July 15, 1987, filed electronically as Exhibit 1 to the Initial Registration Statement No. 33-54471, filed on or about July 5, 1994, is incorporated by reference. 1.2 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 10 subaccounts dated Aug. 21, 1997, filed electronically as Exhibit 1.2 to American Enterprise Variable Annuity Accounts Post-Effective Amendment No. 8 to Registration Statement No. 33-54471, filed on or about Aug. 27, 1997, is incorporated by reference. 1.3 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 6 subaccounts dated June 17, 1998, filed electronically as Exhibit 1.3 to American Enterprise Variable Annuity Accounts Post-Effective Amendment No. 12 to Registration Statement No. 33-54471, filed on or about Aug. 24, 1998, is incorporated by reference. 1.4 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 16 subaccounts dated Jan. 20, 1999, filed electronically as Exhibit 1.2 to American Enterprise Variable Annuity Accounts Pre-Effective Amendment No. 1 to Registration Statement No. 333-67595, filed on or about Feb. 16, 1999, is incorporated by reference. 1.5 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 37 subaccounts dated June 29, 1999, filed electronically as Exhibit 1.2 to American Enterprise Variable Annuity Accounts Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865, filed on or about July 8, 1999, is incorporated by reference. 1.6 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 236 subaccounts dated Sept. 8, 1999, filed electronically as Exhibit 1.2 to American Enterprise Variable Annuity Accounts Pre-Effective Amendment No. 1 to Registration Statement No. 333-82149, filed on or about Sept. 21, 1999, is incorporated by reference. 1.7 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 67 subaccounts dated Nov. 22, 1999, filed electronically as Exhibit 1.2 to American Enterprise Variable Annuity Accounts Post-Effective Amendment No. 2 to Registration Statement No. 333-85567 filed on or about Dec. 30, 1999 is incorporated by reference. 1.8 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 15 subaccounts dated Feb. 2, 2000, filed electronically as Exhibit 1.2 to American Enterprise Variable Annuity Accounts Pre-Effective Amendment No. 1 to Registration Statement No. 333-92297, filed on or about Feb. 11, 2000, is incorporated by reference. 1.9 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 141 additional subaccounts within the separate account dated April 25, 2000, filed electronically as Exhibit 1.3 to American Enterprise Variable Annuity Accounts Post-Effective Amendment No. 5 to Registration Statement No. 333-85567 filed on or about April 28, 2000 is incorporated by reference. 1.10 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 1 subaccount dated April 25, 2000, filed electronically as Exhibit 1.4 to American Enterprise Variable Annuity Accounts Post-Effective Amendment No. 3 to Registration Statement No. 333-74865, filed on or about April 27, 2001, is incorporated by reference. 1.11 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 21 subaccounts dated April 13, 2001, filed electronically as Exhibit 1.4 to American Enterprise Variable Annuity Accounts Post-Effective Amendment No. 7 to Registration Statement No. 333-85567, filed on or about April 30, 2001, is incorporated by reference. 1.12 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 12 subaccounts dated Sept. 29, 2000, filed electronically as Exhibit 1.12 to Registrant's Pre-Effective Amendment No. 1 to Registration Statement No. 333-73958, filed on or about Feb. 20, 2002, is incorporated by reference. 1.13 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 85 subaccounts dated Feb. 5, 2002, filed electronically as Exhibit 1.13 to Registrant's Pre-Effective Amendment No. 1 to Registration Statement No. 333-73958, filed on or about Feb. 20, 2002, is incorporated by reference. 1.14 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 109 subaccounts dated April 17, 2002, filed electronically as Exhibit 1.14 to American Enterprise Variable Annuity Accounts Post-Effective Amendment No. 11 to Registration Statement No. 333-85567 is incorporated by reference. 1.15 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 229 subaccounts dated July 1, 2002, filed electronically as Exhibit 1.15 to the American Enterprise Variable Annuity Account's Post-Effective Amendment No. 6 to Registration Statement No. 333-92297 and is incorporated by reference. 1.16 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 339 subaccounts dated December 16, 2002, filed electronically as Exhibit 1.16 to Post-Effective Amendment No. 3 to Registration Statement No. 333-73958, filed on or about December 20, 2002, is incorporated by reference. 1.17 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 6 subaccounts dated April 1, 2003 filed electronically as Exhibit 1.17 to Registrant's Post-Effective Amendment No. 12 to Registration Statement No. 333-85567 filed on or about April 24, 2003, is incorporated by reference. 1.18 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 183 subaccounts dated October 29, 2003 filed electronically as Exhibit 1.18 to Registrant's Post-Effective Amendment No. 15 to Registration Statement No. 333-92297 filed on or about October 30, 2003 is incorporated by reference. 1.19 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing 973 subaccounts dated April 26, 2004 filed electronically as Exhibit 1.19 to Registrant's Post-Effective Amendment No. 9 to Registration Statement No. 333-74865 filed on or April 27, 2004 is incorporated by reference. 1.20 Resolution of the Board of Directors of American Enterprise Life Insurance Company establishing an additional subaccount within the separate account that will invest in RiverSource(SM) Variable Portfolio - Global Inflation Protected Securities Fund dated April 24, 2006 filed electronically as Exhibit 1.20 to Registrant's Post-Effective Amendment No. 14 to Registration Statement No. 333-74865 is incorporated by reference. 1.21 Unanimous Written Consent of the Board of Directors In Lieu of a Meeting for IDS Life Insurance Company, adopted December 8, 2006 for the Re-designation of the Separate Accounts to Reflect Entity Consolidation and Rebranding filed electronically as Exhibit 27(a)(6) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777 is herein incorporated by reference. 2. Not applicable. 3.1 Form of Principal Underwriter Agreement for RiverSource Life Insurance Company Variable Annuities and Variable Life Insurance filed electronically as Exhibit 3.1 to the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan 2, 2007, is incorporated by reference. 3.2 Not applicable. 4.1 Form of Deferred Annuity Contract Option L (form 271496), filed electronically as Exhibit 4.1 to Registrant's Pre-Effective Amendment No. 1 to Registration Statement No. 333-73958, filed on or about Feb. 20, 2002, is incorporated by reference. 4.2 Form of Deferred Annuity Contract Option C (form 271491), filed electronically as Exhibit 4.2 to Registrant's Pre-Effective Amendment No. 1 to Registration Statement No. 333-73958, filed on or about Feb. 20, 2002, is incorporated by reference. 4.3 Form of Enhanced Death Benefit Rider (form 44213), filed electronically as Exhibit 4.3 to American Enterprise Variable Annuity Account's Pre-Effective Amendment No. 1 to Registration Statement No. 333-85567 on form N-4, filed on or about Nov. 4, 1999, is incorporated by reference. 4.4 Form of Guaranteed Minimum Income Benefit Rider (form 44214), filed electronically as Exhibit 4.4 to American Enterprise Variable Annuity Account's Pre-Effective Amendment No. 1 to Registration Statement No. 333-85567 on form N-4, filed on or about Nov. 4, 1999, is incorporated by reference. 4.5 Not applicable. 4.6 Form of Roth IRA Endorsement (form 43094), filed electronically as Exhibit 4.2 to American Enterprise Variable Annuity Account's Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865, filed on or about Aug. 4, 1999, is incorporated by reference. 4.7 Form of SEP-IRA (form 43433), filed electronically as Exhibit 4.3 to American Enterprise Variable Annuity Account's Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865, filed on or about Aug. 4, 1999, is incorporated by reference. 4.8 Form of TSA Endorsement (form 43413), filed electronically as Exhibit 4.4 to American Enterprise Variable Annuity Account's Pre-Effective Amendment No. 1 to Registration Statement No. 333-72777 on form N-4, filed on or about July 8, 1999, is incorporated by reference. 4.9 Form of Benefit Protector(SM) Death Benefit Rider (form 271155), filed electronically as Exhibit 4.15 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 6 to Registration Statement No. 333-85567, filed on or about March 1, 2001, is incorporated by reference. 4.10 Form of Benefit Protector(SM) Plus Death Benefit Rider (form 271156), filed electronically as Exhibit 4.16 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 6 to Registration Statement No. 333-85567, filed on or about March 1, 2001, is incorporated by reference. 4.11 Form of Traditional IRA or SEP-IRA Endorsement (form 272108) filed electronically as Exhibit 4.11 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 10 to Registration Statement No. 333-92297, filed on or about January 30, 2003, is incorporated by reference. 4.12 Form of Roth IRA Endorsement (form 272109) filed electronically as Exhibit 4.12 to Post-Effective Amendment No. 10 to Registration Statement No. 333-92297, filed on or about January 30, 2003, is incorporated by reference. 4.13 Form of Variable Annuity Unisex Endorsement (form 272110) filed electronically as Exhibit 4.13 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 10 to Registration Statement No. 333-92297, filed on or about January 30, 2003, is incorporated by reference. 4.14 Form of Maximum Anniversary Value Death Benefit Rider (form 272869) filed electronically as Exhibit 4.11 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 7 to Registration Statement No. 333-74865 filed on or about Feb. 2, 2004 is incorporated by reference. 4.15 Form of 5% Accumulation Death Benefit Rider (form 272870) filed electronically as Exhibit 4.12 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 7 to Registration Statement No. 333-74865 filed on or about Feb. 2, 2004 is incorporated by reference. 4.16 Form of Enhanced Death Benefit Rider (form 272871) filed electronically as Exhibit 4.13 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 7 to Registration Statement No. 333-74865 filed on or about Feb. 2, 2004 is incorporated by reference. 4.17 Form of Guaranteed Minimum Income Benefit Rider (Maximum Anniversary Value Benefit Base)(form 272872) filed electronically as Exhibit 4.14 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 7 to Registration Statement No. 333-74865 filed on or about Feb. 2, 2004 is incorporated by reference. 4.18 Form of Guaranteed Minimum Income Benefit Rider (5% Accumulation Benefit Base)(form 272873) filed electronically as Exhibit 4.15 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 7 to Registration Statement No. 333-74865 filed on or about Feb. 2, 2004 is incorporated by reference. 4.19 Form of Guaranteed Minimum Income Benefit Rider (Greater of Maximum Anniversary Value Benefit Base and 5% Accumulation Benefit Base)(form 272874) filed electronically as Exhibit 4.16 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 7 to Registration Statement No. 333-74865 filed on or about Feb. 2, 2004 is incorporated by reference. 4.20 Form of Guaranteed Minimum Withdrawal Benefit Rider (The Guarantor(SM) Withdrawal Benefit Rider)(form 272875) filed electronically as Exhibit 4.17 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 7 to Registration Statement No. 333-74865 filed on or about Feb. 2, 2004 is incorporated by reference. 4.21 Form of Deferred Variable Annuity Contract (form 272876 DPFCC) filed electronically as Exhibit 4.21 to Registrant's Post-Effective Amendment No. 5 filed on or about February 10, 2004 is incorporated by reference. 4.22 Form of Deferred Variable Annuity Contract (form 272876 DPFCL) filed electronically as Exhibit 4.22 to Registrant's Post-Effective Amendment No. 5 filed on or about February 10, 2004 is incorporated by reference. 4.23 Form of Guaranteed Minimum Withdrawal Benefit Rider (form 273567) filed as Exhibit 4.22 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 22 to Registration Statement No. 333-92297 filed on or about Jan. 28, 2005 is incorporated by reference. 4.24 Form of Guaranteed Minimum Accumulation Benefit Rider (form 273568) filed electronically as Exhibit 4.23 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 22 to Registration Statement No. 333-92297 filed on or about Jan. 28, 2005 is incorporated by reference. 4.25 Form of Annuity Endorsement (form 273566) filed electronically as Exhibit 4.24 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 22 to Registration Statement No. 333-92297 filed on or about Jan. 28, 2005 is incorporated by reference. 4.26 Form of Guaranteed Minimum Lifetime Withdrawal Benefit Rider (Guarantor Withdrawal Benefit for Life (SM) Rider) (Form 273959) filed electronically as Exhibit 4.22 to Post-Effective Amendment No. 14 to Registration Statement No. 333-74865 filed on or about April 28, 2006, is incorporated by reference. 4.27 Form of Guarantor(SM) Withdrawal Benefit (form 273567-E) filed as Exhibit 4.26 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 30 to Registration Statement No. 333-92297 filed on or about August 25, 2006, is incorporated by reference. 4.28 Form of Guarantor(SM) Withdrawal Benefit (form 272875-E) filed as Exhibit 4.27 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 30 to Registration Statement No. 333-92297 filed on or about August 25, 2006, is incorporated by reference. 4.29 Form of Variable Annuity Contract (form 271498) filed as Exhibit 4.29 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 3, 2007, is incorporated herein by reference. 4.30 Form of Fixed and Variable Annuity Contract (form 272876) filed electronically as Exhibit 4.35 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.31 Form of Fixed and Variable Annuity Contract - RVSL (form 273954) filed electronically as Exhibit 4.37 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.32 Form of Fixed and Variable Annuity Contract - AEL (form 273954) filed electronically as Exhibit 4.38 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.33 Form of Contract Data Pages - RVSL (form 273954DPFCC) filed as Exhibit 4.33 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 4.34 Form of Contract Data Pages - AEL (form 273954DPFCC) filed as Exhibit 4.34 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 4.35 Form of Contract Data Pages - RVSL (form 273954DPFCL) filed as Exhibit 4.35 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 4.36 Form of Contract Data Pages - AEL (form 273954DPFCL) filed as Exhibit 4.37 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 4.37 Form of TSA Endorsement - RVSL (form 272865) filed electronically as Exhibit 4.30 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.38 Form of TSA Endorsement - AEL (form 272865) filed electronically as Exhibit 4.31 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.39 Form of 401 Plan Endorsement - RVSL (form 272866) filed electronically as Exhibit 4.32 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.40 Form of 401 Plan Endorsement - AEL (form 272866) filed electronically as Exhibit 4.33 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.41 Form of Unisex Endorsement (form 272867) filed electronically as Exhibit 4.34 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.42 Form of Pre-election endorsement (form 273566) filed electronically as Exhibit 4.24 to American Enterprise Variable Annuity Account's Post-Effective Amendment No. 22 to Registration Statement No. 333-92297 on or about Jan. 28, 2005 is incorporated by reference. 4.43 Form of MAV GMIB Rider -RVSL (form 273961) filed electronically as Exhibit 4.40 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.44 Form of MAV GMIB Rider - AEL (form 273961) filed electronically as Exhibit 4.41 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.45 Form of 5% GMIB Rider - RVSL (form 273962) filed electronically as Exhibit 4.42 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.46 Form of 5% GMIB Rider - AEL (form 273962) filed electronically as Exhibit 4.43 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.47 Form of Greater of MAV or 5% GMIB Rider - RVSL (form 273963) filed electronically as Exhibit 4.44 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.48 Form of Greater of MAV or 5% GMIB Rider - AEL (form 273963) filed electronically as Exhibit 4.45 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.49 Form of Unisex Endorsement - RVSL (form 273964) filed electronically as Exhibit 4.46 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.50 Form of Unisex Endorsement - AEL (form 273964) filed electronically as Exhibit 4.47 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.51 Form of 5% Death Benefit Rider - RVSL (form 273965) filed electronically as Exhibit 4.48 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.52 Form of 5% Death Benefit Rider - AEL (form 273965) filed electronically as Exhibit 4.49 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.53 Form of Greater of MAV or 5% Death Benefit Rider - RVSL (form 273966) filed electronically as Exhibit 4.50 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.54 Form of Greater of MAV or 5% Death Benefit Rider - AEL (form 273966) filed electronically as Exhibit 4.51 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature(SM) Select Variable Annuity and RiverSource Signature(SM) Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 4.55 Form of Guaranteed Minimum Withdrawal Benefit Single Life Rider (form 273959-sg) filed electronically as Exhibit 4.51 to RiverSource Variable Annuity Account Post-Effective Amendment No. 1 to Registration Statement 333-139763 on or about Feb. 23, 2007, is incorporated herein by reference. 4.56 Form of Guaranteed Minimum Withdrawal Benefit Joint Life Rider (form 273959-jt) filed electronically as Exhibit 4.52 to RiverSource Variable Annuity Account's Post-Effective Amendment No. 1 to Registration Statement 333-139763 on or about Feb. 23, 2007, is incorporated herein by reference. 4.57 Form of Contract Data Pages - RVSL (form 273954DPBAC) filed electronically as Exhibit 4.57 to Registrant's Post-Effective Amendment No. 3 to Registration Statement No. 333-139763 on or about May 18, 2007 is incorporated herein by reference. 4.58 Form of Contract Data Pages - RVSL (form 273954DPBA7) filed electronically as Exhibit 4.58 to Registrant's Post-Effective Amendment No. 3 to Registration Statement No. 333-139763 on or about May 18, 2007 is incorporated herein by reference. 5 Not applicable. 5.1 Form of Variable Annuity Application - WF Advantage Choice et al (form 271492) filed as Exhibit 5.1 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139764, on or about Jan. 2, 2007, is incorporated herein by reference. 5.2 Form of Variable Annuity Application - FlexChoice (form 271493) filed as Exhibit 5.2 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139764, on or about Jan. 2, 2007, is incorporated herein by reference. 5.3 Form of Variable Annuity Application - EG Pathways (form 271850) filed as Exhibit 5.3 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139764, on or about Jan. 2, 2007, is incorporated herein by reference. 5.4 Form of Variable Annuity Application - EG Privilege (form 271851) filed as Exhibit 5.4 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139764, on or about Jan. 2, 2007, is incorporated herein by reference. 5.5 Form of Variable Annuity Application - WF Advantage Select et al (form 272880) filed electronically as Exhibit 5.14 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource(SM) New Solutions Variable Annuity, RiverSource Innovations(SM) Variable Annuity, RiverSource Innovations(SM) Select Variable Annuity, RiverSource Innovations(SM) Classic Variable Annuity, RiverSource Innovations(SM) Classic Select Variable Annuity, RiverSource Endeavor Select(SM) Variable Annuity, Evergreen New Solutions Variable Annuity, Evergreen New Solutions Select Variable Annuity, Evergreen Essential(SM) Variable Annuity, Wells Fargo Advantage(R) Select Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 5.6 Form of Variable Annuity Application - FlexChoice Select (form 272882) filed as Exhibit 5.6 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 5.7 Form of Variable Annuity Application - EG Pathways (form 272883) filed as Exhibit 5.7 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 5.8 Form of Variable Annuity Application - WF Advantage Select et al (form 273632) filed electronically as Exhibit 5.19 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource(SM) New Solutions Variable Annuity, RiverSource Innovations(SM) Variable Annuity, RiverSource Innovations(SM) Select Variable Annuity, RiverSource Innovations(SM) Classic Variable Annuity, RiverSource Innovations(SM) Classic Select Variable Annuity, RiverSource Endeavor Select(SM) Variable Annuity, Evergreen New Solutions Variable Annuity, Evergreen New Solutions Select Variable Annuity, Evergreen Essential(SM) Variable Annuity, Wells Fargo Advantage(R) Select Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 5.9 Form of Variable Annuity Application - FlexChoice Select (form 273634) filed as Exhibit 5.9 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 5.10 Form of Variable Annuity Application - EG Pathways Select (form 273636) filed as Exhibit 5.10 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 5.11 Form of Variable Annuity Application - AccessChoice Select (form 273639) filed as Exhibit 5.11 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 5.12 Form of Variable Annuity Application - WF Advantage Select et al - RVSL (form 273969) filed electronically as Exhibit 5.24 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource(SM) New Solutions Variable Annuity, RiverSource Innovations(SM) Variable Annuity, RiverSource Innovations(SM) Select Variable Annuity, RiverSource Innovations(SM) Classic Variable Annuity, RiverSource Innovations(SM) Classic Select Variable Annuity, RiverSource Endeavor Select(SM) Variable Annuity, Evergreen New Solutions Variable Annuity, Evergreen New Solutions Select Variable Annuity, Evergreen Essential(SM) Variable Annuity, Wells Fargo Advantage(R) Select Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 5.13 Form of Variable Annuity Application - WF Advantage Select et al - AEL (form 273969) filed electronically as Exhibit 5.24 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource(SM) New Solutions Variable Annuity, RiverSource Innovations(SM) Variable Annuity, RiverSource Innovations(SM) Select Variable Annuity, RiverSource Innovations(SM) Classic Variable Annuity, RiverSource Innovations(SM) Classic Select Variable Annuity, RiverSource Endeavor Select(SM) Variable Annuity, Evergreen New Solutions Variable Annuity, Evergreen New Solutions Select Variable Annuity, Evergreen Essential(SM) Variable Annuity, Wells Fargo Advantage(R) Select Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 5.14 Form of Variable Annuity Application - FlexChoice Select - RVSL (form 273970) filed as Exhibit 5.12 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 5.15 Form of Variable Annuity Application - FlexChoice Select - AEL (form 273970) filed as Exhibit 5.13 to RiverSource Variable Annuity Account's Initial Registration Statement on Form N-4, No. 333-139759, on or about Jan. 2, 2007, is incorporated herein by reference. 5.16 Form of Variable Annuity Application - AccessChoice Select et al - RVSL (form 273973) filed electronically as Exhibit 5.27 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource(SM) New Solutions Variable Annuity, RiverSource Innovations(SM) Variable Annuity, RiverSource Innovations(SM) Select Variable Annuity, RiverSource Innovations(SM) Classic Variable Annuity, RiverSource Innovations(SM) Classic Select Variable Annuity, RiverSource Endeavor Select(SM) Variable Annuity, Evergreen New Solutions Variable Annuity, Evergreen New Solutions Select Variable Annuity, Evergreen Essential(SM) Variable Annuity, Wells Fargo Advantage(R) Select Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 5.17 Form of Variable Annuity Application - AccessChoice Select et al - AEL (form 273973) filed electronically as Exhibit 5.27 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource(SM) New Solutions Variable Annuity, RiverSource Innovations(SM) Variable Annuity, RiverSource Innovations(SM) Select Variable Annuity, RiverSource Innovations(SM) Classic Variable Annuity, RiverSource Innovations(SM) Classic Select Variable Annuity, RiverSource Endeavor Select(SM) Variable Annuity, Evergreen New Solutions Variable Annuity, Evergreen New Solutions Select Variable Annuity, Evergreen Essential(SM) Variable Annuity, Wells Fargo Advantage(R) Select Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 5.18 Form of Variable Annuity Application - Endeavor Plus - RVSL (form 274752) filed electronically as Exhibit 5.18 to Registrant's Post-Effective Amendment No. 3 to Registration Statement No. 333-139759 on or about May 18, 2007 is incorporated by reference herein. 6.1 Certificate of Incorporation of IDS Life dated July 24, 1957, filed electronically as Exhibit 6.1 to IDS Life Variable Account 10's Initial Registration Statement No. 33-62407 is incorporated herein by reference. 6.2 Copy of Amended and Restated By-Laws of RiverSource Life Insurance Company filed electronically as Exhibit 27(f)(2) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777 is incorporated by reference. 6.3 Copy of Certificate of Amendment of Certificate of Incorporation of IDS Life Insurance Company dated June 22, 2006, filed electronically as Exhibit 27(f)(1)to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777 is incorporated by reference. 7. Not applicable. 8.1 Copy of Amended and Restated Participation Agreement dated April 17, 2006, by and among AIM Variable Insurance Funds, AIM Distributors, Inc. American Enterprise Life Insurance Company, American Partners Life Insurance Company, IDS Life Insurance Company, and Ameriprise Financial Services, Inc. filed electronically as Exhibit 27(h)(1) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777 is incorporated herein by reference. 8.2 Copy of Amended and Restated Participation Agreement dated August 1, 2006, among American Enterprise Life Insurance Company, IDS Life Insurance Company, Ameriprise Financial Services, Inc., AllianceBernstein L.P. and AllianceBernstein Investments, Inc. filed electronically as Exhibit 27(h)(20) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777 is incorporated herein by reference. 8.3 Copy of Amended and Restated Fund Participation Agreement dated January 1, 2007,among Variable Insurance Products Funds, Fidelity Distributors Corporation and RiverSource Life Insurance Company filed electronically as Exhibit 8.6 to RiverSource Variable Annuity Account's Post-Effective Amendment No. 2 to Registration Statement No. 333-139760 on or about April XX, 2008 is incorporated by reference herein. 8.4 Copy of Amended and Restated Participation Agreement dated June 9, 2006, by and among American Enterprise Life Insurance Company, IDS Life Insurance Company, Goldman Sachs Variable Insurance Trust and Goldman, Sachs & Co. filed herewith as Exhibit 27(h)(24) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777 is incorporated herein by reference. 8.5 Copy of Participation Agreement among MFS Variable Insurance Trust, American Enterprise Life Insurance Company, IDS Life Insurance Company and Massachusetts Financial Services Company, dated June 9, 2006, filed electronically as Exhibit 8.9 to RiverSource Variable Life Account's Post-Effective Amendment No. 1 to Registration Statement No. 333-139760, filed on or about April 24, 2007, is incorporated by reference. 8.6 Copy of Amended and Restated Fund Participation Agreement dated March 30, 2007, among Oppenheimer Variable Account funds, Oppenheimer Funds, Inc. and RiverSource Life Insurance Company filed electronically as Exhibit 8.21 to RiverSource Variable Annuity Account's Post-Effective Amendment No. 2 to Registration Statement No. 333-139760 on or about April 24, 2008 is incorporated by reference herein. 8.7 Copy of Amended and Restated Fund Participation Agreement dated January 1, 2007, by and among RiverSource Life Insurance Company, Putnam Variable Trust and Putnam Retail Management Limited Partnership filed electronically as Exhibit 8.2 to RiverSource Variable Annuity Account's Post-Effective Amendment No. 2 to Registration Statement No. 333-139760 on or about April 24, 2008 is incorporated by reference herein. 8.8 Copy of Amended and Restated Participation Agreement dated May 1, 2006, among Van Kampen Life Investment Trust, Van Kampen Funds Inc., Van Kampen Asset Management, American Enterprise Life Insurance Company and IDS Life Insurance Company filed electronically as Exhibit 8.26 to Post-Effective Amendment No. 41 to Registration Statement No. 333-79311 is incorporated herein by reference. 8.9 Copy of Participation Agreement by and among Wells Fargo Variable Trust, RiverSource Life Insurance Company, RiverSource Distributors, Inc. and Wells Fargo Funds Distributor, LLC dated Jan. 1, 2007, filed electronically as Exhibit 8.16 to Post-Effective Amendment No. 1 to Registration Statement No. 333-139762, filed on or about April 24, 2007, is incorporated by reference. 8.10 Copy of Amended and Restated Participation Agreement by and between Franklin Templeton Variable Insurance Products Trust, Franklin/Templeton Distributors, Inc., American Centurion Life Assurance Company, American Enterprise Life Insurance Company, IDS Life Insurance Company, IDS Life Insurance Company of New York, Ameriprise Financial Services, Inc. (formerly American Express Financial Advisors, Inc.) dated as of August 1, 2005 filed as Exhibit 8.15 to Post-Effective Amendment No. 14 to Registration Statement No. 333-74865 filed on or about April 28, 2006, is incorporated by reference. 8.11 Copy of Amended and Restated Fund Participation Agreement dated June 1, 2006, by and among American Centurion Life Assurance Company, American Enterprise Life Insurance Company, American Partners Life Insurance Company, IDS Life Insurance Company, IDS Life Insurance Company of New York, Ameriprise Financial Services, Inc. and American Century Investment Services, Inc. filed electronically as Exhibit 27(h)(3) to Post-Effective Amendment No. 22 to Registration Statement No. 333-44644 is incorporated herein by reference. 8.12 Copy of Fund Participation Agreement dated May 1, 2006 among American Enterprise Life Insurance Company, IDS Life Insurance Company, Columbia Funds Variable Insurance Trust, Columbia Management Advisors, LLC and Columbia Management Distributors, Inc. filed electronically as Exhibit 8.17 with the Initial Registration Statement on Form N-4 for RiverSource Variable Annuity Account (previously American Enterprise Variable Annuity Account), RiverSource Signature Select Variable Annuity and RiverSource Signature Variable Annuity, on or about Jan. 2, 2007, is incorporated by reference. 8.13 Copy of Fund Participation Agreement dated May 1, 2006, by and among American Enterprise Life Insurance Company, IDS Life Insurance Company, The Dreyfus Corporation, Dreyfus Variable Investment Fund, and Dreyfus Investment Portfolios filed electronically as Exhibit 8.7 to Post-Effective Amendment No. 41 to Registration Statement No. 333-79311 is incorporated herein by reference. 8.14 Copy of Evergreen Variable Annuity Trust Amended and Restated Participation Agreement dated June 1, 2006, by and among American Enterprise Life Insurance Company, IDS Life Insurance Company and Evergreen Variable Annuity Trust filed electronically as Exhibit 27(h)(6) to Post-Effective Amendment No. 28 to Registration Statement No. 333-69777 is incorporated herein by reference. 8.15 Copy of Participation Agreement dated January 1, 2007, by and among RiverSource Life Insurance Company, RiverSource Life Insurance Co. of New York and RiverSource Distributors, Inc. filed electronically as Exhibit 8.8 to Post-Effective Amendment No. 1 to Registration Statement No. 333-139761 is incorporated herein by reference. 8.16 Copy of Participation Agreement by and among RiverSource Life Insurance Company, RiverSource Distributors, Inc., Lazard Asset Management Securities, LLC, and Lazard Retirement Series, Inc., dated Jan. 1, 2007, filed electronically Exhibit 8.7 to Registrant's Post-Effective Amendment No. 1 to Registration Statement No. 333-139762 on or about April 24, 2007 is incorporated by reference. 9. Opinion of counsel and consent to its use as to the legality of the securities being registered, is filed electronically herewith. 10.1 Consent of Independent Registered Public Accounting Firm for RiverSource(R) FlexChoice Select Variable Annuity is filed electronically herewith. 10.2 Consent of Independent Registered Public Accounting Firm for RiverSource(R) FlexChoice Variable Annuity is filed electronically herewith. 10.3 Consent of Independent Registered Public Accounting Firm for RiverSource(R) AccessChoice Select Variable Annuity is filed electronically herewith. 10.4 Consent of Independent Registered Public Accounting Firm for Evergreen Pathways Variable Annuity is filed electronically herewith. 10.5 Consent of Independent Registered Public Accounting Firm for Evergreen Pathways Select Variable Annuity is filed electronically herewith. 10.6 Consent of Independent Registered Public Accounting Firm for Wells Fargo Advantage Choice(SM) Variable Annuity is filed electronically herewith. 10.7 Consent of Independent Registered Public Accounting Firm for Wells Fargo Advantage Choice(SM) Select Variable Annuity is filed electronically herewith. 10.8 Consent of Independent Registered Public Accounting Firm for Evergreen Privilege(SM) Variable Annuity is filed electronically herewith. 10.9 Consent of Independent Registered Public Accounting Firm for RiverSource(R) Endeavor Plus(SM) Variable Annuity is filed electronically herewith. 11. None. 12. Not applicable. 13. Power of Attorney to sign Amendment to this Registration Statement, dated Aug. 30, 2007 filed electronically as Exhibit (r)(1) to Post- Effective Amendment No. 31 to Registration Statement No. 333-69777 is incorporated herein by reference. 14. Not applicable. Item 25. Item 25. Directors and Officers of the Depositor RiverSource Life Insurance Company
Position and Offices Name Principal Business Address* With Depositor - ---- --------------------------- ---------------------------- Gumer C. Alvero Director and Executive Vice President - Annuities Timothy V. Bechtold Director and President Kent M. Bergene Vice President - Affiliated Investments Walter S. Berman Vice President and Treasurer Richard N. Bush Senior Vice President - Corporate Tax Pat H. Carey Vice President-Fund Relations Charles R. Caswell Reinsurance Officer Jim Hamalainen Vice President - Investments Michelle M. Keeley Vice President - Investments Timothy J. Masek Vice President - Investments Brian J. McGrane Director, Executive Vice President and Chief Financial Officer Thomas W. Murphy Vice President - Investments Kevin E. Palmer Director, Vice President and Chief Actuary Bridget M. Sperl Director, Executive Vice President - Client Service David K. Stewart Vice President and Controller
* The business address is 70100 Amerprise Financial Center, Minneapolis, MN 55474. Item 26. Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant The following list includes the names of major subsidiaries of Ameriprise Financial, Inc.
Jurisdiction of Name of Subsidiary Incorporation - ------------------ --------------- Advisory Capital Strategies Group Inc. Minnesota AEXP Affordable Housing LLC Delaware American Enterprise Investment Services Inc. Minnesota American Express Property Casualty Insurance Agency of Kentucky,Inc. Kentucky American Express Property Casualty Insurance Agency of Maryland,Inc. Maryland American Express Property Casualty Insurance Agency of Mississippi,Inc. Mississippi American Express Property Casualty Insurance Agency of Pennsylvania,Inc. Pennsylvania Ameriprise Auto & Home Insurance Agency, Inc. Wisconsin Ameriprise Bank, FSB USA Ameriprise Capitive Insurance Company Vermont Ameriprise Capital Trust I Delaware Ameriprise Capital Trust II Delaware Ameriprise Capital Trust III Delaware Ameriprise Capital Trust IV Delaware Ameriprise Certificate Company Delaware Ameriprise Financial Services,Inc. Delaware Ameriprise India Private Ltd. India Ameriprise Insurance Company Wisconsin Ameriprise Trust Company Minnesota Boston Equity General Partner LLC Delaware IDS Capital Holdings Inc. Minnesota IDS Futures Corporation Minnesota IDS Management Corporation Minnesota IDS Property Casualty Insurance Company Wisconsin IDS REO 1, LLC Minnesota IDS REO 2, LLC Minnesota Investors Syndicate Development Corporation Nevada Kenwood Capital Management LLC (47.7% owned) Delaware Realty Assets, Inc. Nebraska RiverSource CDO Seed Investments, LLC Minnesota RiverSource Distributors,Inc. Delaware RiverSource Investments,LLC Minnesota RiverSource Life Insurance Company Minnesota RiverSource Life Insurance Co. of New York New York RiverSource Service Corporation Minnesota RiverSource Tax Advantaged Investments, Inc. Delaware Securities America Advisors,Inc. Nebraska Securities America Financial Corporation Nebraska Securities America, Inc. Nebraska Threadneedle Asset Management Holdings Ltd. England
Item 27. Number of Contract owners As of March 31, 2008 there were 31,635 nonqualified and 35,780 qualified contracts of contract owners. Item 28. Indemnification The amended By-Laws of the depositor provide that the depositor will indemnify, to the fullest extent now or hereafter provided for or permitted by law, each person involved in, or made or threatened to be made a party to, any action, suit, claim or proceeding, whether civil or criminal, including any investigative, administrative, legislative, or other proceeding, and including any action by or in the right of the depositor or any other corporation, or any partnership, joint venture, trust, employee benefit plan, or other enterprise (any such entity, other than the depositor, being hereinafter referred to as an "Enterprise"), and including appeals therein (any such action or process being hereinafter referred to as a "Proceeding"), by reason of the fact that such person, such person's testator or intestate (i) is or was a director or officer of the depositor, or (ii) is or was serving, at the request of the depositor, as a director, officer, or in any other capacity, or any other Enterprise, against any and all judgments, amounts paid in settlement, and expenses, including attorney's fees, actually and reasonably incurred as a result of or in connection with any Proceeding, except as provided below. No indemnification will be made to or on behalf of any such person if a judgment or other final adjudication adverse to such person establishes that such person's acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that such person personally gained in fact a financial profit or other advantage to which such person was not legally entitled. In addition, no indemnification will be made with respect to any Proceeding initiated by any such person against the depositor, or a director or officer of the depositor, other than to enforce the terms of this indemnification provision, unless such Proceeding was authorized by the Board of Directors of the depositor. Further, no indemnification will be made with respect to any settlement or compromise of any Proceeding unless and until the depositor has consented to such settlement or compromise. The depositor may, from time to time, with the approval of the Board of Directors, and to the extent authorized, grant rights to indemnification, and to the advancement of expenses, to any employee or agent of the depositor or to any person serving at the request of the depositor as a director or officer, or in any other capacity, of any other Enterprise, to the fullest extent of the provisions with respect to the indemnification and advancement of expenses of directors and officers of the depositor. There are agreements in place under which the underwriter and affiliated persons of the depositor or registrant may be indemnified against liabilities arising out of acts or omissions in connection with the offer of the contracts; provided however, that no such indemnity will be made to the underwriter or affiliated persons of the depositor or registrant for liabilities to which they would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the depositor or the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 29. ITEM 29. PRINCIPAL UNDERWRITERS. (a) RiverSource Distributors Inc. acts as principal underwriter, depositor or sponsor for: RiverSource Variable Annuity Account ; RiverSource Account F; RiverSource Variable Annuity Fund A, RiverSource Variable Annuity Fund B, RiverSource Variable Account 10; RiverSource Account MGA; RiverSource MVA Account; RiverSource Variable Life Separate Account; RiverSource Variable Life Account; RiverSource Life Insurance Company; RiverSource of New York Variable Annuity Account ; RiverSource of New York Account 8; RiverSource of New York Variable Annuity Account; RiverSource Bond Series, Inc.; RiverSource California Tax-Exempt Trust; RiverSource Dimensions Series, Inc.; RiverSource Diversified Income Series, Inc.; RiverSource Equity Series, Inc.; RiverSource Global Series, Inc.; RiverSource Government Income Series, Inc.; RiverSource High Yield Income Series, Inc.; RiverSource Income Series, Inc.; RiverSource International Managers Series, Inc.; RiverSource International Series, Inc.; RiverSource Investment Series, Inc.; RiverSource Large Cap Series, Inc.; RiverSource Managers Series, Inc.; RiverSource Market Advantage Series, Inc.; RiverSource Money Market Series, Inc.; RiverSource Sector Series, Inc.; RiverSource Selected Series, Inc.; RiverSource Series Trust; RiverSource Short Term Investments Series, Inc.; RiverSource Special Tax-Exempt Series Trust; RiverSource Strategic Allocation Series; Inc., RiverSource Strategy Series, Inc.; RiverSource Tax-Exempt Income Series, Inc.; RiverSource Tax-Exempt Money Market Series, Inc.; RiverSource Tax-Exempt Series, Inc.; RiverSource Variable Series Trust. (b) As to each director, officer or partner of the principal underwriter:
Name and Principal Business Positions and Offices with Address* Underwriter - --------------------------- --------------------------------- Gumer C. Alvero Director and Vice President Patrick T. Bannigan Director and Senior Vice President-Asset Management, Products and Marketing Group Timothy V. Bechtold Director Paul J. Dolan Chief Operating Officer and Chief Administrative Officer Jeffrey P. Fox Chief Financial Officer Martin T. Griffin President-Outside Distribution Jeffrey L. McGregor, Sr. President-Inside Distribution Scott R. Plummer Chief Counsel Julie A. Ruether Chief Compliance Officer William F. "Ted" Truscott Chairman of the Board, CEO and President
* Business address is: 70100 Ameriprise Financial Center, Minneapolis, MN 55474 (c) RiverSource Distributors Inc., the principal underwriter during Registrant's last fiscal year, was paid the following commissions:
NAME OF NET UNDERWRITING PRINCIPAL DISCOUNTS AND COMPENSATION ON BROKERAGE UNDERWRITER COMMISSIONS REDEMPTION COMMISSIONS COMPENSATION - ----------- ---------------- --------------- ----------- ------------ RiverSource Distributors, Inc. $322,665,705 None None None
Item 30. Location of Accounts and Records RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 Item 31. Management Services Not applicable. Item 32. Undertakings (a) Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes that it will include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information. (c) Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request to the address or phone number listed in the prospectus. (d) The sponsoring insurance company represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. (e) Registrant represents that it is relying upon the no-action assurance given to the American Council of Life Insurance (pub. Avail. Nov. 28, 1988). Further, Registrant represents that it has complied with the provisions of paragraphs (1) - (4) of that no-action letter. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, RiverSource Life Insurance Company, on behalf of the Registrant, certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Registration Statement has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Minneapolis, and State of Minnesota, on the 24th day of April, 2008. RIVERSOURCE VARIABLE ANNUITY ACCOUNT (Registrant) By RiverSource Life Insurance Company (Sponsor) By /s/ Timothy V. Bechtold* ------------------------------------- Timothy V. Bechtold President As required by the Securities Act of 1933, this Amendment to this Registration Statement has been signed by the following persons in the capacities indicated on the 24th day of April, 2008.
Signature Title - --------- ----- /s/ Gumer C. Alvero* Director and Executive Vice - -------------------------------------- President - Annuities Gumer C. Alvero /s/ Timothy V. Bechtold* Director and President - -------------------------------------- Timothy V. Bechtold /s/ Brian J. McGrane* Director, Executive Vice President and - -------------------------------------- Chief Financial Officer Brian J. McGrane /s/ Kevin E. Palmer* Director, Vice President and Chief - -------------------------------------- Actuary Kevin E. Palmer /s/ Bridget M. Sperl* Executive Vice President - - -------------------------------------- Client Services Bridget M. Sperl
/s/ David K. Stewart* Vice President and Controller - -------------------------------------- David K. Stewart
* Signed pursuant to Power of Attorney dated Aug. 30, 2007 filed electronically as Exhibit (r)(1) to Post-Effective Amendment No. 31 to Registration Statement No. 333-69777, by: /s/ Elisabeth A. Dahl - -------------------------------------- Elisabeth A. Dahl Assistant General Counsel and Assistant Secretary CONTENTS OF REGISTRATION STATEMENT AMENDMENT NO. 7 TO REGISTRATION STATEMENT NO. 333-139759 This Registration Statement is comprised of the following papers and documents: The Cover Page. Part A. The prospectuses for: RiverSource(R) FlexChoice Select Variable Annuity RiverSource(R) FlexChoice Variable Annuity RiverSource(R) AccessChoice Select Variable Annuity Evergreen Pathways(SM) Variable Annuity Evergreen Pathways(SM) Select Variable Annuity Evergreen Privilege(SM) Variable Annuity Wells Fargo Advantage Choice(SM) Variable Annuity Wells Fargo Advantage Choice(SM) Select Variable Annuity RiverSource(R) Endeavor Plus(SM) Variable Annuity Part B. The combined Statement of Additional Information and Financial Statements for RiverSource Variable Annuity Account dated May 1, 2008 filed electronically as Part B to Post-Effective Amendment No. 2 to Registration Statement No. 333-139760 on or about Apr. 24, 2008, is incorporated by reference. Part C. Other Information. The signatures. Exhibits. EXHIBIT INDEX 9. Opinion of Counsel and Consent 10.1 - 10.9 Consents of Independent Registered Public Accounting Firm. EX-9 2 c17683bexv9.txt OPINION OF COUNSEL AND CONSENT EXHIBIT 9 April 24, 2008 RiverSource Life Insurance Company 829 Ameriprise Financial Center Minneapolis, MN 55474 RE: RiverSource Variable Annuity Account RiverSource(R) FlexChoice Select Variable Annuity RiverSource(R) FlexChoice Variable Annuity RiverSource(R) AccessChoice Select Variable Annuity Evergreen Pathways(SM) Variable Annuity Evergreen Pathways(SM) Select Variable Annuity Evergreen Privilege(SM) Variable Annuity Wells Fargo Advantage Choice(SM) Variable Annuity Wells Fargo Advantage Choice(SM) Select Variable Annuity RiverSource(R) Endeavor Plus(SM) Variable Annuity Post-Effective Amendment No. 7 File Nos.: 333-139759/811-7195 Ladies and Gentlemen: I am familiar with the establishment of the RiverSource Variable Account ("Account"), which is a separate account of RiverSource Life Insurance Company ("Company") established by the Company's Board of Directors according to applicable insurance law. I also am familiar with the above-referenced Registration Statement filed by the Company on behalf of the Account with the Securities and Exchange Commission. I have made such examination of law and examined such documents and records as in my judgment are necessary and appropriate to enable me to give the following opinion: 1. The Company is duly incorporated, validly existing and in good standing under applicable state law and is duly licensed or qualified to do business in each jurisdiction where it transacts business. The Company has all corporate powers required to carry on its business and to issue the contracts. 2. The Account is a validly created and existing separate account of the Company and is duly authorized to issue the securities registered. 3. The contracts issued by the Company, when offered and sold in accordance with the prospectuses contained in the Registration Statement and in compliance with applicable law, will be legally issued and represent binding obligations of the Company in accordance with their terms. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Sincerely, /s/ Elisabeth A. Dahl - -------------------------------------- Elisabeth A. Dahl Assistant General Counsel and Assistant Secretary EX-10.1 3 c17683bexv10w1.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.1 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the RiverSource(R) FlexChoice Select Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.2 4 c17683bexv10w2.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.2 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the RiverSource(R) FlexChoice Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.3 5 c17683bexv10w3.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.3 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the RiverSource(R) AccessChoice Select Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.4 6 c17683bexv10w4.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.4 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the Evergreen Pathways(SM) Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.5 7 c17683bexv10w5.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.5 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the Evergreen Pathways(SM) Select Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.6 8 c17683bexv10w6.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.6 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the Wells Fargo Advantage Choice(SM) Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.7 9 c17683bexv10w7.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.7 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the Wells Fargo Advantage Choice(SM) Select Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.8 10 c17683bexv10w8.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.8 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the Evergreen Privilege(SM) Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 EX-10.9 11 c17683bexv10w9.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 10.9 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Independent Registered Public Accounting Firm" in the Statement of Additional Information and to the use of our report dated February 27, 2008 with respect to the consolidated financial statements of RiverSource Life Insurance Company and to the use of our report dated April 24, 2008 with respect to the financial statements of RiverSource Variable Annuity Account included in Post-Effective Amendment No. 7 to the Registration Statement (Form N-4, No. 333-139759) for the registration of the RiverSource(R) Endeavor Plus(SM) Variable Annuity offered by RiverSource Life Insurance Company. /s/ Ernst & Young LLP Minneapolis, Minnesota April 24, 2008 -----END PRIVACY-ENHANCED MESSAGE-----