Correspondence 0000931788-24-000034 from JACKSON NATIONAL LIFE INSURANCE CO (CIK 0000931788)
JACKSON NATIONAL LIFE INSURANCE CO (CIK 0000931788)
Date: April 4, 2024 · CIK: 0000931788 · Accession: 0000931788-24-000034
AI Filing Summary & Sentiment
File numbers found in text: 333-268101
Letter
jmlpiiresponsememocombined
MEMORANDUM
TO: Sonny Oh
Senior Counsel
Disclosure Review and Accounting Office
Division of Investment Management
U. S. Securities and Exchange Commission
FROM: Alison Samborn, Esq.
Assistant Vice President, Insurance Legal & Product Development
DATE: April 4, 2024
SUBJECT: Response to Comments for Post-Effective Amendment No. 2 to the Registration Statement on Form S-1 for File No. 333-268101 (Jackson Market Link Pro Advisory II)
This memorandum is in response to the comments you provided via telephone on April 3, 2024 for the above referenced filing. In the interest of convenience for the staff of the Securities and Exchange Commission, this memorandum provides our understanding of each of the specific comments, followed respectively by narrative responses (in bold).
The following comments and responses apply to the post-effective amendment filing referenced above. Excerpted pages of the prospectus, marked to show the changes discussed below are attached, and will be provided electronically. Page references in the responses are to the PDF page of the attached marked copy of the document. A post-effective amendment to the above-referenced registration statement will subsequently be filed in response to the comments.
Glossary (p. 2)
1.Please review the definition of Market Value Adjustment and revise to keep consistent with the disclosures found in the Market Value Adjustment row of the Contract Overview table in the Summary section of the prospectus.
Response: We have revised this definition and also revised the MVA row in the Contract Overview table, the “Market Value Adjustment” section of the prospectus, the “Income Options” section of the prospectus, and the “GMWB Income Options” subsection of the prospectus to more carefully and specifically identify when an MVA applies to an income payment and when it does not.
Risk Factors (p. 3)
2.In the Risk Factor titled “Deduction of Advisory Fees from Contract Value”, please revise the new language to identify that the contract value element of the basic death benefit is reduced when withdrawals are taken to pay advisory fees that are not compliant with your administrative rules, or taken after election of the GMWB.
Response: We have revised, however it appears that the accurate disclosure here is to identify that the return of premium element of the basic death benefit will be reduced under this scenario. The contract value element will always be reduced, even when advisory fee withdrawals are taken under our administrative rules.
Index Account
3.In the last paragraph of the subsection titled “Index Adjustment”, please note that the revisions made in response to previous comments should also be pulled into the commission-based version of this product.
Response: We have made this revision to the commission-based product.
Access To Your Money (p. 6)
4.In the first paragraph of the RMD Notes table found in the subsection titled “Required Minimum Distributions Under Certain Tax Qualified Plans (“RMDs”)”, please note that the language struck in response to prior comments should be retained and modified to identify that an MVA would apply to any portion of a withdrawal exceeding the company’s calculation of the RMD.
Response: We have made this revision.
Market Value Adjustment (p. 7)
5.In the fifth paragraph of the section titled “Market Value Adjustment”, there is disclosure outlining specific income payments to which an MVA does not apply. Please review this language and confirm its accuracy in connection with other references to income payments taken during the first Contract Year elsewhere in the prospectus.
Response: We have revised this paragraph accordingly, and also revised the MVA row in the Contract Overview table, the “Income Options” section of the prospectus, and the “GMWB Income Options” subsection of the prospectus to more carefully and specifically identify when an MVA applies to an income payment and when it does not. For disclosure, the only time that an MVA will apply to income payments is where they are taking income under an option for a specified period of shorter than five years and those payments are taken during the first six Contract Years.
Death Benefit (p. 9)
6.In the last paragraph before the subsection titled “Payout Options”, please note that the disclosure is missing information about how the return of premium portion of the death benefit is not reduced when following administrative rules for advisor fee withdrawals, but that when the withdrawals are not compliant with the administrative rules or taken after the GMWB rider is elected, the return of premium portion of the death benefit is reduced for those withdrawals. See language found in the Risk Factor titled “Deduction of Advisory Fees From Contract Value” for an example of clearer language. Please revise.
Response: We have made this revision.
Please contact me at (517) 367-3754 if you have any questions or require additional information.
Market Value Adjustment A positive or negative adjustment applied to withdrawals from your Contract in excess of the MVA Free Withdrawal amount or in excess of the GAWA (or RMD if applicable), including partial and total withdrawals, and income payments under certain income options when commenced withinfor specified perdiods where the specified period is shorter than five years and those payments are taken during the first six Contract Year.Years.. Market Value Adjustments may apply during the first six years of the Contract when any portion of Contract Value is withdrawn or annuitized. Certain withdrawals and income options are exempt from Market Value Adjustments. For more information about Market Value Adjustments, including details about certain withdrawals that are exempt from Market Value Adjustments, please see the section titled “Market Value Adjustment" on page 51. In some states we do not apply an MVA. For more information, see "Appendix B: State Variations". Death Benefit For Owners 80 or younger at the Issue Date of the Contract, the standard death benefit (known as the Return of Premium death benefit) is the greater of the Contract Value or the Premium you paid into the Contract (reduced proportionately by the percentage reduction in the Index Account Option Value and the Fixed Account Value for each partial withdrawal (including any applicable Market Value Adjustment)). For Owners age 81 or older at the Issue Date of the Contract, the standard death benefit is the Contract Value. Income Options You can choose to begin taking income from your Contract at any time, but all of the Contract Value must be annuitized. Market Value Adjustments will apply if you begin taking income in the first six years, and we will use your Interim Value (if you begin taking income on any day other than the Index Account Option Term Anniversary) to calculate your income payments. You may choose from the following annuitization options: - Life Income - Joint Life and Survivor Income - Life Income with Guaranteed Payments for 10 Years or 20 Years - Life Income for a Specified Period Once an income option has been selected, and payments begin, the income option may not be changed. No withdrawals will be permitted once the contract is in the income phase. For more information about income options, please see the section titled "Income Options" on page 53. Additional income options may be available if you elect to add the +Income GMWB or +Income GMWB with Joint Option to your Contract. For more information, please see "GMWB Income Options" on page 46. Charges and Expenses You will bear the following charges and expenses: - Market Value Adjustments (for the first six years of the Contract); - GMWB Charge if you elect the add-on GMWB; and - Premium and Other Taxes. Additionally, if you take a withdrawal before the end of your Term (including automatic withdrawals, GAWA withdrawals, Required Minimum Distributions, income payments, death benefit payments, Free Looks and Intra-Term Performance Locks), we will calculate an Interim Value adjustment (in addition to any applicable Market Value Adjustment), which may serve to limit amounts credited to less than the amount of the Index Return on the date of the withdrawal. Also, in the case of a withdrawal before the end of the Term where the Index Return is negative, less protection is provided the earlier in the Term the withdrawal occurs. Please note that the Contract also imposes Caps that can limit amounts credited to less than the amount of the Index Return on the date of the withdrawal. Free Look Provision You may cancel the Contract within a certain time period after receiving it by returning the Contract to us or to the financial professional who sold it to you. This is known as a “Free Look.” We will return either your Premium Payment or Contract Value, depending on your state, and we will not deduct any fees or charges. Free Looks are subject to Interim Value adjustments. 7
Market Value Adjustment ("MVA") - a positive or negative adjustment we may apply to amounts you withdraw or annuitize under certain income options during the first six years of the Contract that are in excess of the MVA Free Withdrawal amount or in excess of the GAWA (or RMD if applicable), including partial and total withdrawals, or income payments commenced within the first Contract Year. MVA Free Withdrawal - the maximum amount that may be withdrawn each year free of any otherwise applicable Market Value Adjustment. The MVA Free Withdrawal amount is equal to 10% of Remaining Premium during each Contract Year that would otherwise incur an MVA, less earnings. If an RMD or GAWA is applicable and exceeds 10% of Remaining Premium, the MVA Free Withdrawal amount is equal to the greater of the RMD or GAWA, less earnings. Owner, you or your – the natural person or legal entity entitled to exercise all rights and privileges under the Contract. Usually, but not always, the Owner is the Annuitant. The Contract allows for the naming of joint Owners. (We do not capitalize “you” or “your” in the prospectus.) Any reference to the Owner includes any joint Owner. Performance Boost Cap Rate ("PBCR") - an Index Adjustment Factor associated with the Performance Boost Crediting Method. The PBCR is the maximum positive Index Adjustment, expressed as a percentage, that could be credited to an Index Account Option under the Performance Boost Crediting Method at the end of each Index Account Option Term. The Performance Boost Cap Rate is not a stand-alone Crediting Method. It is applicable only when you select the Performance Boost Rate Crediting Method. Performance Boost Rate ("PBR") - one of three currently available Crediting Methods, and an Index Adjustment Factor. The PBR is the amount that will be added to Index Return, expressed as a percentage, that will increase value of the Index Adjustment that will be credited to an Index Account Option under the Performance Boost Crediting Method at the end of each Index Account Option Term if the performance criteria are met. The Index Adjustment credited under the Performance Boost Crediting Method is limited by the Performance Boost Cap Rate. Performance Trigger Rate ("PTR") - one of three currently available Crediting Methods, and an Index Adjustment Factor. The PTR is the amount of positive Index Adjustment, expressed as a percentage, that will be credited to an Index Account Option under the Performance Trigger Crediting Method at the end of each Index Account Option Term if the performance criteria are met. Premium - consideration paid into the Contract by or on behalf of the Owner. Protection Options - the general term used to describe the Floor and Buffer Index Adjustment Factors. Protection Options provide varying levels of partial protection against the risk of loss of Index Account Option Value when Index Return is negative. Remaining Premium - total Premium paid into the Contract, reduced by withdrawals of Premium before withdrawals are adjusted for any applicable Market Value Adjustment. Required Minimum Distributions ("RMDs") – for certain qualified Contracts, the amount defined under the Internal Revenue Code as the minimum distribution requirement as applied to your Contract only. This definition excludes any withdrawal necessary to satisfy the minimum distribution requirements of the Internal Revenue Code if the Contract is purchased with contributions from a nontaxable transfer after the death of the Owner of a qualified Contract. Step-Up - a feature under which we automatically increase the GWB to reflect any increases in the Contract Value due to positive investment performance during the Contract Year when you have elected the +Income GMWB or +Income GMWB with Joint Option. There are annual Step-Ups and a Determination Date Step-Up available under the +Income GMWB and +Income GMWB with Joint Option. Withdrawal Value - the amount payable upon a total withdrawal of Contract Value. The Withdrawal Value is equal to the Contract Value less any applicable charges for add-on benefits, subject to any applicable positive or negative Interim Value adjustment, adjusted for any applicable Market Value Adjustment. 11
In addition, since all withdrawals reduce the Contract Value, withdrawals will also reduce the amount that can be taken as income since such amount is determined by the Contract Value on the Income Date. The Latest Income Date for this contract is age 95. If your Contract Value falls below the minimum Contract Value remaining as a result of a withdrawal (as stated in your Contract), we may terminate your Contract. This minimum Contract Value requirement does not apply if you have added +Income GMWB or +Income GMWB with Joint Option to your Contract. There are administrative rules that must be followed when taking an RMD withdrawal. Notice of an RMD is required at the time of your withdrawal request, and there is an administrative form for providing such notice. The administrative form allows you to elect one time or automatic RMD withdrawals. Eligible withdrawals that are specified as RMDs may only be taken based on the value of the Contract to which the endorsement applies, even where the Internal Revenue Code allows taking multiple contracts’ RMDs from a single contract. You, as Owner, are responsible for complying with the Internal Revenue Code’s RMD requirements. If you fail to take your full RMD for a year, you will be subject to a 25% excise tax on any shortfall. This excise tax is reduced to 10% if a distribution of the shortfall is made within two years and prior to the date the excise tax is assessed or imposed by the IRS. If your requested RMD exceeds our calculation of the RMD for your Contract, your request will not be eligible for the waiver of any applicable MVA and we will apply an MVA as applicable, which will be reflected in the confirmation of the transaction. An RMD exceeding our calculation may also result in an Excess Withdrawal for purposes of your GMWB, which would result in an adverse recalculation of the GWB and GAWA. For more information on RMD requirements, please see "Required Minimum Distributions Under Certain Tax-Qualified Plans ("RMDS")" beginning on page 48. Deduction of Advisory Fees from Contract Value. Under certain circumstances, you may elect to have advisory fees directly deducted from your Contract Value and automatically transmitted to your third party financial professional, subject to certain administrative rules. If you do elect to pay your advisory fees via direct deductions under our rules, we will not treat such deductions as withdrawals in two specific ways: (i) we will not report them as taxable distributions under your Contract; and (ii) any such deduction will not trigg
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filename1.htm
jmlpiiresponsememocombined
MEMORANDUM
TO: Sonny Oh
Senior Counsel
Disclosure Review and Accounting Office
Division of Investment Management
U. S. Securities and Exchange Commission
FROM: Alison Samborn, Esq.
Assistant Vice President, Insurance Legal & Product Development
DATE: April 4, 2024
SUBJECT: Response to Comments for Post-Effective Amendment No. 2 to the Registration Statement on Form S-1 for File No. 333-268101 (Jackson Market Link Pro Advisory II)
This memorandum is in response to the comments you provided via telephone on April 3, 2024 for the above referenced filing. In the interest of convenience for the staff of the Securities and Exchange Commission, this memorandum provides our understanding of each of the specific comments, followed respectively by narrative responses (in bold).
The following comments and responses apply to the post-effective amendment filing referenced above. Excerpted pages of the prospectus, marked to show the changes discussed below are attached, and will be provided electronically. Page references in the responses are to the PDF page of the attached marked copy of the document. A post-effective amendment to the above-referenced registration statement will subsequently be filed in response to the comments.
Glossary (p. 2)
1.Please review the definition of Market Value Adjustment and revise to keep consistent with the disclosures found in the Market Value Adjustment row of the Contract Overview table in the Summary section of the prospectus.
Response: We have revised this definition and also revised the MVA row in the Contract Overview table, the “Market Value Adjustment” section of the prospectus, the “Income Options” section of the prospectus, and the “GMWB Income Options” subsection of the prospectus to more carefully and specifically identify when an MVA applies to an income payment and when it does not.
Risk Factors (p. 3)
2.In the Risk Factor titled “Deduction of Advisory Fees from Contract Value”, please revise the new language to identify that the contract value element of the basic death benefit is reduced when withdrawals are taken to pay advisory fees that are not compliant with your administrative rules, or taken after election of the GMWB.
Response: We have revised, however it appears that the accurate disclosure here is to identify that the return of premium element of the basic death benefit will be reduced under this scenario. The contract value element will always be reduced, even when advisory fee withdrawals are taken under our administrative rules.
Index Account
3.In the last paragraph of the subsection titled “Index Adjustment”, please note that the revisions made in response to previous comments should also be pulled into the commission-based version of this product.
Response: We have made this revision to the commission-based product.
Access To Your Money (p. 6)
4.In the first paragraph of the RMD Notes table found in the subsection titled “Required Minimum Distributions Under Certain Tax Qualified Plans (“RMDs”)”, please note that the language struck in response to prior comments should be retained and modified to identify that an MVA would apply to any portion of a withdrawal exceeding the company’s calculation of the RMD.
Response: We have made this revision.
Market Value Adjustment (p. 7)
5.In the fifth paragraph of the section titled “Market Value Adjustment”, there is disclosure outlining specific income payments to which an MVA does not apply. Please review this language and confirm its accuracy in connection with other references to income payments taken during the first Contract Year elsewhere in the prospectus.
Response: We have revised this paragraph accordingly, and also revised the MVA row in the Contract Overview table, the “Income Options” section of the prospectus, and the “GMWB Income Options” subsection of the prospectus to more carefully and specifically identify when an MVA applies to an income payment and when it does not. For disclosure, the only time that an MVA will apply to income payments is where they are taking income under an option for a specified period of shorter than five years and those payments are taken during the first six Contract Years.
Death Benefit (p. 9)
6.In the last paragraph before the subsection titled “Payout Options”, please note that the disclosure is missing information about how the return of premium portion of the death benefit is not reduced when following administrative rules for advisor fee withdrawals, but that when the withdrawals are not compliant with the administrative rules or taken after the GMWB rider is elected, the return of premium portion of the death benefit is reduced for those withdrawals. See language found in the Risk Factor titled “Deduction of Advisory Fees From Contract Value” for an example of clearer language. Please revise.
Response: We have made this revision.
Please contact me at (517) 367-3754 if you have any questions or require additional information.
Market Value Adjustment A positive or negative adjustment applied to withdrawals from your Contract in excess of the MVA Free Withdrawal amount or in excess of the GAWA (or RMD if applicable), including partial and total withdrawals, and income payments under certain income options when commenced withinfor specified perdiods where the specified period is shorter than five years and those payments are taken during the first six Contract Year.Years.. Market Value Adjustments may apply during the first six years of the Contract when any portion of Contract Value is withdrawn or annuitized. Certain withdrawals and income options are exempt from Market Value Adjustments. For more information about Market Value Adjustments, including details about certain withdrawals that are exempt from Market Value Adjustments, please see the section titled “Market Value Adjustment" on page 51. In some states we do not apply an MVA. For more information, see "Appendix B: State Variations". Death Benefit For Owners 80 or younger at the Issue Date of the Contract, the standard death benefit (known as the Return of Premium death benefit) is the greater of the Contract Value or the Premium you paid into the Contract (reduced proportionately by the percentage reduction in the Index Account Option Value and the Fixed Account Value for each partial withdrawal (including any applicable Market Value Adjustment)). For Owners age 81 or older at the Issue Date of the Contract, the standard death benefit is the Contract Value. Income Options You can choose to begin taking income from your Contract at any time, but all of the Contract Value must be annuitized. Market Value Adjustments will apply if you begin taking income in the first six years, and we will use your Interim Value (if you begin taking income on any day other than the Index Account Option Term Anniversary) to calculate your income payments. You may choose from the following annuitization options: - Life Income - Joint Life and Survivor Income - Life Income with Guaranteed Payments for 10 Years or 20 Years - Life Income for a Specified Period Once an income option has been selected, and payments begin, the income option may not be changed. No withdrawals will be permitted once the contract is in the income phase. For more information about income options, please see the section titled "Income Options" on page 53. Additional income options may be available if you elect to add the +Income GMWB or +Income GMWB with Joint Option to your Contract. For more information, please see "GMWB Income Options" on page 46. Charges and Expenses You will bear the following charges and expenses: - Market Value Adjustments (for the first six years of the Contract); - GMWB Charge if you elect the add-on GMWB; and - Premium and Other Taxes. Additionally, if you take a withdrawal before the end of your Term (including automatic withdrawals, GAWA withdrawals, Required Minimum Distributions, income payments, death benefit payments, Free Looks and Intra-Term Performance Locks), we will calculate an Interim Value adjustment (in addition to any applicable Market Value Adjustment), which may serve to limit amounts credited to less than the amount of the Index Return on the date of the withdrawal. Also, in the case of a withdrawal before the end of the Term where the Index Return is negative, less protection is provided the earlier in the Term the withdrawal occurs. Please note that the Contract also imposes Caps that can limit amounts credited to less than the amount of the Index Return on the date of the withdrawal. Free Look Provision You may cancel the Contract within a certain time period after receiving it by returning the Contract to us or to the financial professional who sold it to you. This is known as a “Free Look.” We will return either your Premium Payment or Contract Value, depending on your state, and we will not deduct any fees or charges. Free Looks are subject to Interim Value adjustments. 7
Market Value Adjustment ("MVA") - a positive or negative adjustment we may apply to amounts you withdraw or annuitize under certain income options during the first six years of the Contract that are in excess of the MVA Free Withdrawal amount or in excess of the GAWA (or RMD if applicable), including partial and total withdrawals, or income payments commenced within the first Contract Year. MVA Free Withdrawal - the maximum amount that may be withdrawn each year free of any otherwise applicable Market Value Adjustment. The MVA Free Withdrawal amount is equal to 10% of Remaining Premium during each Contract Year that would otherwise incur an MVA, less earnings. If an RMD or GAWA is applicable and exceeds 10% of Remaining Premium, the MVA Free Withdrawal amount is equal to the greater of the RMD or GAWA, less earnings. Owner, you or your – the natural person or legal entity entitled to exercise all rights and privileges under the Contract. Usually, but not always, the Owner is the Annuitant. The Contract allows for the naming of joint Owners. (We do not capitalize “you” or “your” in the prospectus.) Any reference to the Owner includes any joint Owner. Performance Boost Cap Rate ("PBCR") - an Index Adjustment Factor associated with the Performance Boost Crediting Method. The PBCR is the maximum positive Index Adjustment, expressed as a percentage, that could be credited to an Index Account Option under the Performance Boost Crediting Method at the end of each Index Account Option Term. The Performance Boost Cap Rate is not a stand-alone Crediting Method. It is applicable only when you select the Performance Boost Rate Crediting Method. Performance Boost Rate ("PBR") - one of three currently available Crediting Methods, and an Index Adjustment Factor. The PBR is the amount that will be added to Index Return, expressed as a percentage, that will increase value of the Index Adjustment that will be credited to an Index Account Option under the Performance Boost Crediting Method at the end of each Index Account Option Term if the performance criteria are met. The Index Adjustment credited under the Performance Boost Crediting Method is limited by the Performance Boost Cap Rate. Performance Trigger Rate ("PTR") - one of three currently available Crediting Methods, and an Index Adjustment Factor. The PTR is the amount of positive Index Adjustment, expressed as a percentage, that will be credited to an Index Account Option under the Performance Trigger Crediting Method at the end of each Index Account Option Term if the performance criteria are met. Premium - consideration paid into the Contract by or on behalf of the Owner. Protection Options - the general term used to describe the Floor and Buffer Index Adjustment Factors. Protection Options provide varying levels of partial protection against the risk of loss of Index Account Option Value when Index Return is negative. Remaining Premium - total Premium paid into the Contract, reduced by withdrawals of Premium before withdrawals are adjusted for any applicable Market Value Adjustment. Required Minimum Distributions ("RMDs") – for certain qualified Contracts, the amount defined under the Internal Revenue Code as the minimum distribution requirement as applied to your Contract only. This definition excludes any withdrawal necessary to satisfy the minimum distribution requirements of the Internal Revenue Code if the Contract is purchased with contributions from a nontaxable transfer after the death of the Owner of a qualified Contract. Step-Up - a feature under which we automatically increase the GWB to reflect any increases in the Contract Value due to positive investment performance during the Contract Year when you have elected the +Income GMWB or +Income GMWB with Joint Option. There are annual Step-Ups and a Determination Date Step-Up available under the +Income GMWB and +Income GMWB with Joint Option. Withdrawal Value - the amount payable upon a total withdrawal of Contract Value. The Withdrawal Value is equal to the Contract Value less any applicable charges for add-on benefits, subject to any applicable positive or negative Interim Value adjustment, adjusted for any applicable Market Value Adjustment. 11
In addition, since all withdrawals reduce the Contract Value, withdrawals will also reduce the amount that can be taken as income since such amount is determined by the Contract Value on the Income Date. The Latest Income Date for this contract is age 95. If your Contract Value falls below the minimum Contract Value remaining as a result of a withdrawal (as stated in your Contract), we may terminate your Contract. This minimum Contract Value requirement does not apply if you have added +Income GMWB or +Income GMWB with Joint Option to your Contract. There are administrative rules that must be followed when taking an RMD withdrawal. Notice of an RMD is required at the time of your withdrawal request, and there is an administrative form for providing such notice. The administrative form allows you to elect one time or automatic RMD withdrawals. Eligible withdrawals that are specified as RMDs may only be taken based on the value of the Contract to which the endorsement applies, even where the Internal Revenue Code allows taking multiple contracts’ RMDs from a single contract. You, as Owner, are responsible for complying with the Internal Revenue Code’s RMD requirements. If you fail to take your full RMD for a year, you will be subject to a 25% excise tax on any shortfall. This excise tax is reduced to 10% if a distribution of the shortfall is made within two years and prior to the date the excise tax is assessed or imposed by the IRS. If your requested RMD exceeds our calculation of the RMD for your Contract, your request will not be eligible for the waiver of any applicable MVA and we will apply an MVA as applicable, which will be reflected in the confirmation of the transaction. An RMD exceeding our calculation may also result in an Excess Withdrawal for purposes of your GMWB, which would result in an adverse recalculation of the GWB and GAWA. For more information on RMD requirements, please see "Required Minimum Distributions Under Certain Tax-Qualified Plans ("RMDS")" beginning on page 48. Deduction of Advisory Fees from Contract Value. Under certain circumstances, you may elect to have advisory fees directly deducted from your Contract Value and automatically transmitted to your third party financial professional, subject to certain administrative rules. If you do elect to pay your advisory fees via direct deductions under our rules, we will not treat such deductions as withdrawals in two specific ways: (i) we will not report them as taxable distributions under your Contract; and (ii) any such deduction will not trigg