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ROTH IRA REQUIREMENTS

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Regarding Roth Individual Retirement Annuity (IRA) Plans Described in Section 408A of the Internal Revenue Code

This Disclosure Statement (“Disclosure”) presents a general overview of the federal laws applicable to your Roth Individual Retirement Annuity (“Roth IRA”). It does not describe the special rules that apply to Traditional IRAs, Education IRAs (Coverdell Education Savings Accounts), or SIMPLE IRAs. Neither National Western Life Insurance Company (“NWL”) nor any of its employees or agents are authorized to provide legal or tax advice. If you have any questions regarding this Disclosure or the tax implications of your Roth IRA contact your tax or legal advisor. Please read this Disclosure carefully. File this Disclosure with the other documents pertaining to your Roth IRA.

RIGHT TO REVOKE

You may revoke your Roth IRA by mailing or delivering to NWL a written notice of revocation at any time during the seven-day period following (1) the establishment of your Roth IRA or (2) the date you receive an amendment that materially changes the information in this Disclosure or in your Roth IRA contract if such amendment is effective within the seven-day period following the establishment of your Roth IRA. If your written notice is mailed, it will be considered mailed on the date of the postmark (or, if sent by certified or registered mail, on the date of certification or registration), but only if:

(1) It was enclosed in an envelope or other appropriate wrapper; (3) It was deposited in the United States mail; and (2) It was sent with first class postage prepaid; (4) It was addressed to: Policy Owner Services

National Western Life Insurance Company

850 E. Anderson Lane, Austin, Texas 78752-1602

Upon NWL’s receipt of timely notice of revocation, you are entitled to a full refund of the contributions made to your Roth IRA. The amount returned to you will not be adjusted for any expenses, commissions, fluctuations in market value or other charges. You may call NWL’s Policy Owner Services at (800) 922-9422 if you have any questions regarding revocation of your Roth IRA.

ELIGIBILITY

You may contribute to a Roth IRA for any taxable year during which you receive earned income. For any taxable year during which your spouse does not receive earned income, you (if you have earned income) may also contribute to a separate "spousal" Roth IRA established for your spouse’s benefit.

ROTH IRA REQUIREMENTS

The annuity contract used to fund your Roth IRA meets the following requirements specified in the contract and/or Sections 408A(a) and 408(b) of the Internal Revenue Code:

(1) The contract cannot be transferable by you (except to a former spouse under a divorce decree); (2) The contract cannot be used as security for a loan;

(3) The premiums are not fixed;

(4) The annual premium paid under the contract cannot exceed the maximum contribution amounts detailed herein;

(5) Any refund of premiums will be applied before the close of the next calendar year toward the payment of future premiums or the purchase of additional benefits; and

(6) Your entire interest must be nonforfeitable.

ROTH IRA CONTRIBUTIONS

You may continue to fund a Roth IRA as long as you have earned income and your Modified Adjusted Gross Income (MAGI) does not exceed the limits discussed below.

Maximum Contributions: The total amount you may contribute to your Roth IRA cannot exceed the lesser of 100 percent of your earned income or $3,000 for years 2002-2004, $4,000 for years 2005-2007, and $5,000 for 2008, with the possibility of cost of living adjustments in years 2009 and beyond. If you also maintain a Traditional IRA (an IRA subject to Internal Revenue Code Sections 408(a) or 408(b)) the maximum contribution to your Roth IRA is reduced by any contributions to your Traditional IRA. Your annual contribution to your Roth IRAs and Traditional IRAs may not exceed the lesser of the applicable limit mentioned above or 100 percent of your earned income.

Limitations on Contributions: Unmarried individuals with Modified Adjusted Gross Income (MAGI) exceeding $110,000 may not fund a Roth IRA. Married individuals filing their taxes jointly with MAGI exceeding $160,000 may not fund a Roth IRA. Married individuals filing separately with MAGI exceeding $10,000 may not fund a Roth IRA.

If you are unmarried with MAGI between $95,000 and $110,000 your maximum Roth IRA contribution, subject to the yearly maximums stated above, is determined as follows: (1) Subtract your MAGI from $110,000; (2) Divide this amount by $15,000; and (3) Multiply this amount by the maximum allowable contribution applicable for that year including catch-up contributions if applicable.

Group Policy Form No. 01-1114-98, Group Certificate 01-1114CA-98, and variations thereof

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If you are married filing jointly with MAGI between $150,000 and $160,000 your maximum Roth IRA contribution, subject to the yearly maximum stated above, is determined as follows: (1) Subtract your MAGI from $160,000; (2) Divide this amount by $10,000; and (3) Multiply this amount by the maximum allowable contribution applicable for that year including catch-up contributions if applicable. After 2006, the MAGI dollar limits described above may be adjusted in $1,000 increments for changes in the cost of living.

Catch-up Contributions: If you are 50 or older at the close of the tax year, you may make additional contributions to your Roth IRA of $500 for years 2002-2005 and $1,000 for years 2006 and beyond.

Limited Make-up Contributions: If (1) you participated in a 401(k) plan with an employer stock matching contribution of at least 50% of your contributions; (2) in an earlier tax year that employer became bankrupt and the employer or another person was subject to indictment or conviction resulting from business transactions relating to the bankruptcy; and (3) you participated in the employer’s 401(k) plan six months prior to the employer’s bankruptcy filing, then instead of making Catch-up Contributions you may make additional contributions to your Roth IRA of up to $3,000 for years after 2006 and before 2010. Qualified Reservist Repayment Contribution: You may contribute to your Roth IRA an amount equal to any Qualified Reservist Distribution you previously received. The repayment must be completed within two years after the end of your active-duty period or by August 17, 2008, if later. A Qualified Reservist Distribution is a distribution received after September 11, 2001 from your IRA or of amounts attributable to your 401(k) or 403(b) contributions if you are a reservist who is called or ordered to active duty between September 11, 2001 and December 31, 2007 for an indefinite period or a period in excess of 179 days.

TAX STATUS

Contributions: No deduction is allowed for contributions, transfers or rollovers to a Roth IRA. You may be eligible to receive a tax credit of up to $1,000 per year for your contributions to your Roth IRA. Please consult your tax or legal advisor to determine your eligibility for this tax credit.

Interest Earnings: Interest earnings credited to your Roth IRA are not taxable to you currently as income. As discussed below, the taxation of interest earnings when distributed depends on whether or not the distribution is a qualified distribution. If your withdrawal is attributed to funds converted from a Traditional IRA, taxation may be accelerated.

Required Minimum Distributions: You are not required to take distributions from your Roth IRA when you reach age 70 ½. However, if you die prior to beginning distributions, your entire benefit must be completed by the end of the calendar year containing the fifth anniversary of your death unless distribution of your benefit is made over the life expectancy of your beneficiary and begins by the end of the calendar year following the calendar year of your death (or, if later and if your designated beneficiary is your spouse, by the end of the calendar year in which you would have attained age 70½).

TIMING OF CONTRIBUTIONS

You may make contributions to your Roth IRA for a given year at any time up to the due date of your federal tax return for such year (without regard to any extensions). In the case of a new Roth IRA, it is not necessary that the plan be established prior to the end of the year for which the initial contribution is made. It is necessary only that the plan was established and the initial contribution made on or before the due date of your federal tax return for that year.

ROLLOVER AND CONVERSION CONTRIBUTIONS

Your Roth IRA may be (1) rolled over to another of your Roth IRAs, (2) receive rollover contributions from another of your Roth IRAs or, after 2005, from your Designated Roth Account under a 401(k) or 403(b) plan, (3) or may receive conversion contributions provided all applicable rollover or conversion rules are followed. A rollover is a tax-free movement of funds to your Roth IRA from another of your Roth IRAs or Designated Roth Accounts. A conversion is movement of Traditional IRA or, after 2007, other Eligible Retirement Plan funds to a Roth IRA and is generally a taxable event. Below is a brief description of the types of rollovers and conversions permitted. Rollover and conversion transactions are complex and technical. Please consult your tax or legal advisor with any questions you may have regarding a rollover or conversion.

Roth IRA to Roth IRA: Funds from your Roth IRA may be rolled over to another of your Roth IRAs if the requirements of IRC Section 408(d)(3) are met. A proper rollover requires that (1) all or part of the distribution is rolled over generally not more than 60 days after the distribution is received; (2) you have not completed another Roth IRA to Roth IRA rollover from the distributing Roth IRA during the preceding 12 months; and (3) you have not rolled over the same funds in the previous 12 months. Roth IRA assets may not be rolled over to another type of IRA (e.g., Traditional IRAs, SIMPLE IRAs, etc.). Designated Roth Account to Roth IRA: After 2005 an “eligible rollover distribution” from your Designated Roth Account under a 401(k) plan or 403(b) annuity may be rolled over to your Roth IRA within 60 days after the distribution is received. In general, an eligible rollover distribution is a distribution of all or any portion of your Designated Roth Account other than a required minimum distribution, a hardship distribution, or a distribution made in installments for a period of ten or more years or for your life or life expectancy (or the joint lives or life expectancies of you and your beneficiary).

Traditional IRA or Eligible Retirement Plan to Roth IRA: You may convert all or a portion of your Traditional IRA or, after 2007, Eligible Retirement Plan (other than a Designated Roth Account) to your Roth IRA. Prior to 2010, you may not make such a conversion if your MAGI exceeds $100,000 or you are married filing separate tax returns. The amount of a conversion from your Traditional IRA or Eligible Retirement Plan (other than a Designated Roth Account) will be treated as a distribution for income tax purposes and is includible in your income (excluding nondeductible contributions). The 10 percent early distribution penalty will not apply to conversions of funds from a Traditional IRA or Eligible Retirement Plan (other than a Designated Roth Account) to a Roth IRA. An Eligible Retirement Plan includes a qualified retirement or annuity plan, an eligible 457(b) plan, or a 403(b) annuity.

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EXCESS CONTRIBUTIONS

An excise tax of 6 percent is imposed on excess contributions to your Roth IRA. This tax applies each year in which excess contributions remain in your Roth IRA. Excess contributions are those contributions that exceed your maximum contribution amount as previously discussed in this Disclosure, excluding rollover and direct transfer amounts. The excise tax on excess contributions may also apply if contributions to Traditional IRAs have been made and the total of all contributions excluding rollover and direct transfer amounts, exceed your maximum contribution amount as previously discussed in this Disclosure. It is solely your responsibility to make sure the proper amount was contributed and to make timely requests for the return of any excess contributions.

DISTRIBUTIONS

Qualified Distributions: Qualified distributions from your Roth IRA are not included in your gross income for tax purposes. A qualified distribution is one made after the five-year period beginning with the first year in which you made a contribution to your Roth IRA and is made because of one of the following occurrences:

(1) You reach age 59 ½; (2) You become disabled;

(3) You purchase your first home (subject to a $10,000 limit); or (4) You die.

Nonqualified Distributions: If you do not meet the requirements listed above to take a qualified distribution, funds withdrawn from your Roth IRA will be included in your gross income for tax purposes. If you are under age 59 ½ the amount of the distribution may also be subject to early withdrawal penalties. However, when nonqualified distributions are taken from your Roth IRA they are generally not taxable until the distributions exceed the amount of your annual contributions and your conversion contributions. These rules are technical and complex. Please consult your tax or legal advisor with any questions you may have.

Effect of Your Death on Distributions: If you die before your entire interest is distributed, the remaining portion will be distributed in accordance with the settlement option in effect at the time you die. If you die before distributions commence, your entire interest must be distributed in accordance with the provisions outlined in your Roth IRA Endorsement Form made a part of your annuity contract, subject to the required minimum distribution rule described above.

PROHIBITED TRANSACTIONS

If you should borrow money from or pledge your Roth IRA as security for a loan, then your Roth IRA will lose its tax exempt status retroactively to the first day of the taxable year in which the borrowing or transaction occurred, and you must include in your gross income for that year the earnings as of the first day of your tax year. Furthermore, if by the date of the borrowing or pledging, you had not yet attained age 59 ½, become disabled, or satisfied another exception, the 10% excise tax on premature distributions will apply. In addition, if you engage in any transaction prohibited under Section 4975(c) of the Internal Revenue Code, a 15% excise tax will be imposed.

INTERNAL REVENUE SERVICE APPROVAL

The contract used to fund your Roth IRA has not yet been approved for use as a Roth IRA contract by the Internal Revenue Service. The Internal Revenue Service approval is a determination only as to the form of the contract, and does not represent a determination of the merits of such contract.

RETURN FOR EXCISE TAXES

If you owe an excise tax for a year due to an excess contribution, premature distribution, or failure to take a required minimum distribution, you must file IRS Form 5329 with the IRS for that year.

ADDITIONAL INFORMATION AVAILABLE

Additional information regarding Roth IRAs can be obtained from any district office of the Internal Revenue Service. See also IRS Publication 590, Individual Retirement Arrangements (IRAs), available from the IRS by calling 1-800-829-3676, or on the Internet at http://www.irs.gov/.

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PROJECTED FINANCIAL RESULTS

The table on this page illustrates the accumulation of cash values in a Roth IRA funded with an annuity contract under specified assumptions with respect to the amount of contributions, timing of contributions and the rates at which interest is to be credited. The accumulated value of your Roth IRA at any time may exceed or fall short of the value shown in the appropriate table if there is any deviation from these assumptions.

Due to the volatility of current interest rates, any projection of the growth values of this annuity based on non-guaranteed interest rates cannot reasonably be made. Therefore, no projection based on current non-guaranteed rates is provided in this disclosure.

ROTH INDIVIDUAL RETIREMENT ANNUITY (IRA)

Group Policy Form 01-1114-98, Group Certificate 01-1114CA-98 and variations thereof

Accumulation of Values

Based on initial premium of $1,000 Based on annual premium of $1,000

Please note: Minimum initial premium $5,000 Please note: Minimum additional premiums $50

End of Accumulation Cash End of Accumulation Cash End of Accumulation Cash End of Accumulation Cash

Year Account1 Value2 Year Account1 Value2 Year Account1 Value2 Year Account1 Value2

1 1,107 830 36 2,627 2,627 1 1,107 830 36 59,386 59,386

2 1,135 851 37 2,693 2,693 2 2,211 1,820 37 61,896 61,896

3 1,163 872 38 2,760 2,760 3 3,342 2,834 38 64,468 64,468

4 1,192 894 39 2,829 2,829 4 4,502 3,873 39 67,105 67,105

5 1,222 916 40 2,900 2,900 5 5,691 4,939 40 69,807 69,807

6 1,252 939 41 2,972 2,972 6 6,858 5,985 41 72,578 72,578

7 1,284 995 42 3,047 3,047 7 8,055 7,089 42 75,417 75,417

8 1,316 1,053 43 3,123 3,123 8 9,281 8,221 43 78,328 78,328

9 1,349 1,113 44 3,201 3,201 9 10,538 9,383 44 81,311 81,311

10 1,382 1,175 45 3,281 3,281 10 11,827 10,575 45 84,368 84,368

11 1,417 1,240 46 3,363 3,363 11 13,147 11,797 46 87,503 87,503

12 1,452 1,307 47 3,447 3,447 12 14,501 13,051 47 90,715 90,715

13 1,489 1,377 48 3,533 3,533 13 15,889 14,697 48 94,008 94,008

14 1,526 1,450 49 3,622 3,622 14 17,311 16,445 49 97,383 97,383

15 1,564 1,525 50 3,712 3,712 15 18,769 18,299 50 100,843 100,843

16 1,603 1,603 51 3,805 3,805 16 20,263 20,263 51 104,389 104,389

17 1,643 1,643 52 3,900 3,900 17 21,794 21,794 52 108,024 108,024

18 1,684 1,684 53 3,998 3,998 18 23,364 23,364 53 111,749 111,749

19 1,727 1,727 54 4,097 4,097 19 24,973 24,973 54 115,568 115,568

20 1,770 1,770 55 4,200 4,200 20 26,623 26,623 55 119,482 119,482

21 1,814 1,814 56 4,305 4,305 21 28,313 28,313 56 123,494 123,494

22 1,859 1,859 57 4,412 4,412 22 30,046 30,046 57 127,607 127,607

23 1,906 1,906 58 4,523 4,523 23 31,822 31,822 58 131,822 131,822

24 1,953 1,953 59 4,636 4,636 24 33,643 33,643 59 136,142 136,142

25 2,002 2,002 60 4,752 4,752 25 35,509 35,509 60 140,571 140,571

26 2,052 2,052 61 4,871 4,871 26 37,421 37,421 61 145,110 145,110

27 2,104 2,104 62 4,992 4,992 27 39,382 39,382 62 149,763 149,763

28 2,156 2,156 63 5,117 5,117 28 41,392 41,392 63 154,532 154,532

29 2,210 2,210 64 5,245 5,245 29 43,451 43,451 64 159,420 159,420

30 2,265 2,265 65 5,376 5,376 30 45,563 45,563 65 164,431 164,431

31 2,322 2,322 66 5,511 5,511 31 47,727 47,727 66 169,567 169,567

32 2,380 2,380 67 5,648 5,648 32 49,945 49,945 67 174,831 174,831

33 2,440 2,440 68 5,790 5,790 33 52,218 52,218 68 180,227 180,227

34 2,501 2,501 69 5,934 5,934 34 54,549 54,549 69 185,757 185,757

35 2,563 2,563 70 6,083 6,083 35 56,938 56,938 70 191,426 191,426

1 The Accumulation Account above is calculated using 108% of premiums received in the first Certificate Year, 105% of any renewal premiums received in

years 2 - 5, and 100% of any renewal premiums received thereafter, accumulated at the minimum guaranteed interest rate of 2.50%. Your certificate may have a higher minimum guaranteed interest rate. See page 3 of your certificate. The chart above assumes no withdrawals and no premium taxes. The minimum guaranteed interest rate is guaranteed for the life of the contract.

2 The Cash Value above is calculated using 108% of premiums received in the first Certificate Year, 105% of any renewal premiums received in years 2 - 5,

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The Accumulation Account is 108% of premiums received in the first Certificate Year, 105% of premiums received in years 2 - 5, plus 100% of premiums received thereafter, less any Federal, State or Municipal taxes, or any fees or assessments required or authorized by law, accumulated with interest to the date of withdrawal. The Company reserves the right to credit interest at a different rate to any Accumulation Account less than $10,000, but not less than the minimum guaranteed interest rate. Interest is credited daily and compounded annually. The Company may, at their option, credit interest at a higher rate. The Cash Value is the Accumulation Account multiplied by the Market Value Adjustment factor, less applicable withdrawal charges The Accumulation Account multiplied by the Market Value Adjustment factor will never be less than 100% of premiums paid, less any partial withdrawals, accumulated at 3.00% interest.

For an explanation of the Market Value Adjustment factor, please see the Market Value Adjustment section below or reference your certificate. DISCLOSURE OF CHARGES THAT MAY BE MADE IN CONNECTION WITH THE PURCHASE OR SURRENDER OF THIS FLEXIBLE PREMIUM ANNUITY CONTRACT:

SALES CHARGES - NONE (The agent's commission will not be deducted from any contribution made to this contract.)

WITHDRAWAL CHARGES - You may withdraw all or part of the Cash Value at any time before the Annuity Date. The amount withdrawn must be at least $500.00 or the Accumulation Account, if less. Each Certificate Year, after the first, you may make one penalty-free withdrawal of up to 10% of the value of the Accumulation Account. Such partial withdrawal will be made without a withdrawal charge. After the first Certificate Year, in lieu of the penalty-free withdrawal option, you may elect to make withdrawals of interest earnings without withdrawal charges for the year in which the request is made and such withdrawals for each Certificate Year thereafter without withdrawal charges subject to the conditions outlined in your certificate.

We treat any penalty-free withdrawals you take within the prior 12 months from the date of a request for full withdrawal of Cash Value as having been made in anticipation of the full withdrawal of Cash Value. Therefore, a full withdrawal charge is made on that amount at the time of the full withdrawal of Cash Value.

The withdrawal charge rates are shown below. Schedule A rates apply to the portion of the Accumulation Account for premiums received in the first Certificate Year and interest credited for such premiums. Schedule B rates apply to the portion of the Accumulation Account for premiums received after the first Certificate Year and interest credited for such premiums.

WITHDRAWAL CHARGE RATES

CERTIFICATE SCHEDULE SCHEDULE

YEAR A B

1 through 6 25.00% 10.00%

7 22.50% 10.00%

8 20.00% 10.00%

9 17.50% 10.00%

10 15.00% 10.00%

11 12.50% 10.00%

12 10.00% 10.00%

13 7.50% 7.50%

14 5.00% 5.00%

15 2.50% 2.50%

Thereafter 0.00% 0.00%

MARKET VALUE ADJUSTMENT - The amount payable for a partial withdrawal or a full withdrawal of Cash Value may be adjusted up or down by applying a Market Value Adjustment. The Market Value Adjustment factor applicable to the Accumulation Account or a partial withdrawal amount is: (1 + (A - B) * N / 12) where:

A = The Market Value interest rate at the time of issue of the certificate;

B = The Market Value interest rate currently available for new certificates under the policy at the time of full or partial withdrawal, plus one half of one percent.

N = The number of complete months from the date of full or partial withdrawal to the end of the Market Value Adjustment period. After the Market Value Adjustment period, the value of N is equal to 0.

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