Yes, you can have yearly backups as well. Extended retention rules apply to longer term retention, such as weekly full backups, monthly full backups, and yearly full backups. refer http://www.netapp.com/us/media/tr-3920.pdf
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Just to have the actual information searchable from the forum:
Apart from SnapCreator Framework, SnapDrive, SnapManager and SnapCenter do not control SnapVault destination retention.
SnapVault updates triggered by Software use labels, and the destination SVM's snapmirror policy or type mirror-vault or vault is the one that determines each label's number of snapshots to retain (a retention by age is not possible).
Retention is applied on update by ONTAP, and any not yet transferred snapshots with that label will be transferred if they are newer then the most recent snapshot.
XDPDefault is essentially an example, but you can create multiple (mirror-)vault policies with different retention settings for different relationships.