As filed with the Securities and Exchange Commission on February 5, 1999
Registration Nos. 333-9745
No. 811-07753
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------------------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 o
Pre-Effective Amendment No.
Post-Effective Amendment No. 5
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940o
Amendment No. 6
SEPARATE ACCOUNT VA-6
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
(Name of Depositor)
Transamerica Square, 401 North Tryon Street,
Charlotte, North Carolina 28202
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (704) 330-5600
Name and Address of Agent for Service: Copy to:
JAMES W. DEDERER, Esq. FREDERICK R. BELLAMY, Esq.
General Counsel and Secretary Sutherland, Asbill & Brennan LLP
Transamerica Life Insurance 1275 Pennsylvania Avenue, N.W.
and Annuity Company Washington, D.C. 20004-2415
1150 South Olive Street
Los Angeles, California 90015-2211
Approximate date of proposed public
offering: As soon as practicable after effectiveness of
the Registration Statement.
Title of securities being registered:
Flexible premium deferred variable annuity
contracts.
It is proposed that this filing will become effective:
___immediately upon filing pursuant to paragraph (b)
___on _______ pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
_X__ on May 1, 1999 pursuant to paragraph (a)(1)
If appropriate, check the following box:
o this Post-Effective Amendment designates a new
effective date for a previously filed Post-Effective Amendment.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C> <C>
1. Cover Page.............................................. Cover Page
2. Definitions............................................. Definitions
3. Synopsis................................................ Summary of this Prospectus; Variable Account Fee Table
4. Condensed Financial Information......................... Condensed Financial Information
5. General
(a) Depositor.......................................... Transamerica and the Separate Account
(b) Registrant......................................... Transamerica and the Separate Account
(c) Portfolio Company.................................. The Funds
(d) Fund Prospectus.................................... The Funds
(e) Voting Rights...................................... Voting Rights
(f) Administrator....................................... Charges under the Contracts
6. Deductions and Expenses
(a) General............................................ Charges under the Contracts
(b) Sales Load %....................................... Charges under the Contracts
(c) Special Purchase Plan.............................. Not Applicable
(d) Commissions........................................ Underwriter
(e) Fund Expenses...................................... Charges under the Contracts
(f) Operating Expenses................................. Fee Table
7. Contracts
(a) Persons with Rights................................ Description of the Contracts; Surrender of a Contract;
Death Benefits; Voting Rights; Ownership
(b) (i) Allocation of Purchase Payments
Payments..................................... Description of the Contracts
(ii) Transfers.................................... Transfers
(iii) Exchanges.................................... Federal Tax Matters
(c) Changes............................................ The Funds; Voting Rights
(d) Inquiries.......................................... Voting Rights
8. Annuity Period.......................................... Settlement Payments
9. Death Benefit........................................... Death Benefits
10. Purchase and Contract Value
(a) Purchases.......................................... Description of the Contracts
(b) Valuation.......................................... Description of the Contracts
(c) Daily Calculation.................................. Description of the Contracts
(d) Underwriter........................................ Underwriter
11. Redemptions
(a) By Contract Owners................................. Surrender of a Contract
By Annuitant....................................... Not Applicable
(b) Texas ORP.......................................... Not Applicable
(c) Check Delay........................................ Surrender of a Contract
(d) Lapse.............................................. Not Applicable
(e) Free Look.......................................... Right to Cancel
12. Taxes................................Federal Tax Matters
13. Legal Proceedings....................................... Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information.................................. Table of Contents of the Statement of Additional
Information
PART B
Item of Form N-4 Statement of Additional Information Caption
15. Cover Page.............................................. Cover Page
16. Table of Contents....................................... Table of Contents
17. General Information
and History............................................. General Information and History
18. Services
(a) Fees and Expenses
of Registrant...................................... (Prospectus) Variable Account Fee Table; (Prospectus)
The Funds
(b) Management Contracts............................... Not Applicable
(c) Custodian.......................................... Safekeeping of Separate Account Assets; Records and
Reports
Independent Auditors ............................. Accountants
(d) Assets of Registrant............................... Not Applicable
(e) Affiliated Person.................................. Not Applicable
(f) Principal Underwriter.............................. The Underwriter
19. Purchase of Securities
Being Offered........................................... (Prospectus) Description of the Contracts
Offering Sales Load..................................... Charges under the Contracts
20. Underwriters............................................ The Underwriter
21. Calculation of Performance
Data ...........Calculation of Yields and Total Returns
22. Annuity Payments........................................ (Prospectus) Settlement Option Payments
23. Financial Statements.................................... Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits
(a) Financial Statements............................... Financial Statements
(b) Exhibits........................................... Exhibits
25. Directors and Officers of
the Depositor........................................... Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant ....................... Persons Controlled By or Under Common Control with the
Depositor or Registrant
27. Number of Contract Owners............................... Number of Contract Owners
28. Indemnification......................................... Indemnification
29. Principal Underwriters.................................. Principal Underwriter
30. Location of Accounts
and Records............................................. Location of Accounts and Records
31. Management Services..................................... Management Services
32. Undertakings............................................ Undertakings
Signature Page.......................................... Signature Page
</TABLE>
<PAGE>
PROFILE
of the
TRANSAMERICA CATALYSTsm VARIABLE ANNUITY
Issued by
Transamerica Life Insurance and Annuity Company
May 1, 1998
This Profile is a summary of some of the more important points that you
should know and consider before purchasing the contract. The contract
is more fully described in the full prospectus that accompanies this
Profile. Please read the prospectus carefully.
1. The Contract. The Transamerica Catalystsm Variable Annuity is a contract
between you and Transamerica Life Insurance and Annuity Company that allows you
to invest your purchase payments in your choice of 17 mutual fund portfolios
("portfolios") in the Variable Account and two general account options. The
portfolios are professionally managed and you can gain or lose money invested in
a portfolio, but you could also earn more than investing in the general account
options. Transamerica guarantees the safety of money invested in the general
account options. Certain portfolios and general account options may not be
available in all states.
The contract is a deferred annuity and it has two phases: the accumulation
phase, and the annuitization phase. During the accumulation phase, you can make
additional payments on your contract, transfer money among the investment
options, and withdraw some or all of your investment. During this phase, your
earnings accumulate on a tax-deferred basis for individuals, but some or all of
any money you withdraw may be taxable. Tax deferral is not available for
non-qualified contracts owned by corporations and some trusts.
During the annuity phase, Transamerica will make periodic payments to you. The
dollar amount of the payments may depend on the amount of money invested and
earned during the accumulation phase and on other factors, such as the
annuitant's age and sex.
2. Annuity Payments. You can generally decide when to end the accumulation phase
and begin receiving annuity payments from Transamerica. You may choose fixed
payments, where the dollar amount of each payment generally remains the same, or
variable payments, where the dollar amount of each payment may increase or
decrease based on the investment performance of the portfolios you select. You
can choose among payments for the lifetime of an individual, or payments for the
longer of one lifetime or a guaranteed period of 10, 15, or 20 years, or
payments for one lifetime and the lifetime of another individual.
3. Purchasing a Contract. Generally you must invest at least $5,000 ($2,000 for
IRAs) to purchase a contract. You can make additional payments of at least
$1,000 each ($100 each if made under an automatic payment plan deducted from
your bank account). When you make a payment, Transamerica currently adds a
credit of 3.25% of the payment to your account value; Transamerica may vary this
percentage. You may cancel your contract during the free look period.
The Transamerica Catalyst Variable Annuity is designed for long-term
tax-deferred accumulation of assets, generally for retirement and other
long-term goals. Individuals in high tax brackets get the most benefit from the
tax deferral feature. You should not invest in the contract for short-term
purposes or if you cannot take the risk of losing some of your investment.
4. Investment Options. VARIABLE ACCOUNT: You can invest in any of the following
17 portfolios:
<TABLE>
<CAPTION>
----------------------------------------------- -------------------------------------------------
<S> <C> <C>
Alger American Income & Growth MFS VIT Research
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Alliance VPF Growth & Income Morgan Stanley UF Fixed Income
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Alliance VPF Premier Growth Morgan Stanley UF High Yield
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Dreyfus VIF Capital Appreciation Morgan Stanley UF International Magnum
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Dreyfus VIF Small Cap OCC Accumulation Trust Managed
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Janus Aspen Balanced OCC Accumulation Trust Small Cap
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Janus Aspen Worldwide Growth Transamerica VIF Growth
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
MFS VIT Emerging Growth Transamerica VIF Money Market
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
MFS VIT Growth with Income
----------------------------------------------- -------------------------------------------------
</TABLE>
You can earn or lose money in any of these portfolios. These portfolios are
described in their own prospectuses. All portfolios may not be available in all
states.
GENERAL ACCOUNT: You can also allocate payments to the general account options,
where Transamerica guarantees the principal invested plus an annual interest
rate of at least 3%. The general account options include a fixed account and
guarantee period options.
5. Expenses. Transamerica makes certain charges and deductions in order to
provide the benefits and features available under the contract:
If you withdraw your money within seven years of investing it, there
may be a withdrawal charge of up to 8% of the amount invested.
Transamerica deducts an annual account fee of no more than $30 (the
fee is waived for account values over $50,000).
Transamerica deducts insurance and administrative charges of 1.35% per
year from your average daily value in the variable account.
If you elect the Guaranteed Minimum Death Benefit Rider, Transamerica
will deduct a monthly fee equal to 1/12 of 0.20% of the account value.
If you elect the Living Benefits Rider (or Waiver of CDSL Rider),
Transamerica will deduct a monthly fee equal to 1/12 of 0.05% of the
account value.
The first 18 transfers each year are free (then Transamerica will
deduct a $10 fee for each additional transfer).
Advisory fees are also deducted by the portfolios' managers, and the
portfolios pay other expenses which, in total, range from 0.60% to
1.15% of the amounts in the portfolios.
There might be premium tax charges ranging from 0 to 5% of your
investment and/or amounts you use to purchase annuity benefits
(depending on your state's law).
The following chart shows these charges (not including the optional Living
Benefits Rider fee, any transfer fees or premium taxes). The $30 annual account
fee is included in the first column as a charge of 0.075%. The third column is
the sum of the first two columns. The examples in the last two columns show the
total amounts you would be charged if you invested $1,000, a 3.25% credit was
added to the investment and it grew 5% each year, and you withdrew your entire
investment after one year or 10 years. Year one includes the withdrawal charge
and year 10 does not.
<TABLE>
<CAPTION>
--------------------------------------------------------
Total Total
Annual Annual Total Expenses Expenses
Insurance Portfolio Annual at End of at End of
Charges Charges Charges 1 Year 10 Years
--------------------------------------------------------
- -----------------------------------------
<S> <C> <C> <C> <C> <C>
Alger American Income & Growth 1.425% 0.74% 2.165 $94.67 $257.93
Alliance VPF Growth & Income 1.425% 0.72% 2.145 $94.44 $252.83
Alliance VPF Premier Growth 1.425% 0.95% 2.375 $96.84 $279.94
Dreyfus VIF Capital Appreciation Growth 1.425% 0.80% 2.225 $95.27 $262.26
Dreyfus VIF Small Cap 1.425% 0.78% 2.205 $95.07 $259.90
Janus Aspen Balanced 1.425% 0.83% 2.255 $95.59 $265.79
Janus Aspen Worldwide Growth 1.425% 0.74% 2.165 $94.65 $255.18
MFS Emerging Growth 1.425% 0.87% 2.295 $96.02 $271.61
MFS Growth & Income 1.425% 1.00% 2.425 $97.36 $285.10
MFS Research 1.425% 0.88 % 2.305 $96.12 $272.65
Morgan Stanley UF Fixed Income 1.425% 0.70% 2.125 $94.23 $250.47
Morgan Stanley UF High Yield 1.425% 0.80% 2.225 $95.27 $262.26
Morgan Stanley UF International Magnum 1.425% 1.15% 2.575 $98.94 $303.51
OCC Accumulation Trust Managed 1.425% 0.87% 2.295 $96.01 $270.51
OCC Accumulation Trust Small Cap 1.425% 0.97% 2.395 $97.05 $282.29
Transamerica VIF Growth 1.425% 0.85% 2.275 $95.81 $269.52
Transamerica VIF Money Market 1.425% 0.60% 2.025 $93.22 $242.97
- -------------------------------------------------------------------------------------------------
</TABLE>
The Annual Portfolio Charges above are for the year ended December 31, 1998 and
reflect any expense reimbursements or fee waivers. Expenses may be higher or
lower in the future. See the "Variable Account Fee Table" in the Transamerica
Catalyst Variable Annuity prospectus for more detailed information.
6. Federal Income Taxes. Individuals generally are not taxed on increases in the
contract value until a distribution occurs (e.g., a withdrawal or annuity
payment) or is deemed to occur (e.g., a pledge, loan, or assignment of the
contract). If you withdraw money, earnings come out first and are taxed.
Generally, some portion (sometimes all) of any distribution or deemed
distribution is taxable as ordinary income. In some cases, income taxes will be
withheld from distributions. If you are under age 59 1/2 when you withdraw
money, an additional 10% federal tax penalty may apply on the withdrawn
earnings. Certain owners of non-qualified contracts that are not individuals may
be currently taxed on increases in the contract value, whether distributed or
not. Qualified contracts are subject to special income tax rules depending on
the plan or arrangement.
7. Access to Your Money. You can generally take money out at any time during the
accumulation phase. Transamerica may assess a withdrawal charge of up to 8% of a
purchase payment, but no withdrawal charge will be assessed on money that has
been in the contract for seven years. In certain cases, if you elect the Living
Benefits Rider when you purchase the contract, the withdrawal charge may be
waived if you are in a hospital or nursing home for a long period or, in some
states, if you are diagnosed with a terminal illness, or if you are receiving
medically required in-home care (if the withdrawal charge is waived, any credit
less than 12 months old will be forfeited). Subject to certain conditions, each
contract year you may withdraw up to 10% of purchase payments received less than
seven years ago, without incurring a withdrawal charge. Withdrawals from
qualified contracts may be subject to severe restrictions and, in certain
circumstances, prohibited.
You may have to pay income taxes on amounts you withdraw and there may also be a
10% tax penalty if you make withdrawals before you are 59 1/2 years old. If you
withdraw money from a guarantee period prematurely, you may forfeit some of the
interest that you earned, but you will always receive the principal you invested
plus 3% interest.
8. Past Investment Performance. The value of the money you allocate to the
portfolios will go up or down, depending on the investment performance of the
portfolios you select. The following chart shows the adjusted past investment
performance on a year-by-year basis for each portfolio. These figures have
already been reduced by the insurance charges, the account fee, the advisory fee
and all the expenses of the portfolios. These figures do not include the
withdrawal charge, the fee for the optional Living Benefits Rider, any transfer
fees or premium taxes, which would reduce performance if applied. The credit
Transamerica adds to the account value is not included in these figures.
Past performance is no guarantee of future performance or earnings.
<TABLE>
<CAPTION>
CALENDAR YEAR
----------------------------------------------------------------
SUB-ACCOUNT 1998 1997 1996 1995 1994
----------------------------------------------------------------
- -------------------------------------------
<S> <C> <C> <C> <C>
Alger American Income & Growth 36.16% 18.40% 35.18% -8.55%
Alliance VPF Growth & Income 28.25% 21.65% 35.31% -1.09%
Alliance VPF Premier Growth 33.43% 19.63% 43.41% -3.41%
Dreyfus VIF Capital Appreciation Growth 26.84% 22.76% 31.76% 1.52%
Dreyfus VIF Small Cap 17.21% 15.11% 29.06% 7.78%
Janus Aspen Balanced 21.21% 14.55% 22.93% -0.66%
Janus Aspen Worldwide Growth 21.63% 26.40% 25.28% -0.22%
MFS Emerging Growth 21.48% 15.49% N/A N/A
MFS Growth & Income 29.06% 21.67% N/A N/A
MFS Research 19.76% 20.50% N/A N/A
Morgan Stanley UF Fixed Income 8.40% N/A N/A N/A
Morgan Stanley UF High Yield 11.94% N/A N/A N/A
Morgan Stanley UF International Magnum 2.35% N/A N/A N/A
OCC Accumulation Trust Managed 21.18% 20.45% 43.39% 1.71%
OCC Accumulation Trust Small Cap 21.50% 16.88% 15.08% -1.43%
Transamerica VIF Growth 50.31% 26.60% 52.98% 7.68%
Transamerica VIF Money Market N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------
SUB-ACCOUNT 1993 1992 1991 1990 1989
----------------------------------------------------------------
- -------------------------------------------
Alger American Income & Growth 9.43% 7.12% 22.70% -1.39% 5.91%
Alliance VPF Growth & Income 10.24% 6.42% N/A N/A N/A
Alliance VPF Premier Growth 11.16% N/A N/A N/A N/A
Dreyfus VIF Capital Appreciation Growth N/A N/A N/A N/A N/A
Dreyfus VIF Small Cap 67.23% 70.60% 156.10% N/A N/A
Janus Aspen Balanced N/A N/A N/A N/A N/A
Janus Aspen Worldwide Growth N/A N/A N/A N/A N/A
MFS Emerging Growth N/A N/A N/A N/A N/A
MFS Growth & Income N/A N/A N/A N/A N/A
MFS Research N/A N/A N/A N/A N/A
Morgan Stanley UF Fixed Income N/A N/A N/A N/A N/A
Morgan Stanley UF High Yield N/A N/A N/A N/A N/A
Morgan Stanley UF International Magnum N/A N/A N/A N/A N/A
OCC Accumulation Trust Managed 9.29% 17.38% 43.71% -5.87% 31.08%
OCC Accumulation Trust Small Cap 18.20% 18.84% 46.61% -11.17% 16.36%
Transamerica VIF Growth 21.70% 13.55% 41.44% -12.60% 29.23%
Transamerica VIF Money Market N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------
</TABLE>
9. Death Benefit. If you die during the accumulation phase, a death benefit will
be paid to your beneficiary.
If you die before you turn 80 the death benefit will be the greater of: (1) the
contract's account value reduced by any credits less than 12 months old; or (2)
the sum of all purchase payments less withdrawals and applicable premium taxes.
If death occurs after your or your joint owner's 80th birthday, the death
benefit is equal to the contract's account value reduced by any credits less
than 12 months old.
5 If you elect the Guaranteed Minimum Death Benefit Rider the death benefit will
be as described below. If you die before the annuitization phase and before you
turn 85, the death benefit will be the greatest of three amounts: (1) the
account value; (2) the sum of all purchase payments less the proportion of
withdrawals taken and applicable premium tax charges; or (3) the highest account
value on any contract anniversary prior to the earlier of the owner's or joint
owner's 85th birthday, plus purchase payments made, less the proportion of
withdrawals taken and premium tax charges since that contract anniversary. If
death occurs after your or your joint owner's 85th birthday, the death benefit
will be the greater of two amounts: (1) the account value; or (2) the highest
account value on any contract anniversary prior to the earlier of the owner's or
joint owner's 85th birthday, plus purchase payments made, less the proportion of
withdrawals taken and premium tax charges since that contract anniversary.
10. Other Information. The Transamerica Catalyst Variable Annuity offers other
features you might be interested in. Some of these features are as follows:
Free Look. After you get your contract, you have 10 days to look it over and
decide if it is really right for you (this period may be longer in certain
states). If you decide not to keep the contract, you can cancel it during this
period by delivering a written notice of cancellation and returning the contract
to the Service Center at the address listed in item 11 below. Unless otherwise
required by law, Transamerica will refund the purchase payments allocated to any
general account option (less any withdrawals) plus the value in the Variable
Account as of the date the written notice and the contract are received by
Service Center.
Telephone Transfers. You can generally arrange to transfer money between the
investments in your contract by telephone.
Dollar Cost Averaging. You can instruct Transamerica to automatically transfer
money from either the money market sub-account or the fixed account to any of
the other variable sub-accounts each month. This is intended to give you a lower
average cost per share or unit than a single one time investment.
Automatic Rebalancing Option. The performance of each sub-account may cause the
allocation of value among the sub-accounts to change. You may instruct
Transamerica to periodically automatically rebalance the amounts in the
sub-accounts by reallocating amounts among them.
Systematic Withdrawal Option. You can arrange to have Transamerica send you
money automatically each month out of your contract, during the accumulation
phase. There are limits on the amounts, and the payments may be taxable, and,
prior to age 59 1/2, subject to the penalty tax. If the total withdrawals
(including systematic withdrawals) made in a contract year exceed the allowed
amount to be withdrawn without a charge for that year, any applicable withdrawal
charge will then apply.
Automatic Payout Option. For qualified contracts, certain pension and retirement
plans require that certain amounts be distributed from the plan at certain ages.
You can arrange to have such amounts distributed automatically during the
accumulation phase.
These features may not be available in all states and may not be
suitable for your particular situation.
11. Inquiries. If you need further information or have any questions about the
contract, please write or call:
Transamerica Annuity Service Center
401 North Tryon Street, Suite 700
Charlotte, North Carolina 28202
800-420-7749
<PAGE>
PROSPECTUS FOR THE
TRANSAMERICA SERIESsm CATALYST VARIABLE ANNUITY
Annuity le Premium Deferred Variable
Issued By
Transamerica Life Insurance
and
Annuity Company
Offering 17 Sub-Accounts within the Variable Account
(Separate Account VA-6)
In Addition to:
A Fixed Account
&
A Guarantee Period Account
Variable Sub-Account Portfolio Options
This prospectus contains Alger American Income and Growth
information you should Alliance VPF Growth and Income
know before investing. Alliance VPF Premier Growth
Dreyfus VIF Capital Appreciation
Please keep this prospectus Dreyfus VIF Small Cap
for future reference. Janus Aspen Balanced
Janus Aspen Worldwide Growth
You can obtain more information MFS VIT Emerging Growth
about the contract by requesting
a copy of the Statement of
Additional Information ("SAI")
dated May 1, 1999. The SAI is
available free by writing to
Transamerica Life Insurance and
Annuity Company, Annuity Service
Center, 401 North Tryon Street,
Suite 700, Charlotte, north
Carolina, 28202 or by calling
800-420-7749. The current SAI
has been filed with the
Securities and Exchange
Commission and is incorporated
by reference into this
prospectus. The table of
contents of the SAI is included
at the end of this prospectus.
MFS VIT Growth with Income
MFS VIT Research
Morgan Stanley UF Fixed Income
Morgan Stanley High Yield
Morgan Stanley UF International Magnum
OCC Accumulation Trust Managed
OCC Accumulation Trust Small Cap
Transamerica VIF Growth Portfolio
Transamerica VIF Money Market
The SEC's web site is
http://www.sec.gov
Transamerica's web site is
http://www.transamerica.com
Neither the SEC nor any state securities commission has approved this investment
offering or determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
May 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
DEFINITIONS.................................................................................................3
SUMMARY.....................................................................................................5
CONDENSED FINANCIAL INFORMATION............................................................................17
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY AND THE VARIABLE ACCOUNT...................................18
Transamerica Life Insurance and Annuity Company...................................................18
18 Published Ratings
The Variable Account..............................................................................18
THE PORTFOLIOS.............................................................................................19
THE CONTRACT...............................................................................................24
PURCHASE PAYMENTS..........................................................................................25
Purchase Payments.................................................................................25
Allocation of Purchase Payments...................................................................25
Investment Option Limit...........................................................................26
How Credits Are Applied....................................................................................26
ACCOUNT VALUE..............................................................................................27
How Variable Accumulation Units Are Valued........................................................27
TRANSFERS..................................................................................................28
Before the Annuity Date...........................................................................28
28 Other Restrictions
Telephone Transfers...............................................................................29
Dollar Cost Averaging.............................................................................29
Eligibility Requirement for Dollar Cost Averaging ................................................29
Automatic Asset Rebalancing.......................................................................30
After the Annuity Date............................................................................30
CASH WITHDRAWALS...........................................................................................30
Systematic Withdrawal Option......................................................................31
Automatic Payment Option (APO)....................................................................32
DEATH BENEFIT..............................................................................................33
Payment of Death Benefit..........................................................................33
Designation of Beneficiaries......................................................................34
Death of Owner of Joint Owner Before Annuity Date.................................................34
If Annuitant Dies Before Annuity Date.............................................................36
Death After Annuity Date..........................................................................36
Survival Provision................................................................................36
CHARGES, FEES AND DEDUCTIONS...............................................................................36
Contingent Deferred Sales Load....................................................................36
Free Withdrawal - Allowed Amount..................................................................37
Free Withdrawal - Living Benefits Rider...........................................................37
Other Free Withdrawals............................................................................38
Administrative Charges............................................................................38
Mortality and Expense Risk Charge.................................................................38
Living Benefits Rider Fee.........................................................................39
Guaranteed Minimum Death Benefit Rider Fee .......................................................39
Premium Tax Charges...............................................................................39
Transfer Fee......................................................................................40
Option and Service Fees...........................................................................40
Taxes.............................................................................................40
Portfolio Expenses................................................................................40
Interest Adjustment...............................................................................40
Sales in Special Situations.......................................................................40
SETTLEMENT OPTION PAYMENTS.................................................................................41
Annuity Date......................................................................................41
Settlement Option Payments........................................................................41
Election of Settlement Option Forms and Payment Options...........................................41
Payment Options...................................................................................42
Fixed Payment Option..............................................................................42
Variable Payment Option...........................................................................42
Settlement Option Forms...........................................................................42
FEDERAL TAX MATTERS........................................................................................44
Introduction......................................................................................44
Purchase Payments.................................................................................44
Taxation of Annuities.............................................................................45
Qualified Contracts...............................................................................47
Taxation of Transamerica .........................................................................49
Tax Status of Contract............................................................................49
Possible Changes in Taxation......................................................................50
Other Tax Consequences............................................................................50
PERFORMANCE DATA...........................................................................................51
DISTRIBUTION OF THE CONTRACT...............................................................................52
PREPARING FOR YEAR 2000....................................................................................52
LEGAL PROCEEDINGS..........................................................................................53
LEGAL MATTERS..............................................................................................53
ACCOUNTANTS................................................................................................53
VOTING RIGHTS..............................................................................................53
AVAILABLE INFORMATION......................................................................................54
STATEMENT OF ADDITIONAL INFORMATIOIN - TABLE OF CONTENTS...................................................55
APPENDIX A - THE GENERAL ACCOUNT OPTIONS...................................................................56
Fixed Account ....................................................................................56
Guarantee Period Account .........................................................................57
APPENDIX B.................................................................................................60
Example of Variable Accumulation Unit Value Calculations..........................................60
Example of Variable Annuity Unit Value Calculations...............................................60
Example of Variable Annuity Payment Calculations..................................................60
APPENDIX C
Disclosure Statement for Individual Retirement Annuities..........................................61
</TABLE>
DEFINITIONS
Account Value: The sum of the variable accumulated value and the general account
options accumulated value.
Annuity Date: The date on which the annuitization phase of the contract begins.
Cash Surrender Value: The amount we will pay to the owner if the contract is
surrendered on or before the annuity date. The cash surrender value is equal to:
the account value; less any account fee, interest adjustment, contingent
deferred sales load, and premium tax charges.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued under it.
Contract Anniversary: The anniversary of the contract effective date each year.
Contract Effective Date: The effective date of the contract as shown on the
contract.
Contract Year: A 12-month period starting on the contract effective date and
ending with the day before the contract anniversary, and each 12-month period
thereafter.
Fixed Account: An account which credits a rate of interest for a period of at
least twelve months for each allocation or transfer.
General Account Options Accumulated Value: The total dollar value of all amounts
the owner allocates or transfers to any general account options; plus interest
credited; less any amounts withdrawn, applicable fees or premium tax charges, or
transfers out to the variable account prior to the annuity date.
General Account Options: The fixed account and the guarantee period account
offered by us to which the owner may allocate purchase payments and transfers.
Guaranteed Interest Rate: The annual effective rate of interest after daily
compounding credited to a guarantee period.
Guarantee Period: The number of years that a guaranteed rate of interest will be
credited to a guarantee period.
Guarantee Period Account: An account which credits a guaranteed rate of interest
for a specified guarantee period. There may be several guarantee periods, each
with a different guaranteed rate of interest, offered under the guarantee period
account.
Living Benefits Rider: Also called a "Waiver of CDSL" rider in some contracts,
it provides benefits described on page 37.
Guaranteed Minimum Death Benefit Rider: Also referred to as GMDB Rider, it must
be elected before the contract effective date and if cancelled cannot be
reinstated and provides for the benefits described on page 35 at the fee
described on page 11.
Portfolio: The investment portfolio underlying each variable sub-account in
which we will invest any amounts the owner allocates to
that variable sub-account.
Service Center: Transamerica's Annuity Service Center, at P.O. Box 31848,
Charlotte, North Carolina 28231-1848, telephone 800-258-4260.
Status (Qualified and Non-Qualified): The contract has a qualified status if it
is issued in connection with a retirement plan or program. Otherwise, the status
is non-qualified.
Valuation Day: Any day the New York Stock Exchange is open. To determine the
value of an asset on a day that is not a valuation day, we will use the value of
that asset as of the end of the next valuation day.
Valuation Period: The time interval between the closing (generally 4:00 p.m.
Eastern Time) of the New York Stock Exchange on
consecutive valuation days.
Variable Account: Separate Account VA-6, a separate account established and
maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 58-7-95 of the North Carolina Insurance Code.
Variable Accumulation Unit: A unit of measure used to determine the variable
accumulated value before the annuity date. The value of a variable accumulation
unit varies with each variable sub-account.
Variable Accumulated Value: The total dollar value of all variable accumulation
units under this contract prior to the annuity date.
Variable Sub-Account(s): One or more divisions of the variable account which
invests solely in shares of one of the underlying portfolios.
We: The company, Transamerica.
You: The owner.
SUMMARY
The Contract
The Transamerica Series sm Transamerica Catalyst sm Variable Annuity is a
flexible purchase payment deferred annuity. It is designed to aid your long-term
financial planning and retirement needs. The contract may be used in connection
with a retirement plan which qualifies as a retirement program under Sections
403(b), 408 or 408A of the Code, with various types of qualified pension and
profit sharing plans under Section 401 of the Code, or with non-qualified plans.
Some qualified contracts may not be available in all states or in all
situations. The contract is issued by Transamerica Life Insurance and Annuity
Company ("Transamerica"), an indirect wholly-owned subsidiary of Transamerica
Corporation. Its principal office is at 401 North Tryon Street, Charlotte, North
Carolina 28202.
This contract will be issued as a certificate under a group annuity contract in
some states and as an individual annuity contract in other states. The term
"contract" as used in this prospectus refers to either the individual annuity
contract or to a certificate issued under a group annuity contract. The term
"owner" refers to the owner(s) of the individual contract or the owner(s) of the
certificate, as appropriate.
Transamerica will establish and maintain an account for each contract. Each
owner will receive either an individual annuity contract, or a certificate
evidencing the owner's coverage under a group annuity contract. The contract
provides that the account value, after certain adjustments, will be applied to a
settlement option on a future date you select ("annuity date").
You may allocate all or portions of your purchase payments to one or more
variable sub-accounts or to the general account options. At the time of each
purchase payment we will add a credit to your account value in an amount equal
to a percentage of each purchase payment.
The account value prior to the annuity date, except for amounts in the general
account options, will vary depending on the investment experience of each of the
variable sub-accounts selected by the owner. All benefits and values provided
under the contract, when based on the investment experience of the variable
account, are variable and are not guaranteed as to dollar amount. Therefore,
prior to the annuity date the owner bears the entire investment risk under the
contract for amounts allocated to the variable account.
There is no guaranteed or minimum cash surrender value on amounts allocated to
the variable account, so the proceeds of a surrender could be less than the
amount invested.
The initial purchase payment for each contract must be at least $5,000 ($2,000
for contributory IRAs, SEP/IRAs and Roth IRAs). Generally each additional
purchase payment must be at least $1,000, unless an automatic purchase payment
plan is selected. See "Purchase Payments" page 26.
The Variable Account
The variable account is a separate account (designated Separate Account VA-6)
that is subdivided into variable sub-accounts. See "The Variable Account" page
19. Assets of each variable sub-account are invested in a specified mutual fund
portfolio ("portfolio").
The variable sub-accounts currently available for investment are:
Alger American Income & Growth MFS VIT Research
Alliance VPF Growth & Income ..Morgan Stanley UF Fixed Income
Alliance VPF Premier Growth ..Morgan Stanley UF High Yield
Dreyfus VIF Capital Appreciation Morgan Stanley UF International Magnum
Dreyfus VIF Small Cap ..OCC Accumulation Trust Managed
Janus Aspen Balanced ..OCC Accumulation Trust Small Cap
Janus Aspen Worldwide Growth Transamerica VIF Growth Portfolio
MFS VIT Emerging Growth Transamerica VIF Money Market
MFS VIT Growth with Income
The portfolios pay their investment advisers and administrators certain fees
charged against the assets of each portfolio. The variable accumulated value, if
any, of a contract and the amount of any variable settlement option payments
will vary to reflect the investment performance of the variable sub-accounts to
which amounts have been allocated. Additionally, applicable charges are
deducted. See "Charges, Fees and Deductions" page 36. For more information about
the portfolios, see "The Portfolios" page 20 and the accompanying portfolios'
prospectuses.
General Account Options
There are two types of general account options - the fixed account and the
guarantee period account. See "The General Account Options" in Appendix A.
The amounts in the fixed account will be credited interest at a rate of not less
than 3% annually. Transamerica may credit interest at a rate in excess of 3% at
its discretion for any class. Each interest rate will be guaranteed to be
credited for at least 12 months.
The other general account option, the guarantee period account, provides
specified rates of interest for specified terms, of currently, three, five and
seven years subject to interest adjustments on early withdrawals or transfers
which, if applicable, could reduce the interest credited to the 3% minimum rate.
Investment Option Limit
Currently, the owner may not elect more than a total of 18 investment options
over the life of the contract. Investment options include variable sub-accounts
and general account options. See "Investment Option Limits" page 27.
Transfers Before the Annuity Date
Prior to the annuity date, you may transfer values between the variable
sub-accounts and the general account options. For transfers after the annuity
date, see "After the Annuity Date" page 31.
Transfers out of the fixed account are restricted to four per contract year and
to a limited percentage of the fixed account value. More frequent transfers may
be allowed under certain services and options, for example, dollar cost
averaging. Transfers out of a guarantee period prior to the end of the term may
be subject to an interest adjustment which may reduce interest credited to the
3% minimum rate. See "General Account Options" in Appendix A of this prospectus.
Transamerica currently imposes a transfer fee of $10 for each transfer in excess
of 18 made during the same contract year. See "Transfers" on page 29 for
additional limitations and information regarding transfers.
Withdrawals
You may withdraw all or part of the cash surrender value on or before the
annuity date. The cash surrender value of your contract is the account value
less any account fee, interest adjustment, contingent deferred sales load and
premium tax charges. The account fee generally will be deducted on a full
surrender of a contract if the account value is then less than $50,000.
Transamerica may delay payment of any withdrawal from the general account
options for up to six months. See "Cash Withdrawals" page 31.
Withdrawals may be taxable, subject to withholding and subject to a penalty tax.
Withdrawals from qualified contracts may be subject to severe restrictions and,
in certain circumstances, prohibited. See "Federal Tax Matters" page 44.
Contingent Deferred Sales Load
Transamerica does not deduct a sales charge when purchase payments are made
(although premium tax charges may be deducted). However, if any part of the
account value is withdrawn, a contingent deferred sales load of up to 8% of
purchase payments may be deducted. After a purchase payment has been held by
Transamerica for seven years, it may be withdrawn without charge. In most
states, the owner may elect, for an extra charge, an optional Living Benefits
Rider that provides that the contingent deferred sales load will be waived in
certain circumstances. No contingent deferred sales load is assessed on payment
of the death benefit, on transfers within the contract, or on certain
annuitizations. See "Contingent Deferred Sales Load" page 36, "Cash Withdrawals"
page 31 and "Living Benefits Rider" page 37.
Also, beginning 30 days from the contract effective date (or the end of the free
look period if later), any portion of the "allowed amount" may be withdrawn each
contract year without imposition of any contingent deferred sales load. The
allowed amount for each contract year is equal to 10% of purchase payments, that
were received during the last seven years, as of the prior contract anniversary,
less any withdrawals already taken that contract year. All purchase payments not
previously withdrawn that have been held at least seven years are not subject to
a contingent deferred sales load. For purposes of calculating the contingent
deferred sales load, withdrawals will be considered to be taken first from
purchase payments, on a first in/first out basis, and then from earnings and
last from any credits.
Other Charges and Deductions
Transamerica deducts a mortality and expense risk charge of 1.20% (annually) of
the assets in the variable account and an administrative expense charge of 0.15%
(annually) of these assets. The administrative expense charge may change, but it
is guaranteed not to exceed a maximum effective annual rate of 0.35%. See
"Mortality and Expense Risk Charge" page 38 and "Administrative Charges" page
38.
An account fee of currently $30 (or 2% of the account value, if less) is
deducted at the end of each contract year and upon surrender. This fee may
change but it is guaranteed not to exceed $60 (or 2% of the account value, if
less) per contract year. If the account value is more than $50,000 on the last
business day of a contract year, (or as of the date the contract is
surrendered), the account fee will be waived for that year.
After the annuity date, the annual annuity fee of $30 will be deducted in equal
installments from each periodic payment under the variable payment option. For
each transfer in excess of 18 during a contract year, a transfer fee of $10 will
be imposed. (See "Transfer Fee" page 39.)
Charges for premium taxes (including retaliatory premium taxes) are not
currently deducted, except for annuitizations, but such charges could be imposed
in some jurisdictions. Depending on the applicability of such taxes, the charges
could be deducted from purchase payments, from amounts withdrawn, and/or upon
annuitization. (See "Premium Tax Charges" page 39.)
In addition, amounts withdrawn or transferred out of a guarantee period account
prior to the end of its term may be subject to an interest adjustment. (See
"Guaranteed Period Account" in Appendix A.)
If, as the owner, you elect the Living Benefits Rider a fee of 0.05% (annually)
of the account value will be deducted at the end of each contract month at the
rate of 1/12 times 0.05% times the account value. The Living Benefit Rider is
not available in all states.
If, as the owner, you elect the Guaranteed Minimum Death Benefit ("GMDB") Rider,
the appropriate annual fee will be deducted at the end of each contract month.
The monthly rate is 1/12 times the annual fee times the account value. The
annual fee is 0.20% of the account value. You may only elect this Rider before
the contract effective date. It cannot be reinstated if cancelled. It may not be
available in all states.
Currently, no fees are deducted for any other services or options under the
contract. However, Transamerica does reserve the right to impose fees to cover
processing for certain services and options in the future, including dollar cost
averaging, systematic withdrawals, automatic payouts, asset allocation and asset
rebalancing.
Variable Account Fee Table
The purpose of this table is to assist in understanding the various costs and
expenses that you, as the owner will bear directly and indirectly. The table
reflects expenses of the variable account as well as of the mutual fund
portfolios. The table assumes that the entire account value is in the variable
account. The information below should be considered together with the narrative
provided under the heading "Charges, Fees and Deductions" on page 36 of this
prospectus, and with the prospectuses for the portfolios. In addition to the
expenses listed below, premium tax charges may be applicable.
Sales Load(1)
Sales Load Imposed on Purchase Payments 0%
Maximum Contingent Deferred Sales Load(2) 8%
Range of Contingent Deferred Sales Load Over Time
Contingent Deferred
Years Since Sales Load
Purchase Payment Receipt (as a percentage of purchase payment)
Less than 1 year 8%
1 year but less than 2 years 8%
2 years but less than 3 years 7%
3 years but less than 4 years 6%
4 years but less than 5 years 5%
5 years but less than 6 years 4%
6 years but less 7 years 3%
7 or more years 0%
<PAGE>
Other Contract Expenses
Transfer Fee (first 18 per contract year)(3) 0 Fees For Other
Services and Options(4) 0 Account Fee(5) $30 Living Benefits Rider
Fee (if elected)(6) 0.05% Guaranteed Minimum Death Benefit Rider Fee
(if elected)(6) 0.20%
Variable Account Annual Expenses(7)
(as a percentage of the variable accumulated value)
Mortality and Expense Risk Charge 1.20%
Administrative Expense Charge(8) 0.15%
Total Variable Account Annual Expenses 1.35%
Portfolio Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(9)
<TABLE>
<CAPTION>
Total
Management Other Portfolio
Portfolio Fees Expenses Annual
Expenses
<S> <C> <C> <C>
Alger American Income & Growth 0.625 0.115 0.74
Alliance VPF Growth & Income 0.63 0.09 0.72
Alliance VPF Premier Growth 0.85 0.10 0.95
Dreyfus VIF Capital Appreciation 0.75 0.05 0.80
Dreyfus VIF Small Cap 0.75 0.03 0.78
Janus Aspen Balanced 0.76 0.07 0.83
Janus Aspen Worldwide Growth 0.66 0.08 0.74
MFS VIT Emerging Growth 0.75 0.12 0.87
MFS VIT Growth with Income 0.75 0.25 1.00
MFS VIT Research 0.75 0.13 0.88
Morgan Stanley UF Fixed Income 0.00 0.70 0.70
Morgan Stanley UF High Yield 0.00 0.80 0.80
Morgan Stanley UF International Magnum 0.00 1.15 1.15
OCC Accumulation Trust Managed 0.80 0.07 0.87
OCC Accumulation Trust Small Cap 0.80 0.17 0.97
Transamerica VIF Growth 0.62 0.23 0.85
Transamerica VIF Money Market 0.35 0.25 0.60
</TABLE>
Expense information regarding the portfolios has been provided by the
portfolios. In preparing the tables above and below and the examples that
follow, Transamerica has relied on the figures provided by the portfolios.
Transamerica has no reason to doubt the accuracy of that information, but
Transamerica has not verified those figures. These figures are for the year
ended December 31, 1998. Actual expenses in future years may be higher or lower
than these figures.
Notes to Fee Table:
(1) The contingent deferred sales load applies to each contract, regardless of
how the account value is allocated between the variable account and the
general account options.
(2) A portion of the purchase payments may be withdrawn each contract year
without imposition of any contingent deferred sales load, and after seven
years, a purchase payment may be withdrawn free of any contingent deferred
sales load. See "Charges, Fees and Deductions" page 36.
3.) See "Charges, Fees and Deductions" page 36.r each transfer in excess of 18
in a contract year.
4. Transamerica currently does not impose fees for any other services, or
options. However, Transamerica reserves the right to impose a fee for
various services and options including dollar cost averaging, systematic
withdrawals, automatic payouts, asset allocation and asset rebalancing.
(5) The current account fee is $30 (or 2% of the account value, if less) per
contract year. This fee will be waived for account values over $50,000. This
limit may be changed in the future. The fee may be changed, but it may not
exceed $60 (or 2% of the account value, if less). See "Charges, Fees and
Deductions" page 36.
(6) If the owner elects a rider, the rider fee will be deducted at the rate of
1/12 of the annual fee at the end of each contract month based on the
account value at that time. See "Living Benefits Rider" page 37 and
"Guaranteed Minimum Death Benefit Rider" on page 35.
(7) The variable account annual expenses do not apply to the general account
options.
(8) The current annual administrative expense charge of 0.15% may be increased
to 0.35%. See "Charges, Fees and Deductions"
page 36.
(9) From time to time, the portfolios' investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in the
Portfolio Expenses table are the expenses paid for 1998. The expenses shown
in that table reflect a portfolio's adviser's waivers of fees or
reimbursement of expenses, if applicable. It is anticipated that such
waivers or reimbursements will continue for calendar year 1999. Without
such waivers or reimbursements, the annual expenses for 1998 for certain
portfolios would have been, as a percentage of assets, as follows:
<TABLE>
<CAPTION>
Management Other Total Portfolio
Fee Expenses Annual Expense
<S> <C> <C> <C>
Alliance VPF Growth & Income 0.63 0.09 0.72
Alliance VPF Premier Growth 1.00 0.10 1.10
Janus Aspen Balanced 0.77 0.06 0.83
Janus Aspen Worldwide Growth 0.72 0.09 0.81
MFS VIT Growth with Income 0.75 0.35 1.10
Morgan Stanley UF Fixed Income 0.40 1.31 1.71
Morgan Stanley UF High Yield 0.80 0.88 1.68
Morgan Stanley UF International Magnum 0.80 1.98 2.78
Transamerica VIF Growth 0.75 0.23 0.98
</TABLE>
There were no fee waivers or expense reimbursements during 1998 for the Alger
American Income and Growth Portfolio, Dreyfus VIF Capital Appreciation
Portfolio, Dreyfus VIF Small Cap Portfolio, MFS VIT Emerging Growth Portfolio,
MFS VIT Research Portfolio, OCC Accumulation Trust Managed Portfolio or OCC
Accumulation Trust Small Cap Portfolio.
Examples
The following tables show the total expenses an owner would incur in various
situations assuming a $1,000 investment and a 5% annual return on assets.
These examples assume an average account value of $40,000 and, therefore, a
deduction of 0.075% has been made to reflect the $30 account fee, and a 3.25%
credit added to the $1000 purchase payment. These examples also assume that all
amounts were allocated to the variable sub-account indicated. These examples
also assume that no transfer fees or other option or service fees or premium tax
charges have been assessed. Premium tax charges may be applicable. See "Premium
Tax Charges" page 39.
Examples 1 through 3 show expenses for contracts without the optional Living
Benefit Rider and the Guaranteed Minimum Death Benefit Rider based on fee
waivers and reimbursements for the portfolios for 1998. There is no guarantee
that any fee waivers or expense reimbursements will continue in the future. For
annuitizations before the first contract anniversary, and for annuitizations
under a form that does not include life contingencies, the contingent deferred
sales load may apply (see expense examples in column 1).
An owner would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
Example 1: If the owner surrenders the contract at the end of the applicable
time period:
<TABLE>
<CAPTION>
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------
---------------------------------------
<S> <C> <C> <C> <C>
Alger American Income & Growth $94.67 $132.96 $164.96 $257.93
Alliance VPF Growth & Income $94.44 $132.10 $163.24 $252.83
Alliance VPF Premier Growth $96.84 $139.50 $175.91 $279.94
Dreyfus VIF Capital Appreciation $95.27 $134.67 $167.65 $262.26
Growth
Dreyfus VIF Small Cap $95.07 $134.03 $166.54 $259.90
Janus Aspen Balanced $95.59 $135.64 $169.30 $265.79
Janus Aspen Worldwide Growth $94.65 $132.74 $164.34 $255.18
MFS Emerging Growth $96.02 $137.02 $171.76 $271.61
MFS Growth & Income $97.36 $141.06 $178.50 $285.10
MFS Research $96.12 $137.33 $172.28 $272.65
Morgan Stanley UF Fixed Income $94.23 $131.45 $162.13 $250.47
Morgan Stanley UF High Yield $95.27 $134.67 $167.65 $262.26
Morgan Stanley UF International Magnum $98.94 $145.95 $186.94 $303.51
OCC Accumulation Trust Managed $96.01 $136.93 $171.50 $270.51
OCC Accumulation Trust Small Cap $97.05 $140.15 $177.02 $282.29
Transamerica VIF Growth $95.81 $136.39 $170.71 $269.52
Transamerica VIF Money Market $93.22 $128.57 $157.60 $242.97
----------------------------------------------------------------------------------------
Example 2: If the owner does not surrender and does not annuitize the contract:
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------
---------------------------------------
Alger American Income & Growth $22.67 $69.96 $119.96 $257.93
Alliance VPF Growth & Income $22.44 $69.10 $118.24 $252.83
Alliance VPF Premier Growth $24.84 $76.50 $130.91 $279.94
Dreyfus VIF Capital Appreciation $23.27 $71.67 $122.65 $262.26
Growth
Dreyfus VIF Small Cap $23.07 $71.03 $121.54 $259.90
Janus Aspen Balanced $23.59 $72.64 $124.30 $265.79
Janus Aspen Worldwide Growth $22.65 $69.74 $119.34 $255.18
MFS Emerging Growth $24.02 $74.02 $126.76 $271.61
MFS Growth & Income $25.36 $78.06 $133.50 $285.10
MFS Research $24.12 $74.33 $127.28 $272.65
Morgan Stanley UF Fixed Income $22.23 $68.45 $117.13 $250.47
Morgan Stanley UF High Yield $23.27 $71.67 $122.65 $262.26
Morgan Stanley UF International Magnum $26.94 $82.95 $141.94 $303.51
OCC Accumulation Trust Managed $24.01 $73.93 $126.50 $270.51
OCC Accumulation Trust Small Cap $25.05 $77.15 $132.02 $282.29
Transamerica VIF Growth $23.81 $73.39 $125.71 $269.52
Transamerica VIF Money Market $21.22 $65.57 $112.60 $242.97
----------------------------------------------------------------------------------------
Example 3: If the owner elects to annuitize at the end of the applicable period
under a Settlement Option with life contingencies:
-------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------
--------------------------------------
Alger American Income & Growth $22.67 $69.96 $119.96 $257.93
Alliance VPF Growth & Income $22.44 $69.10 $118.24 $252.83
Alliance VPF Premier Growth $24.84 $76.50 $130.91 $279.94
Dreyfus VIF Capital Appreciation $23.27 $71.67 $122.65 $262.26
Growth
Dreyfus VIF Small Cap $23.07 $71.03 $121.54 $259.90
Janus Aspen Balanced $23.59 $72.64 $124.30 $265.79
Janus Aspen Worldwide Growth $22.65 $69.74 $119.34 $255.18
MFS Emerging Growth $24.02 $74.02 $126.76 $271.61
MFS Growth & Income $25.36 $78.06 $133.50 $285.10
MFS Research $24.12 $74.33 $127.28 $272.65
Morgan Stanley UF Fixed Income $22.23 $68.45 $117.13 $250.47
Morgan Stanley UF High Yield $23.27 $71.67 $122.65 $262.26
Morgan Stanley UF International $26.94 $82.95 $141.94 $303.51
Magnum
OCC Accumulation Trust Managed $24.01 $73.93 $126.50 $270.51
OCC Accumulation Trust Small Cap $25.05 $77.15 $132.02 $282.29
Transamerica VIF Growth $23.81 $73.39 $125.71 $269.52
Transamerica VIF Money Market $21.22 $65.57 $112.60 $242.97
---------------------------------------------------------------------------------------
Examples 4 through 6 show expenses for contracts with the optional Living
Benefits Rider and the Guaranteed Minimum Death Benefit Rider, based on the fee
waivers and reimbursements for the portfolios for 1998. There is no guarantee
that fee waivers or expense reimbursements will continue in the future. For
annuitizations before the first contract anniversary and for annuitizations
under a form that does not include life contingencies, a contingent deferred
sales load may apply (see examples in column 4).
An owner would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
Example 4: If the owner surrenders the contract at the end of the applicable
time period:
-----------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------
---------------------------------------
Alger American Income & Growth $95.19 $134.52 $167.58 $263.21
Alliance VPF Growth & Income $94.96 $133.65 $165.84 $258.06
Alliance VPF Premier Growth $97.36 $141.06 $178.50 $285.10
Dreyfus VIF Capital Appreciation $95.79 $136.23 $170.25 $267.47
Growth
Dreyfus VIF Small Cap $95.58 $135.59 $169.14 $265.12
Janus Aspen Balanced $96.11 $137.19 $171.90 $270.99
Janus Aspen Worldwide Growth $95.16 $134.30 $166.94 $260.41
MFS Emerging Growth $96.53 $138.57 $174.36 $276.82
MFS Growth & Income $97.88 $142.61 $181.09 $290.24
MFS Research $96.64 $138.88 $174.88 $277.86
Morgan Stanley UF Fixed Income $94.75 $133.01 $164.74 $255.71
Morgan Stanley UF High Yield $95.79 $136.23 $170.25 $267.47
Morgan Stanley UF International Magnum $99.45 $147.50 $189.51 $308.62
OCC Accumulation Trust Managed $96.52 $138.48 $174.10 $275.70
OCC Accumulation Trust Small Cap $97.57 $141.70 $179.60 $287.45
Transamerica VIF Growth $496.33 $137.95 $173.32 $274.74
Transamerica VIF Money Market $93.74 $130.14 $160.24 $248.34
--------------------------------------------------------------------------------------------
Example 5: If the owner does not surrender and does not annuitize the contract:
-----------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------
---------------------------------------
Alger American Income & Growth $23.19 $71.52 $122.58 $263.21
Alliance VPF Growth & Income $22.96 $70.65 $120.84 $258.06
Alliance VPF Premier Growth $25.36 $78.06 $133.50 $285.10
Dreyfus VIF Capital Appreciation $23.79 $73.23 $125.25 $267.47
Growth
Dreyfus VIF Small Cap $23.58 $72.59 $124.14 $265.12
Janus Aspen Balanced $24.11 $74.19 $126.90 $270.99
Janus Aspen Worldwide Growth $23.16 $71.30 $121.94 $260.41
MFS Emerging Growth $24.53 $75.57 $129.36 $276.82
MFS Growth & Income $25.88 $79.61 $136.09 $290.24
MFS Research $24.64 $75.88 $129.88 $277.86
Morgan Stanley UF Fixed Income $22.75 $70.01 $119.74 $255.71
Morgan Stanley UF High Yield $23.79 $73.23 $125.25 $267.47
Morgan Stanley UF International Magnum $27.45 $84.50 $144.51 $308.62
OCC Accumulation Trust Managed $24.52 $75.48 $129.10 $275.70
OCC Accumulation Trust Small Cap $25.57 $78.70 $134.60 $287.45
Transamerica VIF Growth $24.33 $74.95 $128.32 $274.74
Transamerica VIF Money Market $21.74 $67.14 $115.24 $248.34
--------------------------------------------------------------------------------------------
Example 6: If the owner elects to annuitize at the end of the applicable period
under a Settlement Option with life contingencies:
----------------------------------------------------
1 Year 3 Years 5 Years 10 Years
----------------------------------------------------
---------------------------------------
Alger American Income & Growth $23.19 $71.52 $122.58 $263.21
Alliance VPF Growth & Income $22.96 $70.65 $120.84 $258.06
Alliance VPF Premier Growth $25.36 $78.06 $133.50 $285.10
Dreyfus VIF Capital Appreciation $23.79 $73.23 $125.25 $267.47
Growth
Dreyfus VIF Small Cap $23.58 $72.59 $124.14 $265.12
Janus Aspen Balanced $24.11 $74.19 $126.90 $270.99
Janus Aspen Worldwide Growth $23.16 $71.30 $121.94 $260.41
MFS Emerging Growth $24.53 $75.57 $129.36 $276.82
MFS Growth & Income $25.88 $79.61 $136.09 $290.24
MFS Research $24.64 $75.88 $129.88 $277.86
Morgan Stanley UF Fixed Income $22.75 $70.01 $119.74 $255.71
Morgan Stanley UF High Yield $23.79 $73.23 $125.25 $267.47
Morgan Stanley UF International Magnum $27.45 $84.50 $144.51 $308.62
OCC Accumulation Trust Managed $24.52 $75.48 $129.10 $275.70
OCC Accumulation Trust Small Cap $25.57 $78.70 $134.60 $287.45
Transamerica VIF Growth $24.33 $74.95 $128.32 $274.74
Transamerica VIF Money Market $21.74 467.14 $115.24 $248.34
-------------------------------------------------------------------------------------------
</TABLE>
These examples should not be considered representations of past or future
expenses. Actual expenses paid may be greater or less than those shown, subject
to the guarantees in the contract. The assumed 5% annual rate of return is
hypothetical and should not be considered a representation of past or future
annual returns , which may be greater or less than this assumed rate.
Settlement Option Payments
Settlement option payments will be made either on a fixed basis or a variable
basis or a combination of a fixed and variable basis, as you select. You have
flexibility in choosing the annuity date, but it may generally not be a date
later than the annuitant's 85th birthday or the tenth contract anniversary,
whichever occurs last, but never later than the annuitant's 90th birthday.
Certain qualified contracts may have restrictions as to the annuity date and the
types of settlement options available. (See "Settlement Option Payments" page
40.)
Four settlement options are available under the contract:
1 life annuity
(1) life annuity; (2) life and contingent annuity
annuity; (3) life annuity with period certain
certain; and (4) joint and survivor annuity
For more detailed information on these options, please see "Settlement Option
Forms" page 42.
Death of Owner Before the Annuity Date
If an owner dies prior to the annuity date and before either the owner's or any
joint owner's 80th birthday, the death benefit for the contract will be the
greater of:
of (a) the account value reduced by credits less than 12 months; or
months or (b) the sum of all purchase payments made to the contract, less
withdrawals and applicable premium tax charges.
If death occurs after the earlier of the owner's or joint owner's 80th birthday,
the death benefit will be the account value less any credits less than 12 months
old. If the owner is not a natural person, the annuitant will be treated as the
owner(s) for purposes of the death benefit.
If you elected the Guaranteed Minimum Death Benefit Rider, and you die before
the annuitization phase and before you turn 85, the death benefit will be the
greatest of three amounts:
1. the account value;
2. the sum of all purchase payments less the proportion of withdrawals
taken and applicable premium tax charges; or
3. the highest account value on any contract anniversary prior to the
earlier of the owner's or joint owner's 85th birthday, plus purchase
payments made, less the proportion of withdrawals taken and premium tax
charges since that contract anniversary.
If you elected the Guaranteed Minimum Death Benefit Rider, and you die after
your or your joint owner's 85th birthday, the death benefit will be the greater
of two amounts:
1. the account value; or
2. the highest account value on any contract anniversary prior to the
earlier of the owner's or joint owner's 85th birthday, plus purchase
payments made, less the proportion of withdrawals taken and premium tax
charges since that contract anniversary.
The death benefit will generally be paid within seven days of receipt of the
required proof of death of the owner and election of the method of settlement or
as soon thereafter as Transamerica has sufficient information to make the
payment, but if no settlement method is elected the death benefit will be
distributed within five years after the owner's death. No contingent deferred
sales load is imposed. The death benefit may be paid as either a lump sum or as
a settlement option. (See "Death Benefit" page 33). Amounts in the guarantee
period account will not be subject to interest adjustments in calculating the
death benefit.
Federal Income Tax Consequences
An owner who is a natural person generally should not be taxed on increases in
the account value until a distribution under the contract occurs. Taxable
events, for example, would occur with a withdrawal or settlement option payment,
or as the result of a pledge, loan, or assignment of a contract. Generally, any
portion up to 100% of any distribution or deemed distribution is taxable as
ordinary income. The taxable portion of distributions is generally subject to
income tax withholding unless the recipient elects otherwise. Withholding is
mandatory for certain qualified contracts. In addition, a federal penalty tax
may apply to certain distributions. (See "Federal Tax Matters" page 44.)
Right to Cancel
As the owner, you have the right to examine the contract for a limited period,
known as a "free look period." You may cancel the contract during this period by
delivering or mailing a written notice of cancellation, or sending a telegram to
the Service Center and by returning the contract before midnight of the tenth
day after receipt of the contract, or longer if required by state law. Notice
given by mail and the return of the contract by mail will be effective on the
date received by Transamerica. Unless otherwise required by law, Transamerica
will refund the purchase payment(s) allocated to any general account option,
minus any withdrawals, plus the variable accumulated value as of the date your
written notice to cancel and your contract are received by Transamerica. Any
credits will not be included in the amount paid. See "Purchase Payments" page 26
and "Account Value" page 28.
Questions
Questions about procedures or the contract can be answered by:
The Transamerica Annuity Service Center
P.O. Box 31848
Charlotte, North Carolina
28231-1848
Or by telephone at: 1- 800-258-4260
All inquiries should include the contract number
and the owner's name.
Please Note: The foregoing summary is qualified in its entirety by the detailed
information in the remainder of this prospectus and in the prospectuses for the
portfolios which should be referred to for more detailed information. With
respect to qualified contracts, it should be noted that the requirements of a
particular retirement plan, an endorsement to the contract, or limitations or
penalties imposed by the Code or the Employee Retirement Income Security Act of
1974, as amended, may impose additional limits or restrictions on purchase
payments, withdrawals, distributions, or benefits, or on other provisions of the
contract. This prospectus does not describe such limitations or restrictions.
(See "Federal Tax Matters" page 44.)
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the financial
statements of the Variable Account. The data should be read in conjunction with
the financial statements, related notes, and other financial information
included in the Statement of Additional Information. The financial statements
and reports of independent auditors for the Variable Account and Transamerica
are contained in the Statement of Additional Information.
The following table sets forth certain information regarding the Sub-Accounts
for the period from January 1, 1998, commencement of business operations of the
Sub-Accounts, through December 31, 1998.
The Variable Accumulation Unit values and the number of Variable Accumulation
Units outstanding for each Sub-Account for the periods shown are as follows:
<TABLE>
<CAPTION>
Year Ending December 31, 1998
Alger American Alliance VPF Alliance VPF Dreyfus VIF Cap Dreyfus VIF
Income & Growth Growth & Income Premier Growth Appreciation Growth Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.132 $11.682 $14.911 $14.142 $58.773
Accumulation Unit Value
at End of Period $1.175 $14.185 $15.736 $15.260 $67.668
Number of Accumulation
Units Outstanding
at End of Period 12,049,327.817 1,017,390.458 424,325.816 987,773.886 1,031,483.594
Janus Aspen Janus Aspen MFS MFS MFS
Balanced Worldwide Growth Emerging Growth Growth & Income Research
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $21.802 $26.791 $21.221 $23.131 $14.267
Accumulation Unit Value
at End of Period $27.532 $35.128 $26.879 $26.509 $15.422
Number of Accumulation
Units Outstanding
at End of Period 1,798,913.636 808,857.987 230,281.724 2,179,109.968 378,355.293
Morgan Stanley UF Morgan Stanley UF Morgan Stanley OCC Accumulation OCC Accumulation
Fixed Income High Yield International Growth Trust Managed Trust Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $10.244 $11.776 $10.772 $10.000 $10.000
Accumulation Unit Value
at End of Period $10.982 $15.272 $12.935 $10.852 $11.738
Number of Accumulation
Units Outstanding
at End of Period 172,941.244 1,196,912.676 513,524.112 473,373.863 333,714.857
Transamerica Transamerica
VIF Growth VIF Money Market
Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $10.244 $11.776
Accumulation Unit Value
at End of Period $10.982 $15.272
Number of Accumulation
Units Outstanding
at End of Period 172,941.244 1,196,912.676
</TABLE>
<PAGE>
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
AND THE VARIABLE ACCOUNT
Transamerica Life Insurance and Annuity Company
Transamerica Life Insurance and Annuity Company ("Transamerica") is a stock life
insurance company incorporated under the laws of the State of California in
1966. In 1994, the company moved to North Carolina. It is principally engaged in
the sale of life insurance and annuity policies. Transamerica is a wholly-owned
indirect subsidiary of Transamerica Corporation. The address of Transamerica is
401 North Tryon Street, Charlotte, North Carolina 28202.
Published Ratings
Transamerica may from time to time publish its ratings in advertisements, sales
literature and reports to owners. We receive ratings and other information from
one or more independent rating organizations such as A.M. Best Company, Standard
& Poor's, Moody's, and Duff & Phelps. The ratings reflect the financial strength
and/or claims-paying ability of Transamerica. These ratings should not be
considered as bearing on the investment performance of the variable account.
Ratings and investment performance are unrelated. Each year the A.M. Best
Company reviews the financial status of thousands of insurers, resulting in the
assignment of Best's Ratings. These ratings reflect A.M. Best's current opinion
of the relative financial strength and operating performance of an insurance
company in comparison to the norms of the life/health insurance industry. In
addition, the claims-paying ability of Transamerica as measured by Standard &
Poor's Insurance Ratings Services, Moody's, or Duff & Phelps may be referred to
in advertisements or sales literature or in reports to owners. These ratings are
opinions provided by the companies named above. These opinions relate to how
well they have determined Transamerica is prepared, from a financial standpoint,
to meet our insurance and annuity obligations. The terms of our obligations are
stated within the general account options of this contract. These ratings do not
reflect the investment performance of the variable account or the degree of risk
associated with an investment in the variable account.
The Variable Account
Separate Account VA-6 of Transamerica (the "variable account") was established
by Transamerica as a separate account under the laws of the State of North
Carolina following June 11, 1996, resolutions adopted by Transamerica's Board of
Directors. The variable account is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. It meets the definition of a separate account
under the federal securities laws. However, the Commission does not supervise
the management or the investment practices or policies of the variable account.
The assets of the variable account are owned by Transamerica, but they are held
separately from the other assets of Transamerica. Section 58-7-95 of the North
Carolina Insurance Law provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of the
insurance company (except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account). Income,
gains and losses incurred on the assets in the variable account, whether or not
realized, are credited to or charged against the variable account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the variable account is entirely independent of the investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica.
The variable account currently has seventeen variable sub-accounts available
under the contract, each of which invests solely in a specific corresponding
portfolio. At our discretion, we may make changes to the variable sub-accounts.
THE PORTFOLIOS
Each of the variable sub-accounts offered under the contract invests exclusively
in one of the portfolios. Descriptions of each portfolio's investment objective
follow. The management fees listed below are specified in each portfolio
advisor's contract before any fee waivers.
The Income and Growth Portfolio of The Alger American Fund seeks, primarily, a
high level of dividend income. Capital appreciation is a secondary objective of
the portfolio. Except during temporary defensive periods, the portfolio attempts
to invest 100% of its available capital, and it is a fundamental policy of the
portfolio to invest at least 65% of its total assets in dividend paying equity
securities. Alger Management will favor securities it believes also offer
opportunities for capital appreciation. The portfolio may invest up to 35% of
its total assets in money market instruments and repurchase agreements. It may
invest up to 100% of its assets in these same instruments during temporary
defensive periods.
Adviser: Fred Alger Management, Inc. Management Fee: 0.625%.
The Growth and Income Portfolio of the Alliance Variable Products Series Fund,
Inc., seeks reasonable current income and reasonable opportunity for
appreciation through investments primarily in dividend-paying common stocks of
good quality. Whenever the economic outlook is unfavorable for investment in
common stock, this portfolio may invest in other types of securities, such as
bonds, convertible bonds, preferred stock and convertible preferred stocks. The
portfolio manager(s) will purchase and sell portfolio securities at times and in
amounts as management deems advisable in light of market, economic and other
conditions.
Adviser: Alliance Capital Management L.P. Management Fee: 0.625%.
The Premier Growth Portfolio of Alliance Variable Products Series Fund, Inc.,
seeks growth of capital by pursuing aggressive investment policies. Since this
portfolio's investments will be made based upon their potential for capital
appreciation, current income will not be a high priority for this portfolio. The
portfolio will invest mainly in the equity securities (common stocks, securities
convertible into commons stocks and rights and warrants to subscribe for or
purchase common stocks) of a limited number of large, carefully selected,
high-quality U.S. companies. In the Advisor's judgement, the companies chosen
will be those which are likely to achieve superior earnings growth.
Approximately 25 companies believed by the Advisor to show superior potential
for capital appreciation will usually constitute approximately 70% of the
portfolio's net assets at any one time. The portfolio thus differs from more
typical equity mutual funds by investing most of its assets in a relatively
small number of intensively researched companies. Under normal circumstances the
portfolio will invest at least 85% of the value of its total assets in the
equity securities of U.S.
companies.
Adviser: Alliance Capital Management L.P. Management Fee: 1%.
The Capital Appreciation Portfolio of the Dreyfus Variable Investment Fund is a
diversified portfolio seeking long-term capital growth and preservation of
principal. Current income is a secondary investment objective. During perio9ds
of strong market momentum, the portfolio will invest aggressively to increase
its holdings in: common stocks of foreign and domestic issuers, common stocks
with warrants attached and debt securities of foreign governments. Generally,
the portfolio will invest in large cap companies (those with market
capitalizations exceeding $500 million). These companies will also be selected
on the basis of their potential to achieve predictable, above average earnings
growth.
Adviser: The Dreyfus Corporation. Sub-Adviser: Fayez Sarofim & Co. Management
Fee: 0.75%.
The Small Cap Portfolio of the Dreyfus Variable Investment Fund seeks to
maximize capital appreciation by investing principally in common stocks. Under
normal market conditions, the portfolio will invest at least 65% of its total
assets in companies with market capitalizations of less than $1.5 billion at the
time of purchase. Each company selected for this portfolio will be characterized
by its new or innovative products, services or processes which are expected to
propel growth in future earnings.
Adviser: The Dreyfus Corporation. Management Fee: 0.75%.
The Balanced Portfolio of the Janus Aspen Series seeks long-term capital growth
consistent with preservation of capital and current income. Normally, this
diversified portfolio invests 40-60% of its assets in securities selected
primarily for their growth potential. capacity to generate income. Such holdings
are likely to consist of bonds and preferred stocks. Typically, at least 25% of
this portfolio is made up of fixed-income securities.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200 million plus 0.65% of the assets over $500
million.
The Worldwide Growth Portfolio of the Janus Aspen Series seeks long-term growth
of capital in a manner consistent with the preservation of capital. It is a
diversified portfolio that pursues its objective primarily through investments
in common stocks of foreign and domestic issuers. The portfolio has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of origin or place of principal business
activity. The portfolio normally invests in issuers from at least five different
countries, including the United States. The portfolio may at times invest in
fewer than five countries or even a single country.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200 million plus 0.65% of the assets over $500
million.
The Emerging Growth Series of the MFS Variable Insurance Trust seeks to provide
long-term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the investment objective of long-term
growth of capital. The investment policy provides for investing at least 80% of
the trust's assets in common stocks during normal market circumstances.
Companies that the Adviser selects for inclusion are those which are thought to
be capable of becoming major enterprises. These emerging growth companies will
be characterized chiefly by their superior growth potential. While the portfolio
will invest primarily in common stocks, the portfolio may, to a limited extent,
seek appreciation in other types of securities such as: fixed income securities
(which may be unrated), convertible securities and warrants. The Adviser will
use this strategy when the values of these securities warrant such purchases.
Attractive prices or certain economic environments may provide strategic
opportunities for such purchases. The portfolio may invest in non-convertible
fixed income securities rated lower than "investment grade" (commonly known as
"junk bonds") or in comparable unrated securities. The Adviser will purchase
these types of securities when they present an opportunity for greater
appreciation then investment grade securities, and the risk factors are
comparable to those of investment grade securities. Under normal market
conditions the portfolio will invest not more than 5% of its nets assets in
these securities. Consistent with its investment objective and policies
described above, the portfolio may also invest up to 25% (and generally expects
to invest not more than 15%) of its net assets in foreign securities (including
emerging market securities and Brady Bonds) which are not traded on a U.S.
exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Growth with Income Series of the MFS Variable Insurance Trust seeks
reasonable current income and long-term growth of capital and income. Under
normal market conditions, the portfolio will invest at least 65% of its assets
in equity securities of companies that are believed to have long-term prospects
for growth and income. Equity securities in which the portfolio may invest
include the following: common and preferred stocks, bonds, warrants or rights
that are convertible into stocks, and depository receipts. These securities may
be listed on securities exchanges, traded in various over-the-counter markets or
have no organized markets. Consistent with the investment objective and policies
described above, the portfolio may also invest up to 75% (and generally expects
to invest no more than 15%) of its net assets in foreign securities (including
emerging market securities and Brady Bonds) which are not traded on a U.S.
exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Research Series of the MFS Variable Insurance Trust seeks long-term growth
of capital and future income. It will invest a substantial proportion of its
assets in equity securities of companies believed to possess better than average
prospects for long-term growth. Equity securities in which the portfolio may
invest include the following: common and preferred stocks, bonds, warrants or
rights that are convertible into stocks, and depository receipts. These
securities may be listed on securities exchanges, traded in various
over-the-counter markets or have no organized markets. A smaller proportion of
the assets may be invested in bonds, short-term obligations, preferred stocks or
common stocks that are purchased for their income production capability rather
than for growth. Such securities may also offer some growth opportunity in
addition to income. The Adviser selects both growth stocks and income issues on
the basis that they are issued by innovative, well-managed companies which
demonstrate the capability for better than average growth. The portfolio's
non-convertible debt investments, if any, may consist of investment grade
securities. No more than 10% of the portfolio's net assets will consist of
securities in the lower rated categories or securities which the Adviser
believes to be a similar quality to these lower rated securities (commonly know
as "junk bonds"). Consistent with its investment objective and policies
described above, the portfolio may also invest up to 20% of its net assets in
foreign securities (including emerging market securities) which are not traded
on a U.S. exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Fixed Income Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of U.S. government and agency
bonds, corporate bonds, mortgage backed securities, foreign bonds and other
fixed income securities and derivatives. The portfolio's average weighted
maturity will ordinarily exceed five years and will usually be between five and
fifteen years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.40% of the first
$500 million plus 0.35% of the next $500 million plus
0.30% of the assets over $1 billion.
The High Yield Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in high yield securities of U. S. and foreign issuers,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds." The portfolio's average weighted maturity will ordinarily
exceed five years and will usually be between five and fifteen years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.50% of first $500
million plus 0.45% of next $500 million plus 0.40% of the assets over $1
billion.
The International Magnum Portfolio of the Morgan Stanley Universal Funds, Inc.,
seeks long-term capital appreciation by investing primarily in equity securities
of non-U.S. issuers domiciled in EAFE (Europe and Australia, Far East Equity)
countries. The countries in which the portfolio will invest are those comprising
the Morgan Stanley Capital International EAFE Index, which includes Australia,
Japan, New Zealand, most nations located in Western Europe and certain developed
countries in Asia, such as Hong Kong and Singapore (collectively the "EAFE
countries"). The portfolio may invest up to 5% of its total assets in securities
of issuers domiciled in non-EAFE countries. Under normal circumstances, at least
65% of the total assets of the portfolio will be invested in equity securities
of issuers in at least three different EAFE countries.
Adviser: Morgan Stanley Asset Management Inc. Management Fee: 0.80% of the first
$500 million plus 0.75% of the next $500 million plus 0.70% of the assets over
$1 billion.
The Managed Portfolio of the OCC Accumulation Trust seeks growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the Adviser's
assessments of the relative outlook for such investments. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt. The portfolio will also invest in high quality
short-term money market and cash equivalent securities and may invest almost all
of its assets in such securities when necessary to preserve capital. In
addition, the portfolio may also purchase foreign securities. These foreign
securities must be listed on a domestic or foreign securities exchange or
represented by American depository receipts.
Adviser: OpCap Advisors. Management Fee: 0.80% of first $400 million plus 0.75%
of next $400 million plus 0.70% of the assets over $800 million.
The Small Cap Portfolio of the OCC Accumulation Trust seeks capital appreciation
through investments in a diversified portfolio of stocks issued by small
companies. It will consist primarily of equity securities of companies with
market capitalizations of under $1 billion. Under normal circumstances at least
65% of the portfolio's assets will be invested in equity securities. The
majority of securities purchased by the portfolio will be traded on the New York
Stock Exchange, the American Stock Exchange or in the over-the-counter market.
The portfolio's holdings may also include options, warrants, bonds, notes and
convertible bonds. In addition, the portfolio may also purchase foreign
securities. Foreign securities must listed on a domestic or foreign securities
exchange or be represented by American depository receipts.
Adviser: OpCap Advisors. Management Fee: 0.80% of the first $400 million plus
0.75% of the next $400 million plus 0.70% of assets over $800 million.
The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., seeks
long-term capital growth through investment in common stocks (listed and over
the counter issues). The Growth Portfolio invests primarily in common stocks of
growth companies that are considered by the manager to be premier companies. In
the manager's view, characteristics of premier companies include one or more of
the following: dominant market share; leading brand recognition; proprietary
products or technology; low-cost production capability; and excellent management
with shareholder orientation. The manager of the Portfolio believes in long-term
investing and places great emphasis on the sustainability of the above
competitive advantages. Unless market conditions dictate otherwise, the manager
tries to keep the Portfolio fully invested in equity securities. Attempting to
enter and exit the market at strategic times is not a commonly used strategy for
this portfolio. However, when in the judgment of the Sub-Adviser market
conditions warrant, the portfolio may, for temporary defensive purposes, hold
part or all of its assets in cash, debt or money market instruments. The
portfolio may invest up to 10% of its assets in debt securities having a call on
common stocks that are rated below investment grade.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc. Management Fee: 0.75%.
The Money Market Portfolio of the Transamerica Variable Insurance Fund, Inc.,
seeks to maximize current income from money market securities consistent with
liquidity and the preservation of principal. The portfolio invests primarily in
high quality U. S. dollar-denominated money market instruments with remaining
maturities of 13 months or less. These include: obligations issued or guaranteed
by the U. S. and foreign governments and their agencies and instrumentalities;
obligations of U. S. and foreign banks, or their foreign branches, and U. S.
savings banks; short-term corporate obligations, including commercial paper,
notes and bonds; other short-term debt obligations with remaining maturities of
397 days or less; and repurchase agreements involving any of the securities
mentioned above. The portfolio may also purchase other marketable,
non-convertible corporate debt securities of U. S. issuers. These investments
include bonds, debentures, floating rate obligations, and issues with optional
maturities.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc. Management Fee: 0.35%.
Meeting investment objectives depends on various factors, including, but not
limited to, how well the portfolio managers anticipate changing economic and
market conditions. There is no assurance that any of these portfolios will
achieve their stated objectives.
An investment in the contract is not a deposit or obligation of, or guaranteed
or endorsed, by any bank. Nor is the contract federally insured by the Federal
Deposit Insurance Corporation or any other government agency. Investing in the
contract involves certain investment risks, including possible loss of
principal.
Since all of the portfolios are available to registered separate accounts
offering variable annuity and variable life products of Transamerica and to
other insurance companies as well, there is a possibility of a material
conflict. If such a conflict arises between the interests of the variable
account and one or more other separate accounts investing in the portfolios, the
affected insurance companies will take steps to resolve the matter. These steps
may include stopping their separate accounts from investing in the portfolios.
See the portfolios' prospectuses for greater details.
You can find additional information concerning the investment objectives and
policies of all of the portfolios, the investment advisory services and
administrative services and charges in the current prospectuses for the
portfolios which accompany this prospectus.
Read the prospectuses of the portfolios which interest you carefully before you
make any decision concerning how you will invest, or transfer monies among, the
variable sub-accounts.
Transamerica may receive payments from some or all of the portfolios or their
advisers, in varying amounts. These payments may be based on the amount of
assets allocated to the portfolios. The payments are for administrative or
distribution services.
Addition, Deletion, or Substitution
Transamerica does not control the portfolios. For this reason, we cannot
guarantee that any of the variable sub-accounts offered under this contract or
any of the portfolios will always be available to you for investment purposes.
Transamerica retains the right to make changes in the variable account and in
its investments.
Transamerica reserves the right to eliminate the shares of any portfolio held by
a variable sub-account. We may also substitute shares of another portfolio or of
another investment company for the shares of any portfolio. We would do this if
the shares of the portfolio are no longer available for investment or if, in
Transamerica's judgment, investment in any portfolio would be inappropriate in
view of the purposes of the variable account. To the extent required by the 1940
Act, if we substitute shares in a variable sub-account that you own, we will
provide you with advance notice. We will also seek advance permission from the
Commission. This does not prevent the variable account from purchasing other
securities for other series or classes of variable annuity contracts. Nor does
it prevent the variable account from effecting an exchange between series or
classes of variable contracts on the basis of requests made by owners.
We reserve the right to create new variable sub-accounts for the contracts when,
in our sole discretion, marketing, tax, investment or other conditions warrant
that we do. Any new variable sub-accounts will be made available to existing
owners on a basis to be determined by Transamerica. Each additional variable
sub-account will purchase shares in a mutual fund portfolio or other investment
vehicle. We may also eliminate one or more variable sub-accounts if, in our sole
discretion, marketing, tax, investment or other conditions warrant that we do.
So, in the event any variable sub-account is eliminated, we will notify owners
and request a re-allocation of the amounts invested in the eliminated variable
sub-account.
In the event of any substitution or change, we may make the changes in the
contract that we deem necessary or appropriate to reflect substitutions or
changes. Furthermore, if we believe it to be in the best interests of persons
having voting rights under the contracts, the variable account may be operated
as a management company under the 1940 Act or any other form permitted by law.
It may also be de-registered under such Act in the event that registration is no
longer required. Finally, it may also be combined with one or more other
separate accounts.
THE CONTRACT
The contract is a flexible purchase payment deferred variable annuity contract.
Other variable contracts are also available from Transamerica. The rights and
benefits of this contract are described below. They will also be described in
the individual contract or in the certificate and group contract. However, we
reserve the right to modify the individual contract and the group contract and
their underlying certificates. We also reserve the right to give the owner the
benefit of any federal or state statute or rule or regulation. The obligations
under the contract are obligations of Transamerica. The contracts are available
on a non-qualified basis and on a qualified basis. Contracts available on a
qualified basis are as follows:
1. rollover and contributory individual retirement annuities (IRAs) under
Code Sections 408(a) and 408(b)
2. conversion, rollover and contributory Roth IRAs under Code Section 408A
3. simplified employee pension plans (SEP/IRAs) that qualify for special
federal income tax treatment under Code Section 408(k)
4. rollover Code Section 403(b) annuities (including Rev. Rul. 90-24
transfers) with no additional premiums
5. qualified pension and profit sharing plans intended to qualify under
Code Section 401
Generally, qualified contracts contain certain restrictive provisions limiting
the timing and amount of purchase payments to, and distributions from, the
qualified contract. For further discussion concerning qualified contracts, see
Federal Tax Matters page 44.
Ownership
As the owner you are entitled to the rights granted by the contract. If you die,
your rights belong to the joint owner, if any, and then to your beneficiary. If
there are joint owners, the one designated as the primary owner will receive all
mail and any tax reporting information.
For non-qualified contracts, you as the owner are entitled to designate the
annuitant(s) and, if the owner is an individual (as opposed to a corporation or
other legal entity), the owner can change the annuitant(s) at any time before
the annuity date. Any such change will be subject to our then current
underwriting requirements. We reserve the right to reject any change of
annuitant(s) which has been made without our prior written consent.
If the owner is not an individual, the annuitant(s) may not be changed once the
contract is issued. Different rules apply to qualified contracts. See Federal
Tax Matters, page 44.
For each contract, a different account will be established and values, benefits
and charges will be calculated separately. The various administrative rules
described below will apply separately to each contract, unless otherwise noted.
PURCHASE PAYMENTS
Purchase Payments
All purchase payments must be paid to the Service Center. A confirmation will be
issued to the owner upon the acceptance of each purchase payment.
The initial purchase payment must be at least $5,000 ($2,000 for
contributory IRAs, SEP/IRAs and Roth IRAs).
Your contract will be issued and your initial purchase payment generally will be
credited within two business days after the receipt of: sufficient information
to issue a contract and the initial purchase payment at the Service Center. For
us to issue you a policy, you must provide sufficient information in a form
acceptable to Transamerica. We reserve the right to reject any request for
issuance of a contract or purchase payment. Normally we will not issue contracts
to owners, joint owners, or annuitants more than 80 years old. Nor will we
normally accept purchase payments after the owners' (or annuitants' if
non-individual owner) 81st birthday. In our discretion we may waive these
restrictions in appropriate cases.
If the initial purchase payment allocated to the variable sub-account(s) cannot
be credited within two days of receipt because the information is incomplete, or
for any other reason, we will contact you as the owner. We will explain the
reason for the delay and will refund the initial purchase payment within five
business days. If you consent to Transamerica retaining the initial purchase
payment we will credit it to the variable sub-account of your choice as soon as
the requirements are fulfilled.
You may make additional purchase payments at any time prior to the annuity date.
They must be for at least $1,000 a piece, or at least $100 if made through to an
automatic purchase payment plan. If you elect to use this option additional
purchase payments will be automatically deducted from your bank account and
allocated to the contract. In addition, minimum allocation amounts apply (see
"Allocation of Purchase Payments" below). Additional purchase payments are
credited to the contract as of the date we receive payment from you.
Total purchase payments for any contract may not exceed $1,000,000 without prior
approval of Transamerica.
In no event may the sum of all purchase payments for a contract during any
taxable year exceed the limits imposed by any applicable federal or state law,
rules, or regulations.
Allocation of Purchase Payments
You specify how purchase payments will be allocated under the contract. You may
allocate purchase payments between and among one or more of the variable
sub-accounts and the general account options as long as the portions are whole
number percentages and any allocation percentage for a variable sub-account is
at least 10%. In addition, there is a minimum allocation of $100 to any variable
sub-account and the fixed account, and $1,000 to each guarantee period. We may
waive this minimum allocation amount under certain options and circumstances.
Each purchase payment will be subject to the allocation percentages in effect at
the time of receipt of such purchase payment. You may change the allocation
percentages for additional purchase payments at any time by submitting a request
for such change, in a form and manner acceptable to Transamerica, to the Service
Center. Any changes to the allocation percentages are subject to the
limitation(s) above. Any change will take effect with the first purchase payment
we receive which accompanies your request. If we receive your request
separately, all purchase payments arriving after it will be subject to its
terms. Your request will continue in effect until you change it again.
If you exercise the free look option, in certain jurisdictions, under certain
conditions, Transamerica is legally required to return either: 1. the purchase
payment; or 2. the greater of the purchase payment or account value (credits
will not be included in the amount paid). Any initial allocation you make to the
variable account may be held in the money market variable sub-account during the
applicable free look period plus 5 days for delivery. Any allocations you make
to the money market variable sub-account will automatically be transferred at
the end of the free-look period plus 5 days according to your requested
allocation. This transfer will not count against the 12 transfers allowed free
of charge during the first contract year.
Investment Option Limit
Currently, you may not allocate monies to more than eighteen investment options
over the life of the contract. Investment options include variable sub-accounts
and general account options. Each variable sub-account, each guarantee period of
the guarantee period account, and the fixed account that ever received a
transfer or purchase payment allocation count as one towards this total of
eighteen limit. Transamerica may waive this limit in the future.......
For example, if you make an allocation to the money market variable sub-account
and later transfer all of the funds out of this money market variable
sub-account, this would still count as one transfer for the purposes of the
limitation, even if it held no value. If you transfer from a variable
sub-account to another variable sub-account and later back to the first, the
count towards the limitation would be two, not three. If you select a guarantee
period and renew for the same term, the count will be one; but if you renew to a
guarantee period with a different term, the count will be two.
How Credits Are Applied
We add a credit to your account value with each purchase payment received. This
credit is funded from our general account. Each credit is allocated to the
account value at the same time as the applicable purchase payment. Credits are
applied to the investment options in the same ratio as the applicable purchase
payment. The amount available as a death benefit or upon waiver of the
contingent deferred sales load under the Living Benefits Rider does not include
credits applied in the immediately preceding 12 months. The amount returned if
you exercise your right to cancel the contract during the free-look period does
not include any credits applied.
The credit is expressed and payable only as a percentage of purchase payments.
Currently the percentage is 3.25%. We may vary this percentage.
Examples. The following examples illustrate how a 3.25% credit works.
Suppose you invest $10,000 in a contract. Transamerica immediately credits an
additional 3.25%, or $325, so your Account Value begins at $10,325. Assume that
in six months the Account Value increases by 5%, so it is $10,841 (($10,325 x
0.05= $516.25) + $10,325= $10,841). At that point in time, the death benefit
would be $10,516 ($10,841 less the $325 credit). Note that although the credit
is not included in the death benefit, the $16.25 of earnings on the credit is
included. The cash surrender value would be $10,841 minus the contingent
deferred sales load of 8%, in addition to other applicable deductions.
Assume that at the end of twelve months, the Account Value has increased by 10%
so it is $11,357.50 (($10,325 x .10=$1,032.50) + $10,325=$11,357.50). The death
benefit at that time would be the full Account Value of $11,357.50 and the cash
surrender value would be $11,357.50 minus the contingent deferred sales load of
8% and other applicable deductions.
A decrease in value works in a similar manner. Again suppose you invest $10,000
and Transamerica credits a 3.25%, or $325, credit, and the Account Value
decreases 10% in six months, so your Account Value is $9292.50 ($10,325 minus
$1,032.50). Your death benefit at that point in time would be $10,000, since it
is never less than your purchase payments (less any partial withdrawals and
premium taxes). Your cash surrender value would be the Account Value of
$9,292.50 minus the 8% surrender charge and other applicable deductions.
In the case of multiple purchase payments, for purposes of the credit, the most
recent purchase payment is deemed to be withdrawn first. Suppose you make a
$10,000 purchase payment in January 1999 (getting a $325 credit) and a $20,000
purchase payment in June 1999 (getting a $650 credit). If you die in March 2000
(more than 12 months after the January 1999 purchase payment, but less than 12
months after the June 1999 purchase payment), the $650 credit for the June
purchase payment has not vested (since it is less than 12 months old) so the
full $650 is deducted in calculating the death benefit. However, the death
benefit would include any earnings attributable to that credit. The $325 credit
for the January payment is over 12 months old so it (and any earnings on it) is
included in the death benefit.
ACCOUNT VALUE
Before the annuity date, the account value is equal to: (a) the general account
options accumulated value plus (b) the variable accumulated value.
The variable accumulated value is determined at the end of each valuation day.
To determine the variable accumulated value on a day that is not a valuation
day, the value as of the end of the next valuation day will be used. The
variable accumulated value is expected to change from valuation period to
valuation period, reflecting how investments within selected portfolios
performed. The variable accumulated value will also reflect deductions for
charges and fees. A valuation period is the period between successive valuation
days. It begins at the close of the New York Stock Exchange (generally 4:00 p.m.
ET) on each valuation day and ends at the close of the New York Stock Exchange
on the next succeeding valuation day. A valuation day is each day that the New
York Stock Exchange is open for regular business.
How Variable Accumulation Units Are Valued
Purchase payments allocated to a variable sub-account are credited to the
variable accumulated value in the form of variable accumulation units. The
number of variable accumulation units credited for each variable sub-account is
determined by dividing the purchase payment allocated to the variable
sub-account by the variable accumulation unit value for that variable
sub-account. In the case of the initial purchase payment, variable accumulation
units for that payment will be credited to the variable accumulated value within
two valuation days of the later of:
of: (a) the date sufficient information, in an acceptable manner and form,
is received at our Service Center; or
(b) the date our Service Center receives the initial purchase payment.
In the case of any additional purchase payment, variable accumulation units for
that payment will be credited at the end of the valuation period during which
Transamerica receives the payment. The value of a variable accumulation unit for
each variable sub-account is established at the end of each valuation period and
is calculated by multiplying the value of that unit at the end of the prior
valuation period by the variable sub-account's net investment factor for the
valuation period. The value of a variable accumulation unit can go either up or
down.
The net investment factor is used to determine the value of accumulation and
annuity unit values for the end of a valuation period. The applicable formula
can be found in the statement of additional information.
Transfers involving variable sub-accounts will result in the crediting and/or
cancellation of variable accumulation units having a total value equal to the
dollar amount being transferred to or from a particular variable sub-account.
The crediting and cancellation of such units is made using the variable
accumulation unit value of the applicable variable sub-account as of the end of
the valuation day in which the transfer is effective.
TRANSFERS
Before the Annuity Date
Before the annuity date, you may transfer all or any portion of the account
value among the variable sub-accounts and the guarantee periods. Transfers are
restricted into or out of the fixed account. See General Account Options in
Appendix A.
Transfers among the variable sub-accounts and the general account options may be
made by submitting a request, in a form and manner acceptable to Transamerica,
to the Service Center. The transfer request must specify:
specify: (1) the variable sub-account(s) and/or the general account
option(s) from which your transfer is to be made
2. the amount of your transfer; and
(2) the amount of the transfer; and (3) the variable sub-account(s) and/or
general account option(s) to receive the transferred
amount
The minimum amount which you may transfer from the variable sub-accounts and the
general account options is $1,000. Transfers among the variable sub-accounts are
also subject to the terms and conditions imposed by the portfolios.
When a transfer is made from a guarantee period before the end of its term, the
amount transferred may be subject to an interest adjustment. (See The General
Account Options in Appendix A.) A transfer from a guarantee period made within
30 days before the last day of its term will not be subject to any interest
adjustment.
Transamerica currently imposes a transfer fee of $10 for each transfer in excess
of 18 made during the same contract year. Transamerica reserves the right to
waive the transfer fee or vary the number of transfers without charge. We may
also choose not to count transfers under certain options or services for
purposes of the allowed number without charge. See Transfers on page 29 for
additional limitations regarding transfers. A transfer generally will be
effective on the date the request for transfer is received by the Service
Center.
If a transfer reduces the value in a variable sub-account or guarantee period or
in the fixed account to less than $1,000, then we reserve the right to transfer
the remaining amount along with the amount requested to be transferred. We will
do this in accordance with the transfer instructions provided by the owner.
Under current law, there will not be any tax liability for transfers within the
contract.
Other Restrictions
Transamerica reserves the right without prior notice to modify, restrict,
suspend or eliminate the transfer privileges (including telephone transfers) at
any time and for any reason. For example, restrictions may be necessary to
protect owners from adverse impacts on portfolio management of large and/or
numerous transfers by market timers or others. Transamerica has determined that
the movement of significant variable sub-account values from one variable
sub-account to another may prevent the underlying portfolio from taking
advantage of investment opportunities. This is likely to arise when the volume
of transfers is high, since each portfolio must maintain a significant cash
position in order to handle redemptions. Such movement may also cause a
substantial increase in portfolio transaction costs which must be indirectly
borne by owners. Therefore, Transamerica reserves the right to require that all
transfer requests be made by the owner and not by a third party holding a power
of attorney. We also require that each transfer you request be made by a
separate communication to Transamerica. Transamerica also reserves the right to
require that each transfer request be submitted in writing and be manually
signed by the owner(s). We may choose not to allow telephone or facsimile
transfer requests.
Telephone Transfers
Transamerica will allow telephone transfers if the owner has provided proper
authorization for such transfers in a form and manner acceptable to
Transamerica. Transamerica reserves the right to suspend telephone transfer
privileges at any time, for some or all contracts, for any reason. Withdrawals
are not permitted by telephone.
Transamerica will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. If we follow such procedures, we will not
be liable for any losses due to unauthorized or fraudulent instructions. In the
opinion of certain government regulators, Transamerica may be liable for such
losses if it does not follow those procedures. The procedures Transamerica will
follow for telephone transfers may include requiring some form of personal
identification prior to acting on instructions received by telephone, providing
written confirmation of the transaction, and/or tape recording the instructions
given by telephone.
Dollar Cost Averaging
Prior to the annuity date, you as the owner may request that amounts be
automatically transferred on a monthly basis from a source account, which is
currently either the money market sub-account or the fixed account, to any of
the variable sub-accounts. You can accomplish this by submitting a request to
the Service Center in a form and manner acceptable to Transamerica. Other source
accounts may be available; call the Service Center for information regarding
availability.
You may only dollar cost average from one source account at a time. The
transfers will begin when the owner requests, but no sooner than one week
following, receipt of such request. For new variable annuity policies, dollar
cost averaging transfers will not commence until the later of (a) 30 days after
the contract effective date, or (b) the estimated end of the free look period
(allowing 5 days for delivery). Transfers will continue for the number of
consecutive months which you selected unless:
1. you, as owner, terminate the transfers
selected by the owner unless (1) terminated by the owner, (2)
automatically terminated by TransamericaTransamerica automatically
terminates the transfers because there are insufficient amounts in the
source account
3. for other reasons that are described in the election form
As owner, you may request that monthly transfers be continued for a specific
length of time. You can do this by giving notice to the Service Center in a form
and manner acceptable to us within 30 days prior to the last monthly transfer.
If you do not make a request to continue the monthly transfers, this option will
terminate automatically with the last transfer at the end of the length of time
you initially designated.
Eligibility Requirements for Dollar Cost Averaging
In order to be eligible for dollar cost averaging, the following conditions must
be met:
1. the value of your source account must be at least $5,000
2. the minimum amount that you can transfer out of the source account is
$250 per month
3. the minimum amount you can transfer into any other variable sub-account
is the greater of $250 or 10% of the amount being transferred
These limits may be changed for new elections of this service. Dollar cost
averaging transfers can not be made from a source account from which systematic
withdrawals or automatic payouts are also being made.
Currently, we do not charge for the dollar cost averaging option. Transfers due
to dollar cost averaging currently will not count toward the number of transfers
allowed without charge per contract year. Transamerica may charge in the future
for dollar cost averaging.
Dollar cost averaging transfers may not be made to or from the guarantee period
account or to the fixed account.
Dollar cost averaging may not be elected at the same time that automatic asset
rebalancing is in effect.
Automatic Asset Rebalancing
After purchase payments have been allocated among the variable sub-accounts, the
performance of each variable sub-account may cause proportions of the values in
the variable sub-accounts to vary from the percentages which you initially
defined. As the owner you may instruct Transamerica to automatically rebalance
the amounts in the variable account by reallocating amounts among the variable
sub-accounts, at the time, and in the percentages, specified in the owner
instructions to Transamerica and accepted by Transamerica. As the owner you may
elect to have the rebalancing done on an annual, semi-annual or quarterly basis.
You may elect to have amounts allocated among the variable sub-accounts using
whole percentages, with a minimum of 10% allocated to each variable sub-account.
As the owner you may elect to establish, change or terminate the automatic asset
rebalancing by submitting a request to the Service Center in a form and manner
acceptable to Transamerica. Automatic asset rebalancing currently will not count
towards the number of transfers without charge in a contract year. Transamerica
reserves the right to discontinue the automatic asset rebalancing service at any
time for any reason. There is currently no charge for the automatic asset
rebalancing service. Transamerica may charge for this service in the future, and
may count the transfers toward those allowed without charge.
Automatic asset rebalancing may not be elected at the same time that dollar cost
averaging is in effect.
After the Annuity Date
If a variable payment option is elected, the owner may make transfers among
variable sub-accounts after the annuity date by giving a written request to the
Service Center, subject to the following provisions: (1) transfers after the
annuity date may be made no more than four times during any contract year; and
(2) the minimum amount transferred from one variable sub-account to another is
the amount supporting a current $75 monthly payment.
Transfers among variable sub-accounts after the annuity date will be processed
based on the formula outlined in the appendix in the Statement of Additional
Information.
CASH WITHDRAWALS
If you are the owner of a non-qualified contract you may withdraw all or part of
the cash surrender value at any time prior to the annuity date by giving a
written request to the Service Center. For qualified contracts, reference should
be made to the terms of the particular retirement plan or arrangement for any
additional limitations or restrictions, including prohibitions, on cash
withdrawals. See Federal Tax Matters, page 44. The cash surrender value is equal
to the account value, minus any account fee, interest adjustment, contingent
deferred sales load and premium tax charges. A full surrender will result in a
cash withdrawal payment equal to the cash surrender value at the end of the
valuation period during which the election is received. It must be received
along with all completed forms required at that time by Transamerica. No
surrenders or withdrawals may be made after the annuity date. Partial
withdrawals must be at least $1,000.
In the case of a partial withdrawal, you may direct the Service Center to
withdraw amounts from specific variable sub-account(s) and/or from the general
account options. If the owner does not specify, the withdrawal will be taken pro
rata from account value.
A partial withdrawal request cannot be fulfilled if it would reduce your
account value to less than $2,000. In such instances, you will be notified.
Any withdrawal requests (including surrender requests) generally will be
processed as of the end of the valuation period during which the request and all
completed forms are received. We will pay any cash withdrawal, settlement option
payment or lump sum death benefit due from the variable account and process of
any transfers within seven days from the date we receive your request. However,
Transamerica may postpone such payment if:
if: (1) the New York Stock Exchange is closed for other than usual weekends
or holidays, or trading on the Exchange is otherwise restricted
restricted; or (2) an emergency exists as defined by the Commission, or the
Commission requires that trading be restricted
restricted; or (3) the Commission permits a delay for the protection of
owners
The withdrawal request will be effective when we receive all required withdrawal
request forms. Payments to you for any monies derived from a purchase payment
which you made by check may be delayed until your check has cleared your bank.
When you make a withdrawal from a guarantee period before the end of its term,
the amount you withdraw may be subject to an interest adjustment. See The
General Account Options in Appendix A.
Transamerica may delay payment of any withdrawal from the general account
options for up to six months after we receive the request for such withdrawal.
If we delay payment for more than 30 days, we will pay interest on the
withdrawal amount up to the date of payment.
Since you as the owner assume the investment risk for all amounts in the
variable account and because certain withdrawals are subject to a contingent
deferred sales load and other charges, the total amount paid upon surrender of
your contract may be more or less than the total purchase payments.
As owner, you may elect, under the systematic withdrawal option or automatic
payout option (but not both), to withdraw certain amounts on a periodic basis
from the variable sub-accounts before the annuity date.
The tax consequences of a withdrawal or surrender are discussed later in
this prospectus. See Federal Tax Matters page 44.
Systematic Withdrawal Option
Before the annuity date, you may elect to have withdrawals automatically made
from one or more variable sub-account(s) on a monthly basis. Other distribution
modes may be permitted. The withdrawals will not begin until the later of (a) 30
days after the contract effective date or (b) the end of the free look period.
Withdrawals will be from the variable sub-account(s) and in the percentage
allocations that you specify. Unless you specify otherwise, withdrawals will be
pro rata based on account value and any applicable interest adjustment will
apply to withdrawals from the guarantee periods. You cannot make systematic
withdrawals from a variable sub-account from which dollar cost averaging
transfers are being made. Likewise, systematic withdrawals can not be used at
the same time that the automatic payment option is in effect. The systematic
withdrawal option is currently not available with respect to the general
account.
To be eligible for the systematic withdrawal option, the account value must be
at least $12,000 at the time of election. The minimum monthly amount that can be
withdrawn is $100. Currently, as the owner, you can elect any amount over $100
to be withdrawn systematically. You may also make partial withdrawals while
receiving systematic withdrawals. If your total withdrawals (systematic,
automatic, or partial) in a contract year exceed the allowed amount to be
withdrawn without charge for that year, your account(s) will be charged any
applicable contingent deferred sales load which may apply.
The withdrawals will continue indefinitely unless you terminate them. If you
choose to terminate this option you may not elect to use it again until the end
of the next 12 full months.
Transamerica reserves the right to impose an annual fee of up to $25 for
processing payments under this option. This fee, which is currently waived, will
be deducted in equal installments from each systematic withdrawal during a
contract year.
Systematic withdrawals may be taxable and, prior to age 59 1/2, subject to
a 10% federal tax penalty. See Federal Tax Matters, page 44.
Automatic Payout Option ("APO")
Before the annuity date, for certain qualified contracts, the owner may elect
the automatic payout option (APO) to satisfy minimum distribution requirements
under Sections 401(a)(9), 403(b), and 408(b)(3) of the Code. See Federal Tax
Matters page 44. For IRAs and SEP/IRAs this option may be elected no earlier
than six months before the calendar year in which you, as the owner, attain age
70 1/2. Payments may not begin earlier than January of such calendar year. For
other qualified contracts, APO can be elected no earlier than six months before
the latter of: (a) when you, as the owner, attain age 70 1/2; or (b) when you
retire from employment. Additionally, APO withdrawals may not begin before the
latter of (a) 30 days after the contract effective date or (b) the end of the
free look period. APO may be elected in any calendar month, but no later than
the month of the owner's 84th birthday.
Withdrawals will be from the variable sub-account(s) and in the percentage
allocations you specify. If you do not specify otherwise, withdrawals will be
pro rata from account value. You can not make withdrawals from a variable
sub-account from which you have designated that dollar cost averaging transfers
be made. The APO is not currently available as a feature for the general
account. The calculation of the APO amount will reflect the total account value
although the withdrawals are only from the variable sub-accounts. This
calculation and APO are based solely on the value in this contract.
To be eligible for this option, you must meet the following conditions: (1) your
account value must be at least $12,000 at the time at which you select this
option; (2) the annual withdrawal amount is the larger of the required minimum
distribution under Code Sections 401(a)(9) or 408(b)(3) or $500. These
conditions may change. Currently, withdrawals under this option are only paid
annually.
The withdrawals will continue indefinitely unless you terminate them. If there
are insufficient amounts in the variable account to make a withdrawal, this
option generally will terminate. Once terminated, APO may not be elected again.
DEATH BENEFIT
If an owner dies before the annuity date, a death benefit is payable. If death
occurs prior to any owner's or joint owner's 80th birthday, the death benefit
will be equal to the greater of:
(a) the account value reduced by any credits less than 12 months old, or
(b) the sum of all purchase payments made to the contract minus withdrawals
and applicable premium tax charges.
If the owner or joint owner dies before the annuity date and after either the
deceased owner's or joint owner's 80th birthday, the death benefit will be the
account value minus any credits less than 12 months old. For purposes of
calculating a death benefit, the account value is determined as of the date the
benefit is paid. If the owner is not a natural person (for example, such as a
corporation, trust or other legal entity), the annuitant(s) will be treated as
the owner(s) for purposes of the death benefit. For example, if the owner is a
trust that allows a person(s) other than the trustee to exercise the ownership
rights under this certificate, such person(s) must be named annuitant(s). This
named party will be treated as the owner(s) so the death benefit will be
determined based on the age of the annuitant(s).
If the Guaranteed Minimum Death Benefit Rider is elected and if death occurs
before the annuity date and prior to any owner's or joint owner's 85th birthday,
the death benefit will be equal to the greatest of:
(a) the account value, or
(b) the sum of all purchase payments less withdrawals taken, adjusted as
described below, and the applicable premium tax charges, or
(c) the highest account value in any contract anniversary prior to the
earlier of the owner's or joint owner's 85th birthday, plus purchase
payments made less withdrawals taken, adjusted as described below, and
applicable premium tax charges since that contract anniversary.
If the Guaranteed Minimum Death Benefit Rider is elected and if the owner or
joint owner dies before the annuity date and after either the deceased owner's
or joint owner's 85th birthday the death benefit will be equal to the greater
of:
(a) the account value or
(b) the highest account value on any contract anniversary prior to the
earlier of the owner's or joint owner's 85th birthday plus purchase
payments made less withdrawals taken, adjusted as described below, and
any applicable premium tax charges since that anniversary.
Upon any withdrawal, the amount of the Guaranteed Minimum Death Benefit will be
reduced. The amount of that reduction will depend upon whether the account value
is more or less than the Guaranteed Minimum Death Benefit on the date of
withdrawal. If the account value is equal to or more than the Guaranteed Minimum
Death Benefit, the Guaranteed Minimum Death Benefit will be reduced by the
dollar amount of any withdrawals. If the account value is less than the
Guaranteed Minimum Death Benefit, the Guaranteed Minimum Death Benefit will be
reduced proportionately to the reduction in the account value. For example, if
the withdrawal reduces the account value by 20%, then the Guaranteed Minimum
Death Benefit will also be reduced by 20%.
An ownership change will be subject to our current underwriting rules and may
decrease the death benefit. However, such reduction will never decrease the
death benefit below the account value (minus any credits less than 12 months
old).
Payment of Death Benefit
The death benefit is generally payable upon receipt of proof of death of the
owner. Once we have received this proof, and the beneficiary has selected a
method of settlement, the death benefit generally will be paid within seven
days, or as soon thereafter as Transamerica has sufficient information about the
beneficiary to make the payment.
The death benefit will be determined as of the end of the valuation period
during which our Service Center receives:
(a) proof of death of the owner or joint owner
(b) the written notice of the settlement option elected by the person
to whom the death benefit is payable
If no settlement method is elected, the death benefit will be a lump sum
distributed within five years after the owner's death. No contingent deferred
sales load nor interest adjustment will apply.
Until the death benefit is paid, the account value allocated to the variable
account remains in the variable account, and fluctuates with investment
performance of the applicable portfolio(s). For this reason, the amount of the
death benefit depends on the account value at the time the death benefit is
paid, not at the time of death.
Designation of Beneficiaries
As owner, you may select one or more beneficiaries by designating the person(s)
to receive the amounts payable under this contract. The individual(s) you
designate will receive the percentage you establish if:
contract if: the owner diesyou die before the annuity date and there is no
joint owner
you die after the annuity date and settlement option payments have begun under a
selected settlement option that guarantees payments for a certain peri time
If a beneficiary dies before the owner, that beneficiary's interest in the
annuity will end upon his or her death.
A beneficiary may be named or changed at any time in a form and manner
acceptable to us. Any change made to an irrevocable beneficiary must also
include the written consent of the beneficiary, except as otherwise required by
law.
If more than one beneficiary is named, each named beneficiary will share equally
in any benefits or rights granted by this contract unless the owner gives us
other instructions at the time the beneficiaries are named.
Transamerica may rely on any affidavit by any responsible person in
determining the identity or non-existence of any beneficiary not
identified by name
Death of Owner or Joint Owner Before the Annuity Date
If the owner or joint owner dies before the annuity date, we will pay the death
benefit as specified in this section. The entire death benefit must be
distributed within five years after the owner's death. If the owner is not an
individual, an annuitant's death will be treated as the death of the owner as
provided in Code Section 72 (s)(6). For example, this certificate will remain in
force with the annuitant's surviving spouse as the new annuitant if:
SYMBOL 159 \f "Wingdings" \s 10This contract is owned by a trust; and
SYMBOL 159 \f "Wingdings" \s 10The beneficiary is either the
annuitant's surviving spouse, or a trust holding the contract
solely for the benefit of such spouse.
The manner in which we will pay the death benefit depends on the status of the
person(s) involved in the contract. The death benefit will be payable to the
first person from the applicable list below:
If the owner is the annuitant:
SYMBOL 159 \f "Wingdings" \s 10The joint owner, if any
SYMBOL 159 \f "Wingdings" \s 10The beneficiary, if any
If the owner is not the annuitant:
SYMBOL 159 \f "Wingdings" \s 10The joint owner, if any
SYMBOL 159 \f "Wingdings" \s 10The beneficiary, if any
SYMBOL 159 \f "Wingdings" \s 10The annuitant;
SYMBOL 159 \f "Wingdings" \s 10The joint annuitant; if any
If the death benefit is payable to the owner's surviving spouse (or to a trust
for the sole benefit of such surviving spouse),
We will continue this contract with the owner's spouse as the new annuitant (if
the owner was the annuitant) and the new owner (if applicable), unless such
spouse selects another option as provided below.
If the death benefit is payable to someone other that the owner's surviving
spouse,
We will pay the death benefit in a lump sum payment to, or for the benefit of,
such person within five years after the owner's death, unless such person(s)
selects another option as provided below.
In lieu of the automatic form of death benefit specified above,
The person(s) to whom the death benefit is payable may elect to receive it:
SYMBOL 159 \f "Wingdings" \s 10In a lump sum; or
SYMBOL 159 \f "Wingdings" \s 10As settlement option payments,
provided the person making the election is an individual. Such
payments must begin within one year after the owner's death
and must be in equal amounts over a period of time not
extending beyond the individual's life or life expectancy.
Election of either option must be made no later than 60 days prior to the
one-year anniversary of the owner's death. Otherwise, the death benefit will be
settled under the appropriate automatic form of benefit specified above.
If the person to whom the death benefit is payable dies before the entire death
benefit is paid,
We will pay the remaining death benefit in a lump sum to the payee named by such
person or, if no payee was named, to such person's estate.
If the death benefit is payable to a non-individual (subject to the special rule
for a trust for the sole benefit of a surviving spouse),
We will pay the death benefit in a lump sum within one year after the owner's
death.
If the Annuitant Dies Before the Annuity Date
If an owner and an annuitant are not the same individual and the annuitant (or
the last of joint annuitants) dies before the annuity date, the owner will
become the annuitant until a new annuitant is selected.
Death after the Annuity Date
If an owner or the annuitant dies after the annuity date, any amounts payable
will continue to be distributed at least as rapidly as under the settlement and
payment option then in effect on the date of death.
Upon the owner's death after the annuity date, any remaining ownership rights
granted under this contract will pass to the person to whom the death benefit
would have been paid if the owner had died before the annuity date, as specified
above.
Survival Provision
The interest of any person to whom the death benefit is payable who dies at the
time of, or within 30 days after, the death of the owner will also terminate if
no benefits have been paid to such beneficiary, unless the owner had given us
written notice of some other arrangement.
CHARGES, FEES AND DEDUCTIONS
No deductions are currently made from purchase payments (although we reserve the
right to charge for any applicable premium tax charges). Therefore, the full
amount of the purchase payments are invested in one or more of the variable
sub-accounts and/or the general account options.
Contingent Deferred Sales Load
No deduction for sales charges is made from purchase payments at the time they
are made. However, a contingent deferred sales load of up to 8% of purchase
payments may be imposed on certain withdrawals or surrenders to partially cover
certain expenses incurred by Transamerica relating to the sale of the contract,
including commissions paid to salespersons, the costs of preparation of sales
literature and other promotional costs and acquisition expenses.
The contingent deferred sales load percentage varies according to the number of
years between when a purchase payment was credited to the contract and when the
withdrawal is made. The amount of the contingent deferred sales load is
determined by multiplying the amount withdrawn that is subject to the contingent
deferred sales load by the contingent deferred sales load percentage in
accordance with the following table. In no event shall the total contingent
deferred sales load assessed against the contract exceed 8% of the total
purchase payments.
Number of Years
Since Receipt of Contingent Deferred Sales Load
contingent deferred sales load
Purchase Payment Payment As a Percentage of Purchase
- -----------------------------------------------------------
Less than one year 8%
1 year but less than 2 years 8%
2 years but less than 3 years 7%
3 years but less than 4 years 6%
4 years but less than 5 years 5%
5 years but less than 6 years 4%
6 years but less than 7 years 3%
7 or more years 0%
Free Withdrawals-Allowed Amount
Beginning 30 days after the contract effective date (or the end of the free look
period, if later), the owner may make a withdrawal up to the "allowed amount"
without incurring a contingent deferred sales load each contract year before the
annuity date.
The allowed amount each contract year is equal to 10% of: the total purchase
payments received during the last seven years determined as of the last contract
anniversary, minus any withdrawals during the present contract year. In the
first contract year, the 10% will be applied to the total purchase payments at
the time of the first withdrawal.
Purchase payments held for seven full years may be withdrawn without charge.
Withdrawals will be made first from purchase payments on a first-in/first-out
basis and then from earnings and last from credits. The allowed amount may vary
depending on the state in which your contract is issued. If the allowed amount
is not fully withdrawn or paid out during a contract year, it does not carry
over to the next contract year.
Free Withdrawals - Living Benefits Rider
When the contract is purchased, you, as the owner, may also elect, in certain
states, a Living Benefits Rider for an additional fee. This rider provides that
the contingent deferred sales load will be waived in any of the three following
instances:
(1)if the owner receivesif you, as the owner, receive extended medical
care in a licensed hospital or nursing care facility (as defined in the
contract) for at least 60 consecutive days, and the request for the
withdrawal or surrender, together with proof of such extended care, is
received at the Service Center during the term of such care, or within
90 days after the last day upon which you received such extended care;
or
(2)if the owner receives medically required in-home care for at least 60
days and such extended in-home medical care is certified by a qualified
medical professional and the owner may also be required to submit other
evidence as required by Transamerica such as evidence of medicare
eligibility; or
(3)if the owner becomes terminally ill after the first contract year and
the terminal illness is diagnosed by a qualified medical professional
and is reasonably expected to result in death within 12 months.
Neither 1 nor 2 apply if you as owner are receiving extended medical care in a
licensed hospital or nursing care facility or in-home medical care at the time
you purchase the contract.
Transamerica reserves the right to not accept purchase payments after the owner
has qualified for any of these waivers. Owner under this rider means either the
owner or the joint owner, if any, or annuitant(s) if the contract is not owned
by an individual. Any withdrawals under this rider on which the contingent
deferred sales load is waived will not reduce the allowed amount for the
contract year. Any credits less than 12 months old will not be available for
withdrawal under this rider.
Other Free Withdrawals
In addition, no contingent deferred sales load is assessed:
upon annuitization after the first contract year to an option involving
life contingencies
upon payment of the death benefit
Any applicable contingent deferred sales load will be deducted from the amount
requested for both partial withdrawals (including withdrawals under the
systematic withdrawal option or the APO) and full surrenders, unless the owner
elects to add the amount of the applicable load to the amount requested for a
partial withdrawal to cover the applicable contingent deferred sales load. The
contingent deferred sales load and any premium tax charge applicable to a
withdrawal from the guarantee period account will be deducted from the amount
withdrawn after the interest adjustment, if any, is applied and before payment
is made.
Administrative Charges
Account Fee. At the end of each contract year before the annuity date,
Transamerica deducts an annual account fee as partial compensation for expenses
relating to the issue and maintenance of the contract and the variable account.
The annual account fee is equal to the lesser of $30 or 2% of the account value.
The account fee may be increased upon 30 days advance written notice, but in no
event may it exceed $60 (or 2% of the account value, if less) per contract year.
If the contract is surrendered, the account fee, unless waived will be deducted
from a full surrender before the application of any contingent deferred sales
load. The account fee will be deducted on a pro rata basis (based on values)
from the account value. The fee deductions will be based on both the variable
sub-accounts and the general account options. No interest adjustment will be
assessed on any deduction for the account fee taken from the guarantee period
account. The account fee for a contract year will be waived if the account value
exceeds $50,000 on the last business day of that contract year or as of the date
you, as owner, surrender the contract.
Annuity Fee. After the annuity date, an annual annuity fee of $30 to help cover
processing costs will be deducted in equal amounts from each variable payment
made during the year ($2.50 each month if monthly payments). This fee will not
be changed. No annuity fee will be deducted from fixed payments. This fee may be
waived.
Administrative Expense Charge. Transamerica also makes a daily deduction (the
administrative expense charge) from the variable account (both before and after
the contract date) at an effective current annual rate of 0.15% of assets held
in each variable sub-account to reimburse Transamerica for administrative
expenses. Transamerica has the ability in most states to increase or decrease
this charge, but the charge is guaranteed not to exceed 0.35%. Transamerica will
provide 30 days written notice of any change in fees. The administrative charges
do not bear any relationship to the actual administrative costs of a particular
contract. The administrative expense charge is reflected in the variable
accumulation or variable annuity unit values for each variable sub-account.
Mortality and Expense Risk Charge
Transamerica deducts a charge for bearing certain mortality and expense risks
under the contracts. This is a daily charge at an effective annual rate of 1.20%
of the assets in the variable account. Transamerica guarantees that this charge
of 1.20% will never increase. The mortality and expense risk charge is reflected
in the variable accumulation and variable annuity unit values for each variable
sub-account.
Variable accumulated values and variable settlement option payments are not
affected by changes in actual mortality experience incurred by Transamerica. The
mortality risks assumed by Transamerica arise from its contractual obligations
to make settlement option payments determined in accordance with the settlement
option tables and other provisions contained in the contract and to pay death
benefits prior to the annuity date.
The expense risk assumed by Transamerica is the risk that Transamerica's actual
expenses in administering the contracts and the variable account will exceed the
amount recovered through the administrative expense charge, account fees,
transfer fees and any fees imposed for certain options and services.
If the mortality and expense risk charge is insufficient to cover actual costs
and risks assumed, Transamerica will bear these losses. If this charge is more
than sufficient, any excess will accrue to Transamerica. Currently, Transamerica
expects a profit from this charge.
Transamerica anticipates that the contingent deferred sales load will not
generate sufficient funds to pay the cost of distributing the contracts. To the
extent that the contingent deferred sales load is insufficient to cover the
actual cost of contract distribution, the deficiency will be met from
Transamerica's general corporate assets which may include amounts, if any,
derived from the mortality and expense risk charge.
Living Benefits Rider Fee
If you, as the owner, elected the Living Benefits Rider when the contract was
purchased, a fee will be deducted at the end of each contract month while the
rider continues in force. The fee each month will be 1/12 of 0.05% of the
account value at that time. The fee is deducted from each variable sub-account
on a pro rata basis based on the value in each variable sub-account through the
cancellation of variable accumulation units. If there is insufficient variable
accumulated value, the fee will be deducted pro rata from the values in the
general account options (any interest adjustment will apply). Transamerica
reserves the right to waive the interest adjustment for deduction from the
guarantee period account for this rider fee.
Guaranteed Minimum Death Benefit Rider Fee
If the owner elects the Guaranteed Minimum Death Benefit (GMDB) Rider, a fee
will be deducted at the end of each contract month while the rider continues in
force in the amount of 1/12 of 0.20% of the account value at that time. The
account value is the sum of the variable accumulated value and the general
account options accumulated value. The GMDB Rider fee is deducted first from the
variable accumulated value by taking a deduction from each variable sub-account
pro rata based on the value in each variable sub-account through the
cancellation of variable accumulation units. If there is insufficient variable
accumulated value, the remainder of the fee will be deducted pro rata from the
values in the general account options (any interest adjustment will apply,
although Transamerica reserves the right to waive the interest adjustment).
Premium Tax Charges
Currently there is no charge for premium taxes except upon annuitization.
However, Transamerica may be required to pay premium or retaliatory taxes
currently ranging from 0% to 5%. Transamerica reserves the right to deduct a
charge for these premium taxes from premium payments, from amounts withdrawn, or
from amounts applied on the annuity date. In some states and jurisdictions,
charges for both direct premium taxes and retaliatory premium taxes may be
imposed at the same or different times with respect to the same purchase
payment, depending upon applicable law.
Transfer Fee
Transamerica currently imposes a fee for each transfer in excess of the first 18
in a single contract year. Transamerica will deduct the charge from the amount
transferred. This fee is $10 and will be used to help cover Transamerica's costs
of processing transfers. Transamerica reserves the right to waive this fee or to
not count transfers under certain options and services as part of the number of
allowed annual transfers without charge.
Option and Service Fees
Transamerica reserves the right to impose reasonable fees for administrative
expenses associated with processing certain options and services. These fees
would be deducted from each use of the option or service during a contract year.
Taxes
No charges are currently made for taxes. However, Transamerica reserves the
right to deduct charges in the future for federal, state, and local taxes or the
economic burden resulting from the application of any tax laws that Transamerica
determines to be attributable to the contracts.
Portfolio Expenses
The value of the assets in the variable account reflects the value of portfolio
shares and therefore the fees and expenses paid by each portfolio. A complete
description of the fees, expenses, and deductions from the portfolios are found
in the portfolios' prospectuses. (See "The Portfolios" page 20.)
Interest Adjustment
For a description of the interest adjustment applicable to early withdrawals and
transfers from the guaranteed period account, see "The General Account Options
- -- the Guarantee Period Account" in Appendix A of this prospectus.
Sales in Special Situations
Transamerica may sell the contracts in special situations that are expected to
involve reduced expenses for Transamerica. These instances may include:
sales in certain group arrangements, such as employee savings plans
sales to current or former officers, directors and employees (and their
families) of Transamerica and its affiliates
affiliates; 3) sales to officers, directors, and employees (and their
families) of the portfolios' investment advisers and their affiliates
sales to officers, directors, employees and sales agents
(registered representatives) (and their families) of
broker-dealers and other financial institutions that have
sales agreements with Transamerica to sell the contracts.
In these situations, 1) the contingent deferred sales load may be reduced or
waived, 2) the mortality and expense risk charge or administration charges may
be reduced or waived; and/or 3) certain amounts may be credited to the contract
account value (for examples, amounts related to commissions or sales
compensation otherwise payable to a broker-dealer may be credited to the
contract account value. These reductions in fees or charges or credits to
account value will not unfairly discriminate against any contract owner. These
reductions in fees or charges or credits to account value may be taxable and
treated as purchase payments for purposes of income tax and any possible premium
tax charge.
SETTLEMENT OPTION PAYMENTS
Annuity Date
The annuity date is the date that the annuitization phase of the contract
begins. On the annuity date, we will apply the annuity amount (defined below) to
provide payments under the settlement option selected by the owner. The annuity
date is selected by the owner and may be changed from time to time by the owner
by giving notice, in a form and manner acceptable to Transamerica, to the
Service Center. Notice of each change must be received by the Service Center at
least thirty (30) days prior to the then-current annuity date. The annuity date
cannot be earlier than the first contract anniversary except for certain
qualified contracts. The latest annuity date which may be elected is the later
of (a) the first day of the calendar month immediately preceding the month of
the annuitant's or joint annuitants' 85th birthday, or (b) the first day of the
month coinciding with or next following the tenth contract anniversary (but in
no event later than the annuitants' or joint annuitants' 90th birthday). The
latest allowed annuity date may vary in certain jurisdictions.
The annuity date must be the first day of a calendar month. The first settlement
option payment will be on the first day of the month immediately following the
annuity date. Certain qualified contracts may have restrictions as to the
annuity date and the types of settlement options available. See Federal Tax
Matters, page 44.
Settlement Option Payments
The annuity amount is the account value, minus any interest adjustment, minus
any applicable contingent deferred sales load, and minus any applicable premium
tax charges. Any contingent deferred sales load will be waived if the settlement
option payments involve life contingencies and begin on or after the first
contract anniversary.
If the amount of the monthly payment from the settlement option selected by the
owner would result in a monthly settlement option payment of less than $150, or
if the annuity amount is less than $5,000, Transamerica reserves the right to
offer a less frequent mode of payment or pay the cash surrender value in a cash
payment. Monthly settlement option payments from the variable payment option
will further be subject to a minimum monthly payment of $75 from each variable
sub-account from which such payments are made.
The owner may choose from the settlement options below. Transamerica may consent
to other plans of payment before the annuity date. For settlement options
involving life contingencies, the actual age and/or sex of the annuitant, or a
joint annuitant will affect the amount of each payment. Sex-distinct rates
generally are not allowed under certain qualified contracts. Transamerica
reserves the right to ask for satisfactory proof of the annuitant's (or joint
annuitant's) age. Transamerica may delay settlement option payments until
satisfactory proof is received. Since payments to older annuitants are expected
to be fewer in number, the amount of each annuity payment shall be greater for
older annuitants than for younger annuitants.
The owner may choose from the two payment options described below. The annuity
date and settlement options available for qualified contracts may also be
controlled by endorsements, the plan or applicable law.
Election of Settlement Option Forms and Payment Options
Before the annuity date, and while the annuitant is living, the owner may, by
written request, change the settlement option or payment option. The request for
change must be received by the Service Center at least 30 days prior to the
annuity date.
In the event that a settlement option form and payment option is not selected at
least 30 days before the annuity date, Transamerica will make settlement option
payments in accordance with the 120 month period certain and life settlement
option and the applicable provisions of the contract.
Payment Options
Owners may elect a fixed or a variable payment option, or a combination of both
(in 25% increments of the annuity amount).
Unless specified otherwise, the annuity amount in the variable account will be
used to provide a variable payment option and the amount in the general account
options will be used to provide a fixed payment option. In this event, the
initial allocation of variable annuity units for the variable sub-accounts will
be in proportion to the account value in the variable sub-accounts on the
annuity date.
Fixed Payment Option
A fixed payment option provides for payments which will remain constant
according to the terms of the settlement option which you elect. If you select a
fixed payment option, the portion of the annuity amount used to provide that
payment option will be transferred to the general account assets of
Transamerica. The amount of payments will be established by the fixed settlement
option which you select and the age and by sex (if sex-distinct rates are
allowed by law) of the annuitant(s). Payment amounts will not reflect investment
performance after the annuity date. The fixed payment amounts are determined by
applying the fixed settlement option purchase rate, which is specified in the
contract, to the portion of the annuity amount applied to the payment option.
Payments may vary after the death of an annuitant under some options; the
amounts of variances are fixed on the annuity date.
Variable Payment Option
A variable payment option provides for payments that vary in dollar amount,
based on the investment performance of the selected variable sub-account(s). The
variable settlement option purchase rate tables in the contract reflect an
assumed (but not guaranteed) annual interest rate of 4%. If the actual net
investment performance of the variable sub-account(s) is less than 4%, then the
dollar amount of the actual payments will decrease. If the actual net investment
performance of the variable sub-account(s) is higher than 4%, then the dollar
amount of the actual payments will increase. If the net investment performance
exactly equals the 4% rate, then the dollar amount of the actual payments will
remain constant. Transamerica may offer other assumed annual interest rates.
Variable payments will be based on the variable sub-accounts you select, and on
the monies which you allocate among them.
For further details as to the determination of variable payments, see the
Statement of Additional Information.
Settlement Option Forms
As owner, you may choose any of the settlement option forms described below.
Subject to approval by Transamerica, you may select any other settlement option
forms offered by Transamerica in the future.
(1) Life Annuity. Payments start on the first day of the month immediately
following the annuity date, if the annuitant is living. Payments end with the
payment due just before the annuitant's death. There is no death benefit. It is
possible that no payment will be made if the annuitant dies after the annuity
date but before the first payment is due; only one payment will be made if the
annuitant dies before the second payment is due, and so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the month
immediately following the annuity date, if the annuitant is living. Payments
will continue for as long as the annuitant lives. After the annuitant dies,
payments will be made to the contingent annuitant, for as long as the contingent
annuitant lives. The continued payments can be in the same amount as the
original payments, or in an amount equal to one-half or two-thirds thereof.
Payments will end with the payment due just before the death of the contingent
annuitant. There is no death benefit after both die. If the contingent annuitant
does not survive the annuitant, payments will end with the payment due just
before the death of the annuitant. It is possible that no payments or very few
payments will be made, if the annuitant and contingent annuitant die shortly
after the annuity date.
The written request for this form must: (a) name the contingent annuitant; and
(b) state the percentage of payments to be made after the annuitant dies. Once
payments start under this settlement option form, the person named as contingent
annuitant for purposes of being the measuring life, may not be changed.
Transamerica will require proof of age for the annuitant and for the contingent
annuitant before payments start.
(3) Life Annuity With Period Certain. Payments start on the first day of the
month immediately following the annuity date, if the annuitant is living.
Payments will be made for the longer of: (a) the annuitant's life; or (b) the
period certain. The period certain may be 120 or 180 or 240 months.
If the annuitant dies after all payments have been made for the period certain,
payments will cease with the payment that is paid just before the annuitant
dies. No benefit will then be payable to the beneficiary.
If the annuitant dies during the period certain, the rest of the period certain
payments will be made to the beneficiary, unless the owner provides otherwise.
The written request for this form must: (a) state the length of the period
certain; and (b) name the beneficiary.
(4) Joint and Survivor Annuity. Payments will be made starting on the first day
of the month immediately following the annuity date, if and for as long as the
annuitant and joint annuitant are living. After the annuitant or joint annuitant
dies, payments will continue as long as the survivor lives. Payments end with
the payment due just before the death of the survivor. The continued payments
can be in the same amount as the original payments, or in an amount equal to
one-half or two-thirds thereof. It is possible that no payments or very few
payments will be made under this arrangement if the annuitant and joint
annuitant both die shortly after the annuity date.
The written request for this form must: (a) name the joint annuitant; and (b)
state the percentage of continued payments to be made upon the first death. Once
payments start under this settlement option form, the person named as joint
annuitant, for the purpose of being the measuring life, may not be changed.
Transamerica will need proof of age for the annuitant and joint annuitant before
payments start.
(5) Other Forms of Payment. We can provide benefits under any other settlement
option not described in this section as long as we agree to these options and
they comply with any applicable state or federal law or regulation. Requests for
any other settlement option must be made in writing to the Service Center at
least 30 days before the annuity date.
After the annuity date:
(a) you will not be allowed to make any changes in the settlement option
and payment option
(b) no additional purchase payment will be accepted under the contract
(c) no further withdrawals will be allowed
As the owner of a non-qualified contract you may, at any time after the contract
date, write to us at our Service Center to change the payee of benefits being
provided under the contract. The effective date of change in payee will be the
latter of:
(a) the date we receive the written request for such change
(b) the date specified by the owner
The owner of a qualified contract may not change payees, except as permitted by
the plan, arrangement or federal law.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax considerations
relating to the contract and is not intended as tax advice. This discussion is
not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under the contract. If you are concerned about these tax implications, you
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon Transamerica's understanding of the present federal
income tax laws as they are currently interpreted by the Internal Revenue
Service (IRS). No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS.
Moreover, no attempt has been made to consider any applicable state or other tax
laws.
The contract may be purchased on a non-tax qualified basis ("non-qualified
contract") or purchased and used in connection with plans or arrangements
qualifying for special tax treatment ("qualified contract"). Qualified contracts
are designed for use in connection with plans or arrangements entitled to
special income tax treatment under Sections 401, 403(b), 408 and 408A of the
Code. The ultimate effect of federal income taxes on the amounts held under a
contract, on settlement option payments, and on the economic benefit to the
owner, the annuitant, or the beneficiary may depend on:
the type of retirement plan or arrangement for which the
contract is purchased
on the tax and employment status of the individual concerned
on Transamerica's tax status
In addition, certain requirements must be satisfied when purchasing a qualified
contract with proceeds from a tax qualified retirement plan or other
arrangement. Certain requirements must also be met when receiving distributions
from a qualified contract, in order to continue receiving favorable tax
treatment. Therefore, purchasers of qualified contracts should seek competent
legal and tax advice regarding the suitability of the contract for their
individual situation, the applicable requirements, and the tax treatment of the
rights and benefits of the contract. The following discussion is based on the
assumption that the contract qualifies as an annuity for federal income tax
purposes and that all purchase payments made to qualified contracts are in
compliance with all requirements under the Code and the specific retirement plan
or arrangement.
Purchase Payments
At the time the initial purchase payment is paid, a prospective purchaser must
specify whether he or she is purchasing a non-qualified contract or a qualified
contract. If the initial purchase payment is derived from an exchange, transfer,
conversion or surrender of another annuity contract, Transamerica may require
that the prospective purchaser provide information with regard to the federal
income tax status of the previous annuity contract. Transamerica will require
that persons purchase separate contracts if they desire to invest monies
qualifying for different annuity tax treatment under the Code. Each such
separate contract would require the minimum initial purchase payment previously
described. Additional purchase payments under a contract must qualify for the
same federal income tax treatment as the initial purchase payment under the
contract; Transamerica will not accept an additional purchase payment under a
contract if the federal income tax treatment of such purchase payment would be
different from that of the initial purchase payment.
Taxation of Annuities
In General. Section 72 of the Code governs taxation of annuities in general.
Transamerica believes that an owner who is a natural person generally is not
taxed on increases in the value of a contract until distribution occurs by
withdrawing all or part of the account value (e.g., withdrawals or settlement
option payments). For this purpose, the assignment, pledge, or agreement to
assign or pledge any portion of the account value (and in the case of a
qualified contract, any portion of an interest in the plan) generally will be
treated as a distribution. The taxable portion of a distribution is taxable as
ordinary income.
The owner of any contract who is not a natural person generally must include in
income any increase in the excess of the account value over the "investment in
the contract" (discussed below) during the taxable year. There are some
exceptions to this rule and a prospective owner that is not a natural person
should discuss these with a competent tax adviser.
The following discussion generally applies to a contract owned by a natural
person.
Withdrawals. With respect to non-qualified contracts, partial withdrawals
(including withdrawals under the systematic withdrawal option) are generally
treated as taxable income to the extent that the account value immediately
before the withdrawal exceeds the investment in the contract at that time. The
investment in the contract generally equals the amount of non-deductible
purchase payments made.
In the case of a withdrawal from qualified contracts (including withdrawals
under the systematic withdrawal option or the automatic payout option), a
ratable portion of the amount received is taxable, generally based on the ratio
of the investment in the contract to the individual's total accrued benefit
under the retirement plan or arrangement. The investment in the contract
generally equals the amount of non-deductible purchase payments made by or on
behalf of any individual. For certain qualified contracts, the investment in the
contract can be zero. Special tax rules applicable to certain distributions from
qualified contracts are discussed below, under Qualified Contracts.
If a partial withdrawal from the guarantee period account is subject to an
interest adjustment, the account value immediately before the withdrawal will
not be altered to take into account the interest adjustment. As a result, for
purposes of determining the taxable portion of a partial withdrawal, the account
value will be treated as including the amount deducted from the guarantee period
account due to the interest adjustment.
Full surrenders are treated as taxable income to the extent that the amount
received exceeds the investment in the contract.
Settlement Option Payments. Although the tax consequences may vary depending on
the settlement option elected under the contract, in general a ratable portion
of each payment that represents the amount by which the account value exceeds
the investment in the contract will be taxed based on the ratio of the
investment in the contract to the total benefit payable; after the investment in
the contract is recovered, the full amount of any additional settlement option
payments is taxable.
For variable payments, the taxable portion is generally determined by an
equation that establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the investment in the
contract by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her investment in the contract.
For fixed payments, in general there is no tax on the portion of each payment
which represents the same ratio that the investment in the contract bears to the
total expected value of the payments for the term selected; however, the
remainder of each settlement option payment is taxable. Once the investment in
the contract has been fully recovered, the full amount of any additional
settlement option payments is taxable. If settlement option payments cease as a
result of an annuitant's death before full recovery of the investment in the
contract, consult a competent tax adviser regarding deductibility of the
unrecovered amount.
Withholding. The Code requires Transamerica to withhold federal income tax from
withdrawals. However, except for certain qualified contracts, an owner will be
entitled to elect, in writing, not to have tax withholding apply. Withholding
applies to the portion of the distribution which is includible in income and
subject to federal income tax. The federal income tax withholding rate is 10%,
or 20% in the case of certain qualified plans, of the taxable amount of the
distribution. Withholding applies only if the taxable amount of the distribution
is at least $200. Some states also require withholding for state income taxes.
The withholding rate varies according to the type of distribution and the
Owner's tax status. Eligible rollover distributions from Section 401(a) plans
and Section 403(b) tax sheltered annuities are subject to mandatory federal
income tax withholding at the rate of 20%. An eligible rollover distribution is
the taxable portion of any distribution from such a plan, except for certain
distributions or settlement option payments made in a specified form. The 20%
mandatory withholding does not apply, however, if the Owner chooses a direct
rollover from the plan to another tax-qualified plan or to an IRA.
The federal income tax withholding rate for a distribution that is not an
eligible rollover distribution is 10% of the taxable amount of the distribution.
Penalty Tax. A federal income tax penalty equal to 10% of the amount treated as
taxable income may be imposed. In general, however, there is no penalty tax on
distributions:
distributions: (1) made on or after the date on which the owner attains age
59 1/2
59 1/2; (2) made as a result of death or disability of the owner
owner; or (3) received in substantially equal periodic payments as a life
annuity or a joint and survivor annuity for the life(ves) or life
expectancy(ies) of the owner and a designated beneficiary
Other exceptions to the tax penalty may apply to certain distributions from a
qualified contract.
Taxation of Death Benefit Proceeds. Amounts may be distributed from the contract
because of the death of an owner. Generally such amounts are includible in the
income of the recipient as follows: (1) if distributed in a lump sum, they are
taxed in the same manner as a full surrender as described above, or (2) if
distributed under a settlement option, they are taxed in the same manner as
settlement option payments, as described above. For these purposes, the
investment in the contract is not affected by the owner's death. That is, the
investment in the contract remains the amount of any purchase payments paid
which are not excluded from gross income.
Transfers, Assignments, or Exchanges of the Contract. For non-qualified
contracts, a transfer of ownership of a contract, the designation of an
annuitant, payee, or other beneficiary who is not also the owner, or the
exchange of a contract may result in certain tax consequences to the owner that
are not discussed herein. An owner contemplating any such designation, transfer,
assignment, or exchange should contact a competent tax adviser with respect to
the potential tax effects of such a transaction. Qualified contracts may not be
assigned or transferred, except as permitted by the Code or the Employee
Retirement Income Security Act of 1974 (ERISA).
Multiple Contracts. All deferred non-qualified contracts that are issued by
Transamerica (or its affiliates) to the same owner during any calendar year are
treated as one contract for purposes of determining the amount includible in
gross income under Section 72(e) of the Code. In addition, the Treasury
Department has specific authority to issue regulations that prevent the
avoidance of Section 72(e) through the serial purchase of contracts or
otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract and
separate deferred annuity contracts as a single annuity contract under its
general authority to prescribe rules that may be necessary to enforce the income
tax laws.
Qualified Contracts
In General. The qualified contracts are designed for use with several types of
retirement plans and arrangements. The tax rules applicable to participants and
beneficiaries in retirement plans or arrangements vary according to the type of
plan and the terms and conditions of the plan. Special tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
and in other specified circumstances.
We make no attempt to provide more than general information about use of the
contracts with the various types of retirement plans. Owners and participants
under retirement plans, as well as annuitants and beneficiaries, are cautioned
that the rights of any person to any benefits under qualified contracts may be
subject to the terms and conditions of the plans themselves, regardless of the
terms and conditions of the contract (including any endorsements) issued in
connection with such a plan. Some retirement plans are subject to distribution
and other requirements that are not incorporated in the administration of the
contracts. Owners are responsible for determining that contributions and other
transactions with respect to the contracts satisfy applicable law. Purchasers of
contracts for use with any retirement plan should consult their legal counsel
and tax adviser regarding the suitability of the contract.
For qualified plans under Section 401(a), 403(a) and 403(b), the Code requires
that distributions generally must commence no later than the later of April 1 of
the calendar year following the calendar year in which the owner (or plan
participant): (a) reaches age 70 1/2; or (b) retires, and must be made in a
specified form or manner. If the plan participant is a 5 percent owner (as
defined in the Code), distributions generally must begin no later than April 1
of the calendar year following the calendar year in which the owner (or plan
participant) reach age 70 1/2. For IRAs and SEP/IRAs described in Section 408,
distributions generally must commence no later than the later of April 1 of the
calendar year following the calendar year in which the owner (or plan
participant) reaches age 70 1/2. Roth IRAs under Section 408A do not require
distributions at any time prior to the owner's death.
Qualified Pension and Profit Sharing Plans. Section 401(a) of the Code permits
employers to establish various types of retirement plans for employees. Such
retirement plans may permit the purchase of the contract in order to provide
retirement savings under the plans. Adverse tax consequences to the plan, to the
participant or to both may result if this contract is assigned or transferred to
any individual as a means to provide benefits payments. If you are buying a
contract for use with such plans, you should seek competent advice. Advice you
receive should address the suitability of the proposed plan documents and the
contract to your specific needs.
Individual Retirement Annuities, Simplified Employee Plans and Roth IRAs. The
sale of a contract for use with any IRA may be subject to special disclosure
requirements of the Internal Revenue Service. If you purchase a contract for use
with an IRA you will be provided with supplemental information required by the
Internal Revenue Service or other appropriate agency. You will have the right to
cancel your purchase within 7 days of whichever is earliest: (a) the
establishment of your IRA; or (b) your purchase. If you intend to make such a
purchase, you should seek competent advice as to the suitability of the contract
you are considering purchasing for use with an IRA.
The contract is designed for use with IRA rollovers and contributory IRAs. A
contributory IRA is a contract to which initial and subsequent purchase payments
are subject to limitations imposed by the Code. Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program known as
an Individual Retirement Annuity or Individual Retirement Account (each
hereinafter is referred to as an IRA). Also, distributions from certain other
types of qualified plans may be rolled over on a tax-deferred basis into an IRA.
Earnings in an IRA are not taxed until distribution. IRA contributions are
limited each year to the lesser of $2,000 or 100% of the Owner's compensation
(including earned income as defined in Code Section 401(c)(2)). These
contributions may be deductible in whole or in part depending on the
individual's adjusted gross income and whether or not the individual in
considered an active participant in a qualified plan. The limit on the amount
contributed to an IRA does not apply to distributions from certain other types
of qualified plans that are rolled over on a tax-deferred basis into an IRA.
Amounts in the IRA (other than nondeductible contributions) are taxed when
distributed from the IRA. Distributions prior to age 59 1/2 (unless certain
exceptions apply) are subject to a 10% penalty tax.
Eligible employers that meet specified criteria under Code Section 408(k) could
establish simplified employee pension plans (SEP/IRAs) for their employees using
IRAs. Employer contributions that may be made to such plans are larger than the
amounts that may be contributed to regular IRAs, and may be deductible to the
employer. SEP/IRAs are subject to certain Code requirements regarding
participation and amounts of contributions.
The contract may also be used for Roth IRA conversions and contributory Roth
IRAs. A contributory Roth IRA is a contract to which initial and subsequent
purchase payments are subject to limitations imposed by the Code. Section 408A
of the Code permits eligible individuals to contribute to an individual
retirement program known as a Roth IRA, although contributions are not tax
deductible. In addition, distributions from a non-Roth IRA may be converted to a
Roth IRA. A non-Roth IRA is an individual retirement account or annuity
described in section 408(a) or 408(b), other than a Roth IRA. You should consult
a tax adviser before combining any converted amounts with any other Roth IRA
contributions, including any other conversion amounts from other tax years.
Distributions from a Roth IRA generally are not taxed, except that, once total
distributions exceed contributions to the Roth IRA, income tax and a 10% penalty
tax may apply to distributions you take:
1. before age 59 1/2 (subject to certain exceptions)
2. during the five taxable years starting with the year in which you first
contributed to the Roth IRA
If you intend to purchase a contract, you should seek competent advice as to
the suitability of the contract for use with Roth IRAs.
Tax Sheltered Annuities. Under Code Section 403(b), payments made by public
school systems and certain tax exempt organizations to purchase annuity
contracts for their employees are excludable from the gross income of the
employee, subject to certain limitations.
However, these payments may be subject to Social Security and Medicare (FICA)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of:
of: (1) elective contributions made in years beginning after December 31,
1988
2. earnings on those contributions
1988; (2) earnings on those contributions; and (3) earnings in such years
on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not subject to
the restrictions described above. However, funds transferred to a qualified
contract from a Section 403(b)(7) custodial account will be subject to the
restrictions.
Restrictions under Qualified Contracts. There may be other restrictions that
apply to the election, commencement, or distribution of benefits under qualified
contracts, or under the terms of the plans under which contracts are issued. A
qualified contract will be amended as necessary to conform to the requirements
of the Code.
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part I of Subchapter L
of the Code. Since the variable account is not an entity separate from
Transamerica, and its operations form a part of Transamerica, it will not be
taxed separately as a "regulated investment company" under Subchapter M of the
Code. Investment income and realized capital gains are automatically applied to
increase reserves under the contracts. Under existing federal income tax law,
Transamerica believes that the variable account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the contracts.
Accordingly, Transamerica does not anticipate that it will incur any federal
income tax liability attributable to the variable account and, therefore, we do
not intend to make provisions for any such taxes. However, if changes in the
federal tax laws or interpretations thereof result in Transamerica being taxed
on income or gains arising from the variable account, then Transamerica may
impose a charge against the variable account (with respect to some or all
contracts) in order to set aside provisions to pay such taxes.
Tax Status of the Contract
Diversification Requirements. Section 817(h) of the Code requires that with
respect to non-qualified contracts, the investments of the portfolios be
"adequately diversified" in accordance with Treasury regulations in order for
the contracts to qualify as annuity contracts under federal tax law. The
variable account, through the portfolios, intends to comply with the
diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5,
which affect how the portfolios' assets may be invested.
In certain circumstances, owners of variable annuity contracts may be considered
the owners, for federal income tax purposes, of the assets of the separate
accounts used to support their contracts. In those circumstances, income and
gains from the separate account assets would be includible in the variable
contract owner's gross income. The IRS has stated in published rulings that a
variable contract owner will be considered the owner of separate account assets
if the contract owner possesses incidents of ownership in those assets, such as
the ability to exercise investment control over the assets.
The Treasury Department has also announced, in connection with the issuance of
regulations concerning diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control for the
investments of a segregated asset account may cause the investor (i.e., the
owner), rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular Sub-Accounts without being treated as
owners of the underlying assets."
The ownership rights under the contract are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that contract owners were not owners of separate account assets. For example,
the owner has additional flexibility in allocating premium payments and account
values. These differences could result in an owner being treated as the owner of
a pro rata portion of the assets of the variable account. In addition,
Transamerica does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. Transamerica therefore reserves the right to modify the contract as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the variable account.
Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, section 72(s) of the Code requires any
non-qualified contract to provide that (a) if any owner dies on or after the
annuity date but prior to the time the entire interest in the contract has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of that
owner's death; and (b) if any owner dies prior to the annuity date, the entire
interest in the contract will be distributed within five years after the date of
the owner's death. These requirements will be considered satisfied as to any
portion of the owner's interest, which is payable to or for the benefit of a
"designated beneficiary." This interest is distributed over the life of the
"designated beneficiary," or over a period not extending beyond the life
expectancy of that beneficiary, provided that such distributions begin within
one year of the owner's death. The owner's "designated beneficiary" refers to a
natural person designated by the owner as a beneficiary. Upon the owner's death,
ownership of the contract passes to the "designated beneficiary." However, if
the owner's "designated beneficiary" is the surviving spouse of the deceased
owner, the contract may be continued with the surviving spouse as the new owner.
The non-qualified contracts contain provisions which are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. All provisions in the
contract will be interpreted to maintain this tax qualification. We may make
changes in order to maintain this qualification or to conform the contract to
any applicable changes in the tax qualification requirements. We will provide
you with a copy of any changes made to the contract.
Possible Changes in Taxation
Legislation has been proposed in 1998 that, if enacted, would adversely modify
the federal taxation of certain insurance and annuity contracts. For example,
one proposal would tax transfers among investment options and tax exchanges
involving variable contracts. A second proposal would reduce the investment in
the contract under cash value life insurance and certain annuity contracts by
certain amounts, thereby increasing the amount of income for purposes of
computing gain. Although the likelihood of there being any changes is uncertain,
there is always the possibility that the tax treatment of the Contracts could be
changed by legislation or other means. Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change). You should consult a tax adviser with respect to legislative
developments and their effect on the Contract.
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax consequences
is not exhaustive and special rules are provided with respect to other tax
situations not discussed in this prospectus. Further, the federal income tax
consequences discussed herein reflect Transamerica's understanding of current
law and the law may change. Federal estate and gift tax consequences and state
and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the contract depend on the individual
circumstances of each owner or recipient of the distribution. A competent tax
adviser should be consulted for further information.
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average annual total
returns for the variable sub-accounts. In addition, Transamerica may advertise
the effective yield of the money market variable sub-account. These figures will
be based on historical information and are not intended to indicate future
performance.
The yield of the money market variable sub-account refers to the annualized
income generated by an investment in that variable sub-account over a specified
seven-day period. The yield is calculated by assuming that the income generated
for that seven-day period is generated each seven-day period over a 52-week
period and is shown as a percentage of the investment. The effective yield is
calculated similarly but, when annualized, the income earned by an investment in
that variable sub-account is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The yield of a variable sub-account (other than the money market variable
sub-account) refers to the annualized income generated by an investment in the
variable sub-account over a specified thirty-day period. The yield is calculated
by assuming that the income generated by the investment during that thirty-day
period is generated each thirty-day period over a twelve-month period and is
shown as a percentage of the investment.
The yield calculations do not reflect the effect of any contingent deferred
sales load or premium taxes that may be applicable to a particular contract. To
the extent that the contingent deferred sales load or premium taxes are
applicable to a particular contract, the yield of that contract will be reduced.
For additional information regarding yields and total returns, please refer to
the Statement of Additional Information.
The average annual total return of a variable sub-account refers to return
quotations assuming an investment has been held in the variable sub-account for
various periods of time including, but not limited to, a period measured from
the date the variable sub-account commenced operations. When a variable
sub-account has been in operation for 1, 5, and 10 years, respectively, the
average annual total return for these periods will be provided. The average
annual total return quotations will represent the average annual compounded
rates of return that would equate an initial investment of $1,000 to the
redemption value of that investment (including the deduction of any applicable
contingent deferred sales load but excluding deduction of any premium taxes) as
of the last day of each of the periods for which total return quotations are
provided.
Performance information for any variable sub-account reflects only the
performance of a hypothetical contract under which account value is allocated to
a variable sub-account during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies and characteristics of the portfolios in
which the variable sub-account invests, and the market conditions during the
given time period, and should not be considered as a representation of what may
be achieved in the future. For a description of the methods used to determine
yield and total returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information including
(1) the ranking of any variable sub-account derived from rankings of variable
annuity separate accounts or their investment products tracked by Lipper
Analytical Services, Inc., VARDS, IBC/Donoghue's Money Fund Report, Financial
Planning Magazine, Money Magazine, Bank Rate Monitor, Standard and Poor's
Indices, Dow Jones Industrial Average, and other rating services, companies,
publications, or other persons who rank separate accounts or other investment
products on overall performance or other criteria, and (2) the effect of tax
deferred compounding on variable sub-account investment returns, or returns in
general, which may be illustrated by graphs, charts, or otherwise, and which may
include a comparison, at various points in time, of the return from an
investment in a contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a currently taxable basis.
Other ranking services and indices may be used.
In its advertisements and sales literature, Transamerica may discuss, and may
illustrate by graphs, charts, or through other means of written communication:
the implications of longer life expectancy for retirement planning
the tax and other consequences of long-term investment in the contract
the effects of the contract's lifetime payout options
the operation of certain special investment features of the contract
-- such as the dollar cost averaging option
Transamerica may explain and depict in charts, or other graphics, the effects of
certain investment strategies, such as allocating purchase payments between the
general account options and a variable sub-account. Transamerica may also
discuss the Social Security system and its projected payout levels and
retirement plans generally, using graphs, charts and other illustrations.
Transamerica may from time to time also disclose average annual total return in
non-standard formats and cumulative (non-annualized) total return for the
variable sub-accounts. The non-standard average annual total return and
cumulative total return will assume that no contingent deferred sales load is
applicable. Transamerica may from time to time also disclose yield, standard
total returns, and non-standard total returns for any or all variable
sub-accounts.
All non-standard performance data will only be disclosed if the standard
performance data is also disclosed. For additional information regarding the
calculation of other performance data, please refer to the Statement of
Additional Information.
Transamerica may also advertise performance figures for the variable
sub-accounts based on the performance of a portfolio prior to the time the
variable account commenced operations.
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is the principal underwriter
of the contracts under a Distribution Agreement with Transamerica. TSSC may also
serve as an underwriter and distributor of other contracts issued through the
variable account and certain other separate accounts of Transamerica and
affiliates of Transamerica. TSSC is an indirect wholly-owned subsidiary of
Transamerica Corporation. TSSC is registered with the Commission as a
broker/dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Its principal offices are located at 1150 South Olive Street, Los
Angeles, California 90015. TSSC may enter into sales agreements with
broker/dealers to solicit applications for the contracts through registered
representatives who are licensed to sell securities and variable insurance
products.
Under the Sales Agreements, TSSC will pay broker-dealers compensation based on a
percentage of each purchase payment. The percentage may be up to 4% and in
certain situations additional amounts for marketing allowances, production
bonuses, service fees, sales awards and meetings, and asset based trailer
commissions may be paid.
PREPARING FOR YEAR 2000
As a result of computer systems that may recognize a date of 12/31/00 as the
year 1900 rather than the year 2000, disruptions of business activities may
occur with the year 2000. In response, Transamerica established in 1997 a Y2K
committee to address this issue. With regard to the systems and software which
administer and affect the contracts, Transamerica has determined that its own
internal systems will be Year 2000 compliant. Additionally, Transamerica
requires any third party vendor which supplies software or administrative
services to Transamerica in connection with the administration of the contracts,
to certify that the software or services will be Year 2000 compliant. In
determining the variable accumulation unit values for each variable sub-account,
Transamerica is reliant upon information received from the portfolios and is
confirming that Year 2000 issues will not interfere with this flow of
information. As of the date of this prospectus, it is not anticipated that
contract owners will experience negative affects on their investment, or on the
services received in connection with their contracts, as a result of Year 2000
issues. However, especially when taking into account interaction with other
systems, it is difficult to predict with precision that there will be no
disruption of service in connection with the year 2000.
LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the variable account.
Transamerica is involved in various kinds of routine litigation which, in
management's judgment, are not of material importance to Transamerica's assets
or to the variable account.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal securities laws
applicable to the issue and sale of the contract has been provided by
Sutherland, Asbill & Brennan LLP. The organization of Transamerica, its
authority to issue the contract and the validity of the form of the contract
have been passed upon by James W. Dederer, General Counsel and Secretary of
Transamerica.
ACCOUNTANTS
The consolidated financial statements of Transamerica for each of the three
years in the period ended December 31, 1997, have been audited by Ernst & Young
LLP, Independent Auditors. Their reports appear in the Statement of Additional
Information, and they rely upon Ernst & Young LLP's expertise in accounting and
auditing. There are no audited financial statements for the variable account
since it had not commenced operations as of the date of this prospectus.
VOTING RIGHTS
To the extent required by applicable law, all portfolio shares held in the
variable account will be voted by Transamerica at regular and special
shareholder meetings of the respective portfolio. The shares will be voted in
accordance with instructions received from persons having voting interests in
the corresponding variable sub-account. If, however, the 1940 Act or any
regulation thereunder should be amended, or if the present interpretation
thereof should change, or if Transamerica determines that it is allowed to vote
all portfolio shares in its own right, Transamerica may elect to do so.
The person with the voting interest is the owner. The number of votes which are
available to an owner will be calculated separately for each variable
sub-account. Before the annuity date, that number will be determined by applying
his or her percentage interest, if any, in a particular variable sub-account to
the total number of votes attributable to that variable sub-account. The owner
holds a voting interest in each variable sub-account to which the account value
is allocated. After the annuity date, the number of votes decreases as
settlement option payments are made and as the reserves for the contract
decrease.
The number of votes of a portfolio will be determined as of the date coincident
with the date established by that portfolio for determining shareholders
eligible to vote at the meeting of the portfolios. Voting instructions will be
solicited by written communication prior to such meeting in accordance with
procedures established by the respective portfolios.
Shares as to which no timely instructions are received and shares held by
Transamerica as to which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
contracts participating in the variable sub-account. Voting instructions to
abstain on any item to be voted upon will be applied on a pro rata basis.
Each person or entity having a voting interest in a variable sub-account will
receive proxy material, reports and other material relating to the appropriate
portfolio.
It should be noted that generally the portfolios are not required, and do not
intend, to hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement (the "Registration Statement")
with the Securities and Exchange Commission under the 1933 Act relating to the
contract offered by this prospectus. This prospectus has been filed as a part of
the Registration Statement and does not contain all of the information set forth
in the Registration Statement and exhibits thereto. Reference is hereby made to
such Registration Statement and exhibits for further information relating to
Transamerica and the contract. Statements contained in this prospectus, as to
the content of the contract and other legal instruments, are summaries. For a
complete statement of the terms thereof, reference is made to the instruments
filed as exhibits to the Registration Statement. The Registration Statement and
the exhibits thereto may be inspected and copied at the office of the
Commission, located at 450 Fifth Street, N.W., Washington, D.C.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more details
concerning the subjects discussed in this prospectus. The following is the Table
of Contents for that Statement:
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
THE CONTRACT ....................................................................................3
NET INVESTMENT FACTOR ...........................................................................3
VARIABLE PAYMENT OPTIONS.........................................................................3
Variable Annuity Units and Payments..............................................................3
Variable Annuity Unit Value......................................................................3
Transfers After the Annuity Date.................................................................4
4ENERAL PROVISIONS...............................................................................
IRS Required Distributions..............................................................4
Non-Participating.......................................................................4
Misstatement of Age or Sex..............................................................4
Proof of Existence and Age..............................................................4
4 Annuity Data............................................................................
Assignment..............................................................................5
Annual Report...........................................................................5
Incontestability........................................................................5
Entire Contract.........................................................................5
Changes in the Contract.................................................................5
Protection of Benefits..................................................................5
Delay of Payments.......................................................................5
Notices and Directions..................................................................6
CALCULATION OF YIELDS AND TOTAL RETURNS .........................................................6
Money Market Sub-Account Yield Calculation..............................................6
Other Sub-Account Yield Calculations....................................................6
Standard Total Return Calculations......................................................7
Adjusted Historical Portfolio Performance Data..........................................8
Other Performance Data..................................................................8
HISTORIC PERFORMANCE DATA........................................................................8
General Limitations.....................................................................8
Adjusted Historical Performance Data....................................................8
DISTRIBUTION OF THE CONTRACT.....................................................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS...........................................................18
18ATE REGULATION.................................................................................
RECORDS AND REPORTS..............................................................................18
FINANCIAL STATEMENTS.............................................................................18
APPENDIX.........................................................................................20
</TABLE>
<PAGE>
Appendix A
THE GENERAL ACCOUNT OPTIONS
This prospectus is generally intended to serve as a disclosure document only for
the contract and the variable account. For complete details regarding the
general account options, see the contract itself.
The account value allocated to the general account options becomes part of the
general account of Transamerica, which supports insurance and annuity
obligations. Because of exemptive and exclusionary provisions, interests in the
general account have not been registered under the Securities Act of 1933 (the
"1933 Act"), nor is the general account registered as an investment company
under the 1940 Act.
Accordingly, neither the general account nor any interests therein are generally
subject to the provisions of the 1933 Act or the 1940 Act, and Transamerica has
been advised that the staff of the Securities and Exchange Commission has not
reviewed the disclosures in this prospectus which relate to the general account
options.
The general account options are part of the general account of Transamerica. The
general account of Transamerica consists of all the general assets of
Transamerica, other than those in the variable account, or in any other separate
account. Transamerica has sole discretion to invest the assets of its general
account subject to applicable law.
The allocation or transfer of funds to the general account options does not
entitle the owner to share in the investment performance of Transamerica's
general account.
There are two general account options: the fixed account and the guarantee
period account, as described below.
THE FIXED ACCOUNT
Currently, Transamerica guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the fixed
account under the contracts. However, Transamerica reserves the right to change
the minimum rate according to state insurance law. Transamerica may credit
interest at a rate in excess of 3% per year.
There is no specific formula for the determination of excess interest credits.
Some of the factors that the company may consider in determining whether to
credit excess interest to amounts allocated to the fixed account and the amount
in that account are:
general economic trends
rates of return currently available
returns anticipated on the company's investments
regulatory and tax requirements
competitive factors
Any interest credited to amounts allocated to the fixed account in excess of 3%
per year will be determined at the sole discretion of Transamerica. The owner
assumes the risk that interest credited to the fixed account allocations may not
exceed the minimum guarantee of 3% for any given year.
Rates of interest credited to the fixed account will be guaranteed for at least
twelve months and will vary according to the timing and class of the allocation,
transfer or renewal. At any time after the end of the twelve month period for a
particular allocation, Transamerica may change the annual rate of interest for
that class; this new annual rate of interest will remain in effect for at least
twelve months. New purchase payments made to the contract which are allocated to
the fixed account may receive different rates of interest.
These rates of interest may differ from those interest rates credited to amounts
transferred from the variable sub-accounts or guarantee period account and from
those credited to amounts remaining in the fixed account and receiving renewal
rates. These rates of interest may also differ from rates for allocations
applied under certain options and services Transamerica may be offering.
Transfers
Each contract year, as the owner, you may transfer a percentage of the value of
the fixed account to variable sub-accounts or to the guarantee period account.
The maximum percentage that may be transferred will be declared annually by
Transamerica. This percentage will be determined by Transamerica at its sole
discretion, but will not be less than 10% of the value of the fixed account on
the preceding contract anniversary and will be declared each year. Currently,
this percentage is 25%.
As the owner, you are limited to four transfers from the fixed account each
contract year, and the total of all such transfers cannot exceed the current
maximum. If Transamerica permits dollar cost averaging from the fixed account to
the variable sub-accounts, the above restrictions are not applicable.
Generally, transfers may not be made from any variable sub-account to the fixed
account for the six-month period following any transfer from the fixed account
to one or more of the variable sub-accounts. Additionally, transfers may not be
made from the fixed account to:
1. any guarantee period
2. the Transamerica VIF Money Market Sub-Account
Sub-Account; and 3) any variable sub-account identified by
Transamerica and investing in a portfolio of fixed income investments
Transamerica reserves the right to modify the limitations on transfers to and
from the fixed account and to defer transfers from the fixed account for up to
six months from the date of request.
THE GUARANTEE PERIOD ACCOUNT
The guarantee period account provides a guaranteed fixed rates of interest
compounded annually for specific guarantee periods. Amounts allocated to the
guarantee period account will be credited with interest of no less than 3% per
year. Amounts withdrawn from a guarantee period prior to the end of its
guarantee period will be subject to an interest adjustment, as explained below.
Each guarantee period offers a specified duration with a corresponding
guaranteed interest rate. Currently Transamerica is offering three, five and
seven year guarantee periods but these may change at any time.
The owner bears the risk that, after the initial guarantee period, Transamerica
will not credit interest in excess of 3% per year to amounts allocated to the
guarantee period account.
Each amount allocated or transferred to the guarantee period account will
establish a new guarantee period of a duration selected by the owner from among
those then being offered by Transamerica. Every guarantee period offered by
Transamerica will have a duration of at least one year. The minimum amount that
may be allocated or transferred to a guarantee period is $1,000. Purchase
payments allocated to a guarantee period will be credited on the date the
payment is received at the Service Center. Any amount transferred from another
guarantee period or from a variable sub-account to a guarantee period will
establish a new guarantee period as of the effective date of the transfer.
Guarantee Period
Each guarantee period will have its own guaranteed interest rate and expiration
date. The guaranteed interest rate applicable to a guarantee period will depend
on the date the guarantee period is established, the duration chosen by the
owner and the class of that guarantee period . A guarantee period chosen may not
extend beyond the annuity date. Transamerica reserves the right to limit the
maximum number of guarantee periods that may be in effect at any one time.
We will establish effective annual rates of interest for each guarantee period.
The effective annual rate of interest established by period. Interest will be
credited to a guarantee period based on its daily balance at a daily rate which
is equivalent to the
guaranteed interest rate applicable to that guarantee period for amounts held
during the entire guarantee period.
Amounts withdrawn or transferred from a guarantee period prior to its expiration
date will be subject to an Interest Adjustment as described below. In no event
will the effective annual rate of interest applicable to a guarantee period be
less than 3% per year.
Interest Adjustment
If any amount is withdrawn or transferred from a guarantee period prior to its
expiration date (excluding withdrawals for the purpose of paying the death
benefit), the amounts withdrawn or transferred will be subject to an interest
adjustment. The interest adjustment reflects the impact that changing interest
rates have on the value of money invested at a fixed interest rate. The interest
adjustment is computed by multiplying the amount withdrawn or transferred by the
following factor:
[(1 + I) divided by (1 + J + 0.005)]N/12 -1
where:
I is the guaranteed interest rate in effect;
J is the current interest rate available for a period equal to
the number of years remaining in the guarantee period at the
time of withdrawal or transfer (fractional years are rounded
up to the next full year); and
N is the number of full months remaining in the term at the time the
withdrawal or transfer request is processed
In general the interest adjustment will operate to decrease the value upon
withdrawal or transfer when the guaranteed interest rate in effect for that
allocation is lower than the current interest rate (as of the date of the
transaction) that would apply for a guarantee period equal to the number of full
years remaining in the guarantee period as of that date. (For purposes of
determining the interest adjustment, if the company does not offer a guarantee
period of that duration, the applicable current interest rate will be determined
by linear interpolation between current interest rates for two periods that are
available). If the current interest rate thus determined plus 1/2 of one percent
is greater than the guaranteed interest rate, the interest adjustment will be
negative and amount withdrawn or transferred will be decreased. However, the
value will never be decreased below the initial allocation plus daily interest
at 3% interest per year. There are no positive interest adjustments.
Expiration of a guarantee period
At least 45 days, but not more than 60 days, prior to the expiration date of a
guarantee period, Transamerica will notify the owner as to the options available
when a guarantee period expires. The owner may elect one of the following:
(a)transfer the amount held in that guarantee period to a new guarantee
period from among those being offered by Transamerica at such time
(b)transfer the amount held in that guaranteed period to one or more
variable sub-accounts or to another general account option then
available
Transamerica must receive the owner's notice electing one of these at the
Service Center by the expiration date of the guarantee period. If such election
has not been received by Transamerica at the Service Center, the amount held in
that guarantee period will remain in the guaranteed period account . A new
guarantee period of the same duration as the expiring guarantee period, if
offered, will automatically be established by Transamerica with a new guaranteed
interest rate declared by Transamerica for that guarantee period. The new
guarantee period will start on the day following the expiration date of the
previous guarantee period.
If Transamerica is not currently offering guarantee period having the same
duration as the expiring guarantee period, the new guarantee period will be the
next longer duration, or if Transamerica is not offering a guarantee period
longer than the duration of the expiring guarantee period, the next shorter
duration. However, no guarantee period can extend beyond the annuity date.
If the amount held in an expiring guarantee period is less than $1,000,
Transamerica reserves the right to transfer such amount to the money market
variable sub-account.
<PAGE>
Appendix B
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a portfolio at the end of the current
valuation period is $20.15; at the end of the immediately preceding valuation
period it was $20.10; the valuation period is one day; and no dividends or
distributions caused the portfolio to go "ex-dividend" during the current
valuation period. $20.15 divided by $20.10 is 1.002488. Subtracting the one day
risk factor for mortality and expense risk charge and the administrative expense
charge of .00367% (the daily equivalent of the current charge of 1.35% on an
annual basis) gives a net investment factor of 1.00245. If the value of the
variable accumulation unit for the immediately preceding valuation period had
been 15.500000, the value for the current valuation period would be 15.53798
(15.5 x 1.00245).
Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of a
variable annuity unit for the immediately preceding valuation period had been
13.500000. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the variable annuity unit for the current valuation period would be 13.53163
(13.5 x 1.00245 (the net investment factor) x 0.999893). 0.999893 is the factor,
for a one day valuation period, that neutralizes the assumed rate of four
percent (4%) per year used to establish the variable annuity rates found in the
contract.
Example of Variable Annuity Payment Calculations
Suppose that the account is currently credited with 3,200.000000 variable
accumulation units of a particular variable sub-account.
Also suppose that the variable accumulation unit value and the variable annuity
unit value for the particular variable sub-account for the valuation period
which ends immediately preceding the first day of the month is 15.500000 and
13.500000 respectively, and that the variable annuity rate for the age and
elected is $5.73 per $1,000. Then the first variable annuity payment would be:
3,200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of variable annuity units credited for future payments would be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the variable annuity unit value on
the 10th day of the second month is 13.565712. Then the second variable annuity
payment would be $285.59 (21.052444 x 13.565712).
<PAGE>
Appendix C
Transamerica Life Insurance and Annuity Company
DISCLOSURE STATEMENT
for Individual Retirement Annuities
The following information is being provided to you, the Owner, in accordance
with the requirements of the Internal Revenue Service (IRS). This Disclosure
Statement contains information about opening and maintaining an Individual
Retirement Account or Annuity ("IRA") and summarizes some of the financial and
tax consequences of establishing an IRA. Part I of this Disclosure Statement
discusses Traditional IRAs, while Part II addresses Roth IRAs. Because the tax
consequences of the two categories of IRAs differ significantly, it is important
that you review the correct part of this Disclosure Statement to learn about
your particular IRA. This Disclosure Statement does not discuss Education IRAs
or SIMPLE-IRAs, except as necessary in the context of discussing other types of
IRAs.
Your Transamerica Life Insurance and Annuity Company's Individual Retirement
Annuity ("Transamerica Life IRA") Contract has been approved as to form by the
IRS. In addition, we are using a Roth IRA Endorsement based the IRS-approved
text. Please note that IRS approval applies only to the form of the contract and
does not represent a determination of the merits of such IRA contract.
It may be necessary for us to amend your Transamerica Life IRA or Roth IRA
Contract in order for us to obtain or maintain IRS approval of its tax
qualification. In addition, laws and regulations adopted in the future may
require changes to your contract in order to preserve its status as an IRA. We
will send you a copy of any such amendment.
No contribution to a Transamerica Life IRA will be accepted under a SIMPLE plan
established by any employer pursuant to Internal Revenue Code ("Code") Section
408(p). No transfer or rollover of funds attributable to contributions made by
an employer to your SIMPLE IRA under the employer's SIMPLE plan may be
transferred or rolled over to your Transamerica Life IRA prior to the expiration
of the two (2) year period beginning on the date you first participated in the
employer's SIMPLE plan. In addition, depending on the annuity contract you
purchased, contributory IRAs may or may not be available.
This Disclosure Statement includes the non-technical explanation of some of the
changes made by the Tax Reform Act of 1986 applicable to IRAs and more recent
changes made by the Small Business Job Protection Act of 1996 (SBA-96), the
Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Tax
Relief Act of 1997 (TRA-97) and the IRS Restructuring and Reform Act of 1998
(RRA-98). The information provided applies to contributions made and
distributions received after December 31, 1986, and reflects the relevant
provisions of the Code as in effect on November 1, 1998. This Disclosure
Statement is not intended to constitute tax advice, and you should consult a tax
professional if you have questions about your own circumstances.
Revocation of Your IRA or Roth IRA
You have the right to revoke your Traditional IRA or Roth IRA issued by us
during the seven calendar day period following its establishment. The
establishment of your Traditional IRA or Roth IRA contract will be the contract
effective date. This seven day calendar period may or may not coincide with the
free look period of your contract. In order to revoke your Traditional IRA or
Roth IRA, you must notify us in writing and you must mail or deliver your
revocation to us postage prepaid, at: 401 North Tryon Street, Charlotte, NC
28202. The date of the postmark (or the date of certification or registration if
sent by certified or registered mail) will be considered your revocation date.
If you revoke your Traditional IRA or Roth IRA during the seven day period, an
amount equal returned to you without any adjustment.
Definitions
Code - Internal Revenue Code of 1986, as amended, and regulations issued
thereunder.
Contributions - Premiums paid to your contract.
Contract - The annuity policy, certificate or contract which you purchased.
Compensation - For purposes of determining allowable contributions, the term
"compensation" includes all earned income, including net earnings from
self-employment and alimony or separate maintenance payments received under a
decree of divorce or separate maintenance and includable in your gross income,
but does not include deferred compensation or any amount received as a pension
or annuity.
Regular Contributions - In General
As is more fully discussed below, for 1998 and later years, the maximum total
amount that you may contribute for any tax year to your regular IRAs and your
regular Roth IRAs combined is $2,000, or if less, your compensation for that
year. Once you attain age 70 1/2, this limit is reduced to zero only for your
regular IRAs, not for your Roth IRAs, but the separate limit on Roth IRA
contributions can be reduced to zero for taxpayers with adjusted gross income
("AGI") above certain levels, as described below in Part II, Section 1. While
your Roth IRA contributions are never deductible, your regular IRA contributions
are fully deductible, unless you (or your spouse) is an active participant in
some form of tax-qualified retirement plan for the tax year. In the latter case,
any deductible portion of your regular IRA contributions for each year is
subject to the limits that are described below in Part I, Section 2, and any
remaining regular IRA contributions for that year must be reported to the IRS as
nondeductible IRA contributions (along with your Roth IRA contributions).
IRA PART I: TRADITIONAL IRAs
The rules that apply to a Traditional Individual Retirement Account or Annuity
(which is referred to in this Disclosure Statement simply as an "IRA" or as a
"Traditional IRA" and which includes a regular or Spousal IRA and a rollover
IRA) generally also apply to IRAs under Simplified Employee Pension plans
(SEP-IRAs), unless specific rules for SEP-IRAs are stated.
1. Contributions
(a) Regular IRA. Regular IRA contributions must be in cash and are subject to
the limits described above. In addition, any of your regular contributions to an
IRA for a tax year must be made by the due date (not including extensions) for
your federal tax return for that tax year. See also Part II, Section 4 below
about recharacterizing IRA and Roth IRA contributions by such date.
(b) Spousal IRA. If you and your spouse file a joint federal income tax return
for the taxable year and if your spouse's compensation, if any, includable in
gross income for the year is less than the compensation includable in your gross
income for the year, you and your spouse may each establish your own separate
regular IRA (and Roth IRA) and may make contributions to such IRAs for your
spouse that are not limited by your spouse's lower amount of compensation.
Instead, the limit for the total contribution to spousal IRAs (that can be made
by you or your spouse) for the tax year is (1) $2,000; or (2) if less, the total
combined compensation for both you and your spouse reduced by any deductible IRA
contributions and any Roth IRA contributions for such year. As with any regular
IRA contributions, those for your spouse cannot be made for any tax year in
which your spouse has attained age 70 1/2, must be in cash, and must be made by
the due date (not including extensions) for your federal income tax return for
that tax year.
(c) Rollover IRA. Rollover contributions to a Traditional IRA are unlimited in
dollar amount. These can include rollover contributions of eligible
distributions received by you from another Traditional IRA or tax-qualified
retirement plan. Generally, any distribution from a tax-qualified retirement
plans (such as a pension or profit sharing plan, code Section 401(k) plan, H.R.
10 or Keogh plan) or a Traditional IRA can be rolled over to a Traditional IRA
unless it is a "required minimum distribution" (as discussed below in Part I,
Section 4(a)) or it is part of a series of payments to be paid to you over your
life, life expectancy or a period of at least 10 years. In addition,
distributions of "after-tax" plan contributions (i.e., amounts which are not
subject to federal income tax when distributed from a tax-qualified retirement
plan) are not eligible to be rolled over to an IRA. If a distribution from a
tax-qualified plan or a Traditional IRA is paid to you and you want to roll over
all or part of the eligible distributed amount to a Transamerica Life
Traditional IRA, the rollover must be accomplished within 60 days of the date
you receive the amount to be rolled over. However, you may roll over any amount
from one Traditional IRA into another Traditional IRA only once in any 365-day
period.
A timely rollover of an eligible distributed amount that has been paid to you
directly will prevent its being taxable to you at the time of distribution; that
is, none of it will be includable in your gross income until you withdraw some
amount from your rollover IRA. However, any such distribution directly to you
from a tax-qualified retirement plan is generally subject to a mandatory 20%
withholding tax.
By contrast, a direct transfer from a tax-qualified retirement plan to a
Traditional IRA is considered a "direct" rollover and is not subject to any
mandatory withholding tax (or other federal income tax) upon the direct
transfer. If you elect to make such a "direct" rollover from a tax-qualified
plan to a Transamerica Life Traditional IRA, the transferred amount will be
deposited directly into your rollover IRA.
Strict limitations apply to rollovers, and you should seek competent tax advice
in order to comply with all the rules governing rollovers.
(d) Direct Transfers from another Traditional IRA.. You may make an initial or
subsequent contribution to your Transamerica Life Traditional IRA by directing
the fiduciary or issuer of any of your existing IRAs to make a direct transfer
of all or part of such IRAs in cash to your Transamerica Life Traditional IRA.
Such a direct transfer between Traditional IRAs is not considered a rollover
(e.g., for purposes of the 1-year waiting period or withholding).
(e) Simplified Employee Pension Plan (SEP-IRA). If an IRA is established that
meets the requirements of a SEP-IRA, generally your employer may contribute an
amount not to exceed the lesser of 15% of your includable compensation ($160,000
for 1998, adjusted for inflation thereafter) or $30,000, even after you attain
age 70 1/2 . The amount of such contribution is not includable in your income
for federal income tax purposes. In the case of a SEP-IRA that has a
grandfathered qualifying form of salary reduction (a SARSEP) that was
established by an employer prior to 1997, generally any employee (including a
self-employed individual) who (1) has worked for the employer for 3 of the last
5 preceding tax years; (2) is at least age 21; and (3) has received from the
employer compensation of at least $400 for the current tax year (adjusted for
inflation after 1998), is eligible to make a salary reduction (before-tax)
contribution to the SARSEP for the current tax year of up to $10,000 (adjusted
for inflation after 1998), subject to the overall limits for SEP-IRA
contributions.
Your employer is not required to make a SEP-IRA contribution in any year nor
make the same percentage contribution each year. But if contributions are made,
they must be made to the SEP-IRA for all eligible employees and must not
discriminate in favor of highly compensated employees. If these rules are not
met, any SEP-IRA contributions by the employer could be treated as taxable to
the employees and could result in adverse tax consequences to the participating
employee. For further details about SARSEPs and SEP-IRAs (e.g., for computing
contribution limits for self-employed individuals), see IRS Publication 590, as
indicated below.
(f) Responsibility of the Owner. Contributions, rollovers, or transfers to any
IRA must be made in accordance with the appropriate sections of the Code. It is
your full and sole responsibility to determine the tax deductibility of any
contribution to your Traditional IRA, and to make such contributions in
accordance with the Code. Transamerica does not provide tax advice, and assumes
no liability for the tax consequences of any contribution to your Transamerica
Life Traditional IRA.
2. Deductibility of Contributions for a Regular IRA
(a) General Rules. The deductible portion of the contributions made to the
regular IRAs for your (or your spouse) for a tax year depends on whether you (or
your spouse) is an "active participant" in some type of a tax-qualified
retirement plan for such year, as described in Section 2(b) immediately below.
If you and your spouse file a joint return for a tax year and neither of you is
an active participant for such year, then the permissible contributions to the
regular IRAs for each of you are fully deductible up to $2,000 apiece (i.e.,
your combined deductible IRA contribution limit for the tax year could be
$4,000). Similarly, if you are not married (or treated as such) for the tax year
and you are not an active participant for such year, the permissible
contributions to your regular IRAs for the tax year are fully deductible up to
$2,000. For instance, if you and your spouse file separate returns for the tax
year and you did not live together at any time during such tax year, then you
are treated as unmarried for such year, and if you were not an active
participant for the tax year, then your deductible limit for your regular IRA
contribution is $2,000 (even if your spouse was an active participant for such
year).
If you are an active participant for the tax year, then your $2,000 limit is
subject to a phase-out rule if your AGI for such year exceeds a Threshold Level,
depending on your tax fling status and the calendar year. If, however, you are
not an active participant for the tax year but your spouse is, then your $2,000
limit is subject to the phase-out rule only if your AGI exceeds a higher
Threshold Level. See Part I, Section 2(c), below.
(b) Active Participant. You are an "active participant" for a year if you
participate in some type of tax-qualified retirement plan. For example, if you
participate in a qualified pension or profit sharing plan, a Code Section 401(k)
plan, certain government plans, a tax-sheltered arrangement under Code Section
403, a SIMPLE plan or a SEP-IRA plan, you are considered to be an active
participant.
Your Form W-2 for the year should indicate your participation status.
(c) Adjusted Gross Income (AGI). If you are an active participant, you must look
at your AGI for the year (or if you and your spouse file a joint tax return, you
use your combined AGI) to determine whether you can make a deductible IRA
contribution for that taxable year. The instructions for your tax return will
show you how to calculate your AGI for this purpose. If you are at or below a
certain AGI level, called the Threshold Level, you are treated as if you were
not an active participant and you can make a deductible contribution under the
same rules as a person who is not an active participant.
If you are an active participant for the tax year, then your Threshold Level
depends upon whether you are a married taxpayer filing a joint tax return, an
unmarried taxpayer, or a married taxpayer filing a separate tax return. If you
are a married taxpayer but file a separate tax return, the Threshold Level is
$0. If you are a married taxpayer filing a joint tax return, or an unmarried
taxpayer, your Threshold Level depends upon the taxable year, and can be
determined using the appropriate table below:
Married Filing Jointly Unmarried
Taxable Threshold Taxable Threshold
Year Level Year Level
1998 $50,000 1998 $30,000
1999 $51,000 1999 $31,000
2000 $52,000 2000 $32,000
2001 $53,000 2001 $33,000
2002 $54,000 2002 $34,000
2003 $60,000 2003 $40,000
2004 $65,000 2004 $45,000
2005 $70,000 2005 and
2006 $75,000 thereafter $50,000
2007 and
thereafter $80,000
Beginning in 1998, if you are not an active participant for the tax year but
your spouse is (and you are not treated as unmarried for filing purposes), then
your Threshold Level is $150,000.
If your AGI is less than $10,000 above your Threshold Level ($20,000 for married
taxpayers filing jointly for the taxable year beginning on or after January 1,
2007), you will still be able to make a deductible contribution, but it will be
limited in amount. The amount by which your AGI exceeds your Threshold Level is
called your Excess AGI. The Maximum Allowable Deduction is $2,000, even for
Spousal IRAs. You can calculate your Deduction Limit as follows:
10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit
-------------------
10,000
For taxable years beginning on or after January 1, 2007, married taxpayers
filing jointly should substitute 20,000 for 10,000 in the
numerator and denominator of the above equation.
You must round up any computation of the Deduction Limit to the next highest $10
level (the next highest number which ends in zero). For example, if the result
is $1,525, you must round it up to $1,530. If the final result is below $200 but
above zero, your Deduction Limit is $200. Your Deduction Limit cannot in any
event exceed 100% of your compensation.
3. Nondeductible Contributions to Regular IRAs
The amounts of your regular IRA contributions which are not deductible will be
nondeductible contributions to such IRAs. You may also choose to make a
nondeductible contribution to your regular IRA, even if you could have deducted
part or all of the contribution. Interest or other earnings on your regular IRA
contributions, whether from deductible or nondeductible contributions, will not
be taxed until taken out of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA, you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year (e.g., on Form 8606).
4. Distributions
(a) Required Minimum Distributions (RMD). Distributions from your Traditional
IRAs must be made or begin no later than April 1 of the calendar year following
the calendar year in which you attain age 70 1/2 (the required beginning date).
You may take RMDs from any Traditional IRA you maintain (but not from any Roth
IRA) as long as: (i) distributions begin when required; (ii) periodic payments
are made at least once a year; and (iii) the amount to be distributed is not
less than the minimum required under current federal tax law. If you own more
than one Traditional IRA, you can choose whether to take your RMD from one
Traditional IRA or a combination of your Traditional IRAs. A distribution may be
made at once in a lump sum, as qualifying partial withdrawals or as qualifying
settlement option payments. Qualifying partial withdrawals and settlement option
payments must be made in equal or substantially equal amounts over: (i) your
life or the joint lives of you and your beneficiary; or (ii) a period not
exceeding your life expectancy (as redetermined annually under IRS tables in the
income tax regulations), or the joint life expectancy of you and your
beneficiary (as redetermined annually, if that beneficiary is your spouse).
Also, special rules may apply if your designated beneficiary (other than your
spouse) is more than ten years younger than you.
If qualifying partial withdrawals or settlement option payments start prior to
the April 1 following the year you turn age 70 1/2, then the annuity date of
such settlement option payments will be treated as the required beginning date
for purposes of the RMD provisions, above, and the death benefit provisions,
below.
If you die before the entire interest in your Traditional IRAs is distributed to
you, but after your required beginning date, the entire interest in your
Traditional IRAs must be distributed to your beneficiaries at least as rapidly
as under the method in effect at your death. If you die before your required
beginning date and if you have a designated beneficiary, distributions to your
designated beneficiary can be made in substantially equal installments over the
life or life expectancy of the designated beneficiary, beginning by December 31
of the calendar year that is one year after the year of your death. Otherwise,
if you die before your required beginning date and your surviving spouse is not
your designated beneficiary, distributions must be completed by December 31 of
the calendar year that is five years after the year of your death.
If your designated beneficiary is your surviving spouse, and you die before your
required beginning date, your surviving spouse can become the new
owner/annuitant and can continue the Transamerica Life Traditional IRA on the
same basis as before your death. If your surviving spouse does not wish to
continue the contract as his or her IRA, he or she may elect to receive the
death benefit in the form of qualifying settlement option payments in order to
avoid the 5-year rule. Such payments must be made in substantially equal amounts
over your spouse's life or a period not extending beyond his or her life
expectancy. Your surviving spouse must elect this option and begin receiving
payments no later than the later of the following dates: (i) December 31 of the
year following the year you died; or (ii) December 31 of the year in which you
would have reached the required beginning date if you had not died.
Either you or, if applicable, your beneficiary, is responsible for assuring that
the required minimum distribution is taken in a timely manner and that the
correct amount is distributed.
(b) Taxation of IRA Distributions. Because nondeductible Traditional IRA
contributions are made using income which has already been taxed (that is, they
are not deductible contributions), the portion of the Traditional IRA
distributions consisting of nondeductible contributions will not be taxed again
when received by you. If you make any nondeductible contributions to your
Traditional IRAs, each distribution from any of your Traditional IRAs will
consist of a nontaxable portion (return of nondeductible contributions) and a
taxable portion (return of deductible contributions, if any, and earnings).
Thus, if you receive a distribution from any of your Traditional IRAs and you
previously made deductible and nondeductible contributions to such IRAs, you may
not take a Traditional IRA distribution which is entirely tax-free. The
following formula is used to determine the nontaxable portion of your
distributions for a taxable year.
<TABLE>
<CAPTION>
<S> <C> <C>
Remaining Nondeductible contributions Total distributions Nontaxable distributions
Year-end total adjusted Traditional IRA balances X (for the year) = (for the year)
</TABLE>
To figure the year-end total adjusted Traditional IRA balance, you must treat
all of your Traditional IRAs as a single Traditional IRA. This includes all
regular IRAs, as well as SEP-IRAs, SIMPLE IRAs and Rollover IRAs (but not Roth
IRAs). You also add back to your year-end total Traditional IRA balances (the
distributions taken during the year from your Traditional IRAs). Please refer to
IRS Publication 590, Individual Retirement Arrangements for instructions,
including worksheets, that can assist you in these calculations. Transamerica
Life Insurance and Annuity Company will report all distributions from your
Transamerica Traditional IRA to the IRS as fully taxable income to you.
Even if you withdraw all of the assets in your Traditional IRAs in a lump sum,
you will not be entitled to use any form of lump sum qualifies as a capital
gain. Moreover, any distribution made before you reach age 59 1/2, may be
subject to a 10% penalty tax on early distributions, as indicated below.
(c) Withholding. Unless you elect not to have withholding apply, federal income
tax will be withheld from your Traditional IRA distributions. If you receive
distributions under a settlement option, tax will be withheld in the same manner
as taxes withheld on wages, calculated as if you were married and claim three
withholding allowances. If you are receiving any other type of distribution, tax
will be withheld in the amount of 10% of the distribution. If payments are
delivered to foreign countries, federal income, tax will generally be withheld
at a 10% rate unless you certify to Transamerica Life Insurance and Annuity
Company that you are not a U. S. citizen residing abroad or a "tax avoidance
expatriate" as defined in Code Section 877. Such certification may result in
mandatory withholding of federal income taxes at a different rate.
5. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year the total regular
IRA contributions you made to your Traditional IRAs and your Roth IRAs (other
than rollovers or transfers) exceed the maximum allowable (deductible and
nondeductible) contributions for that year, the excess contribution amount will
be subject to a nondeductible 6% excise (penalty) tax. Such penalty tax cannot
exceed 6% of the value of your IRAs at the end of such year. However, if you
withdraw the excess contribution, plus any earnings on it, before the due date
for filing your federal income tax return (including extensions) for the taxable
year in which you made the excess contribution, the excess contribution will not
be subject to the 6% penalty tax. The amount of the excess contribution
withdrawn will not be considered an early distribution, nor otherwise be
includible in your gross income if you have not taken a deduction for the excess
amount. However, the earnings withdrawn will be taxable income to you and may be
subject to the 10% penalty tax on early distributions. Alternatively, excess
contributions for one year may be withdrawn in a later year or may be carried
forward as regular IRA contributions in the following year to the extent that
the excess, when aggregated with your regular IRA contributions (if any) for the
subsequent year, does not exceed the maximum allowable (deductible and
nondeductible) amount for that year. The 6% excise tax will be imposed on excess
contributions in each subsequent year they are neither returned to you nor
applied as permissible regular such year.butions for
(b) Early Distributions. Since the purpose of an IRA is to accumulate funds for
retirement, your receipt or use of any portion of your IRA before you attain age
59 1/2 constitutes an early distribution subject to a 10% penalty tax unless the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy or the
joint life expectancies of you and your beneficiary (as determined from IRS
tables in the income tax regulations). Also, the 10% penalty tax will not apply
if distributions are used to pay for medical expenses in excess of 7.5% of your
AGI or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are an unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks. Effective for distributions made in 1998 or later, the 10%
penalty tax also will not apply to an early distribution made to pay for certain
qualifying first-time homebuyer expenses of you or certain family members, or
for certain qualifying higher education expenses for you or certain family
members. First-time homebuyer expenses must be paid within 120 days of the
distribution from the IRA and include up to $10,000 of the costs of acquiring,
constructing, or reconstructing a principal residence, including any usual or
reasonable settlement, financing or other closing costs. Higher education
expenses include tuition, fees, books, supplies, and equipment required for
enrollment, attendance, and room and board at a post-secondary educational
institution. The amount of an early distribution (excluding any nondeductible
contribution included therein) is includable in your gross income and may be
subject to the 10% penalty tax unless you transfer it to another IRA as a
qualifying rollover contribution.
(c) Failure To Satisfy RMD. If the RMD rules described above in Part I, Section
4(a) apply to you and if the amount distributed during a calendar year is less
than the minimum amount required to be distributed, you will be subject to a
penalty tax equal to 50% of the excess of the amount required to be distributed
over the amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction (such as any sale, exchange or leasing of any
property between you and the Traditional IRA, or any interference with the
independent status of such IRA), the Traditional IRA will lose its tax exemption
and be treated as having been distributed to you. The value of the entire
Traditional IRA (excluding any nondeductible contributions included therein)
will be includable in your gross income; and, if at the time of the prohibited
transaction you are under age 59 1/2, you may also be subject to the 10% penalty
tax on early distributions, as described above in Part I, Section 5(b). If you
borrow from or pledge your Traditional IRA, or your benefits under the contract,
as security for a loan, the portion borrowed or pledged as security will cease
to be tax-qualified, the value of that portion will be treated as distributed to
you, and you will have to include the value of the portion borrowed or pledged
as security in your income that year for federal tax purposes. You may also be
subject to the 10% penalty tax on early distributions.
(e) Overstatement or Understatement of Nondeductible Contributions. If you
overstate your nondeductible Traditional IRA contributions on your federal
income tax return (without reasonable cause), you may be subject to a reporting
penalty. Such a penalty also applies for failure to file any form required by
the IRS to report nondeductible contributions. These penalties are in addition
to any ordinary or penalty taxes, interest, and penalties for which you may be
liable if you underreport income upon receiving a distribution from your
Traditional IRA. See Part I, Section 4(b) above for the tax treatment of such
distributions.
IRA PART II: ROTH IRAs
1. Contributions
(a) Regular Roth IRA. You may make contributions to a regular Roth IRA in any
amount up to the contribution limits described in Part II, Section 3, below.
Such contributions are also subject to the minimum amount under the Transamerica
Life Roth IRA contract. Such contribution must be in cash. Your contribution for
a tax year must be made by the due date (not including extensions) for your
federal income tax return for that tax year. Unlike Traditional IRAs, you may
continue making Roth IRA contributions after reaching age 70 1/2 to the extent
that your AGI does not exceed the levels described below.
(b) Spousal Roth IRA. If you and your spouse file a joint federal income tax
return for the taxable year and if your spouse's compensation, if any,
includable in gross income for the year is less than the compensation includable
in your gross income for the year, you and your spouse may each establish your
own individual Roth IRA and may make contributions to those Roth IRAs in
accordance with the rules and limits for contributions contained in the Code,
which are described in Part II, Section 3, below. Such contributions must be in
cash. Your contribution to a Spousal Roth IRA for a tax year must be made by the
due date (not including extensions) for your federal income tax return for that
tax year.
(c) Rollover Roth IRA. You may make contributions to a Rollover Roth IRA within
60 days after receiving a distribution from an existing Roth IRA, subject to
certain limitations discussed in Part II, Section 3, below.
(d) Transfer Roth IRA. You may make an initial or subsequent contribution to
your Transamerica Life Roth IRA by directing a fiduciary or issuer of any of
your existing Roth IRAs to make a direct transfer of all or a portion of the
assets from such Roth IRAs to your Transamerica Life Roth IRA.
(e) Conversion Roth IRA. You may make contributions to a Conversion Roth IRA
within 60 days of receiving a distribution from an existing Traditional IRA or
by instructing the fiduciary or issuer of any of your existing Traditional IRAs
to make a direct transfer of all or a portion of the assets from such a
Traditional IRA to your Transamerica Life Roth IRA, subject to certain
restrictions and subject to income tax on some or all of the converted amounts.
If your AGI, not including the conversion amount, is greater than $100,000 for
the tax year, or if you are married and you and your spouse file separate tax
returns, you may not convert or transfer any amount from a Traditional IRA to a
Roth IRA.
(f) Responsibility of the Owner. Contributions, rollovers, transfers or
conversions to a Roth IRA must be made in accordance with the appropriate
sections of the Code. It is your full and sole responsibility to make
contributions to your Roth IRA in accordance with the Code. Transamerica Life
Insurance and Annuity Company does not provide tax advice, and assumes no
liability for the tax consequences of any contribution to your Roth IRA.
2. Deductibility of Contributions
Your Roth IRA permits only nondeductible after-tax contributions. However,
distributions from your Roth IRA are generally not subject to federal income tax
(see Part II, 4(b) below). This is unlike a Traditional IRA, which permits
deductible and nondeductible contributions, but which provides that most
distributions are subject to federal income tax.
3. Contribution Limits
Contributions for each taxable year to all Traditional and Roth IRAs
may not exceed the lesser of 100% of your compensation or $2,000 for any
calendar year, subject to AGI phase-out rules described below in Section 3(a).
Rollover, transfer and conversion contributions, if properly made, do not count
towards your maximum annual contribution limit, nor do employer contributions to
a SEP-IRA or SIMPLE IRA.
(a) Regular Roth IRAs. The maximum amount you may contribute to a regular Roth
IRA will depend on the amount of your AGI for the calendar year. Your maximum
$2,000 contribution limit begins to phase out when your AGI reaches $95,000
(unmarried) or $150,000 (married filing jointly). Under this phase out, your
maximum regular Roth IRA contributions generally will not be less than $200;
however, no contribution is allowed if your AGI exceeds $110,000 (unmarried) or
$160,000 (married filing jointly). If you are married and you and your spouse
file separate tax returns, your maximum regular Roth IRA contribution phases out
between $0 and $10,000. If you are married but you and your spouse lived apart
for the entire taxable year and file separate federal income tax returns, your
maximum contribution is calculated as if you were not married. You should
consult your tax advisor to determine your maximum contribution.
You may make contributions to a regular Roth IRA after age 70 1/2, subject to
the phase-out rules. Regular Roth IRA contributions for a tax year should be
reported on your tax return for that year (e.g., on Form 8606).
(b) Spousal Roth IRAs. Contributions to your lower-earning spouse's Spousal Roth
IRA may not exceed the lesser of (a) 100% of both spouses' combined compensation
minus any Roth IRA or deductible Traditional IRA contribution for the spouse
with the higher compensation for the year or (b) $2,000, as reduced by the
phase-out rules described above for regular Roth IRAs. A maximum of $4,000 may
be contributed to both spouses' Roth IRAs. Contributions can be divided between
the spouses' Roth IRAs as you and your spouse wish, but no more than $2,000 in
regular Roth IRA contributions can be contributed to either individual's Roth
IRA each year.
(c) Rollover Roth IRAs. There is no limit on the amounts that you may rollover
from one Roth IRA into another Roth IRA, including your Transamerica Life Roth
IRA. You may roll over a distribution from any single Roth IRA to another Roth
IRA only once in any 365-day period.
(d) Transfer Roth IRAs. There is no limit on amounts that you may transfer
directly from one Roth IRA into another Roth IRA, including your Transamerica
Life Roth IRA. Such a direct transfer does not constitute a rollover for
purposes of the 1-year waiting period.
(e) Conversion Roth IRAs. There is no limit on amounts that you may
convert from your Traditional IRA into your Transamerica Life Roth IRA if you
are eligible to open a Conversion Roth IRA as described in Part II, Section
1(e), above. In the case of a conversion from a SIMPLE-IRA, the conversion may
only be done after the expiration of your 2-year participation period described
in Code Section 72(t)(6). However, the distribution proceeds from your
Traditional IRA are includable in your taxable income to the extent that they
represent a return of deductible contributions and earnings on any
contributions. The distribution proceeds from your Traditional IRA are not
subject to the 10% early distribution penalty tax (described below) if the
distribution proceeds are within 60 days.ur Roth IRA
You can also make contributions to a Roth IRA by instructing the fiduciary or
issuer, custodian or trustee of your existing Traditional IRAs to transfer the
assets in your Traditional IRAs to the Roth IRA, which can be a successor to
your existing Traditional IRAs. The transfer will be treated as a distribution
from your Traditional IRAs, and that amount will be includable in your taxable
income to the extent that it represents a return of deductible contributions and
earnings on any contributions, but will not be subject to the 10% early
distribution penalty tax.
If you convert from a Traditional IRA to a Roth IRA during 1998, the income
reportable upon distribution from the Traditional IRA may be reportable entirely
for 1998 or reportable ratably over four years beginning in 1998.
4. Recharacterization of IRA Contributions
(a) Eligibility. By making a timely transfer and election, you generally can
treat a contribution made to one type of IRA as made to a different type of IRA
for a taxable year. For example, if you make contributions to a Roth IRA and
later discover that you are not eligible to make Roth IRA contributions, you may
recharacterize all or a portion of the contribution as a Traditional IRA
contribution by the filing due date (including extensions) for the applicable
tax year.
You may not recharacterize amounts paid into a Traditional IRA that represented
tax-free rollovers or transfers, or employer contributions.
(b) Election. You may elect to recharacterize a contribution amount made to one
type of IRA by simply
making a trustee-to-trustee transfer of such amount (plus net income
attributable to it) to a second type of IRA on or before the federal income tax
due date (including extensions) for the tax year for which the contribution was
initially made. After the recharacterization has been made, you may not revoke
or modify the election.
(c) Taxation of a Recharacterization. For federal income tax purposes, a
recharacterized contribution will be treated as having been contributed to the
transferee IRA (rather than to the transferor IRA) on the same date and for the
same tax year that the contribution was initially made to the transferor IRA. A
recharacterized transfer is not considered a rollover for purposes of the 1-year
waiting period.
The transfer of the contribution amount being recharacterized must include the
net income attributable to such amount. If such amount has experienced net
losses as of the time of the recharacterization transfer, the amount transferred
(the original contribution amount less any losses) will generally constitute a
transfer of the entire contribution amount. You must treat the contribution
amount as made to the transferee IRA on your federal income tax return for the
year to which the original contribution amount related.
5. Distributions
(a) Required Minimum Distribution (RMD). Unlike a Traditional IRA, there are no
rules that require that any distribution be made to you from your Roth IRA
during your lifetime.
If you die before the entire value of your Roth IRA is distributed to you, the
balance of your Roth IRA must be distributed by December 31 of the calendar year
that is five years after your death. However, if you die and you have a
designated beneficiary, your beneficiary may elect to take distributions in the
form of settlement option payments in substantially equal installments over the
life or life expectancy of the designated beneficiary, beginning by December 31
of the calendar year that is one year after your death.
If your beneficiary is your surviving spouse, he or she can become the new
owner/annuitant and can continue the Transamerica Roth IRA on the same basis as
before your death. If your surviving spouse does not wish to continue the
Transamerica Roth IRA as his or her Roth IRA, he or she may elect to receive the
death benefit in the form of qualifying settlement option payments in order to
avoid the 5-year distribution requirement. Such payments must be made in
substantially equal amounts over your spouse's life or a period not extending
beyond his or her life expectancy. Your surviving spouse must elect this option
and begin receiving payments no later than the later of the following dates: (i)
December 31 of the year following the year you died; or (ii) December 31 of the
year in which you would have reached age 70 1/2.
Your beneficiary is responsible for assuring that the required minimum
distribution following your death is taken in a timely manner and that the
correct amount is distributed.
(b) Taxation of Roth IRA Distributions. The amounts that you withdraw from your
Roth IRA are generally tax-free. For federal income tax purposes, all of your
Roth IRAs are aggregated and Roth IRA distributions are treated as made first
from Roth IRA contributions and second from earnings. Distributions that are
treated as made from Roth IRA contributions are treated as made first from
regular Roth IRA contributions (which are always tax-free) and second from
conversion or rollover Roth IRA contributions on a first-in, first-out basis. A
distribution allocable to a particular conversion or rollover Roth IRA
contribution is treated as consisting first of the portion (if any) of the
conversion contribution that was previously includible in gross income by reason
of the conversion.
In any event, since the purpose of a Roth IRA is to accumulate funds for
retirement, your receipt or use of Roth IRA earnings before you attain age 59
1/2 , or within 5 years of your first contribution to the Roth IRA (including a
contribution rolled over, transferred or converted from a Traditional IRA), will
generally be treated as an early distribution subject to regular income tax and
to the 10% penalty tax described below in Section 6(b). No income tax will apply
to earnings that are withdrawn before you attain age 59 1/2, but which are
withdrawn five or more years after the first contribution to the Roth IRA
(including a rollover or transfer contribution or conversion from a Traditional
IRA), where the withdrawal is made (i) upon your death or disability or (ii) to
pay qualified first-time homebuyer expenses of you or certain family members. No
portion of your Roth IRA distribution qualifies as a capital gain. There is also
a separate 5-year rule for the recapture of the 10% penalty tax that is
described below in Section 6(b) and that applies to any Roth IRA distribution
made prior to age 59 1/2 if any conversion or rollover contribution has been
made to any Roth IRA owned by the individual within the 5 most recent taxable
years (even if this current distribution from the Roth IRA is otherwise tax-free
under the rules described in this Subsection 5(b)).
(c) Withholding. If the distribution from your Roth IRA is subject to federal
income tax, unless you elect not to have withholding apply, federal income tax
will be withheld from your Roth IRA distributions. If you receive distributions
under a settlement option, tax will be withheld in the same manner as taxes
withheld on wages, calculated as if you were married and claim three withholding
If you are receiving any other type of distribution, tax will be withheld in the
amount of 10% of the amount of the distribution. If payments are delivered to
foreign countries, federal income tax will generally be withheld at a 10% rate
unless you certify to Transamerica Life Insurance and Annuity Company that you
are not a U. S. citizen residing abroad or a "tax avoidance expatriate" as
defined in Code Section 877. Such certification may result in mandatory
withholding of federal income taxes at a different rate.
6. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year your total regular
Roth IRA contributions (other than rollovers, transfers or conversions) exceed
the maximum allowable contributions for that year (taking into account
Traditional IRA contributions), the excess contribution amount will be subject
to a nondeductible 6% excise (penalty) tax. Such penalty tax cannot exceed 6% of
the value of your Roth IRAs at the end of such year. However, if you withdraw
the excess contribution, plus any earnings on it, before the due date for filing
your federal income tax return (including extensions) for the taxable year in
which you made the excess contribution, the excess contribution will not be
subject to the 6% penalty tax. The amount of the excess contribution withdrawn
will not be considered an early distribution, but the earnings withdrawn will be
taxable income to you and may be subject to the 10% penalty tax on early
distributions. Alternatively, excess contributions for one year may be withdrawn
in a later year or may be carried forward as Roth IRA contributions in a later
year to the extent that the excess, when aggregated with your regular Roth IRA
contributions (if any) for the subsequent year, does not exceed the maximum
allowable contribution for that year. The 6% excise tax will be imposed on
excess contributions in each subsequent year they are neither returned to you
nor applied as permissible regular Roth IRA contributions for such year.
(b) Early Distributions. Since the purpose of a Roth IRA is to accumulate funds
for retirement, your receipt or use of any portion of your Roth IRA before you
attain age 59 1/2 constitutes an early distribution subject to the 10% penalty
tax on the earnings in your Roth IRA. This penalty tax will not apply if the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy or the
joint life expectancies of you and your beneficiary (as determined from IRS
tables in the income tax regulations). Also, the 10% penalty tax will not apply
if distributions are used to pay for medical expenses in excess of 7.5% of your
AGI; or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are an unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks. The 10% penalty tax also will not apply to an early
distribution made to pay for certain qualifying first-time homebuyer expenses
for you or certain family members, or for certain qualifying higher education
expenses for you or certain family members. First-time homebuyer expenses must
be paid within 120 days of the distribution from the Roth IRA and include up to
$10,000 of the costs of acquiring, constructing, or reconstructing a principle
residence, including any usual or reasonable settlement, financing or other
closing costs. Higher education expenses include tuition, fees, books, supplies,
and equipment required for enrollment, attendance, and room and board at a
post-secondary educational institution.
There is also a separate 5-year recapture rule for the 10% penalty tax in the
case of a Roth IRA distribution made prior to age 59 1/2 that is made within 5
years after a conversion or rollover contribution from a Traditional IRA
(because such a prior Roth IRA contribution avoided the 10% penalty tax when it
was rolled over or converted from the Traditional IRA). Under this 5-year
recapture rule, any Roth IRA distribution made prior to age 59 1/2 that is
attributable to any conversion or rollover contribution from a Traditional IRA
made within the previous 5 years to any of the individual's Roth IRAs is
generally subject to the 10% penalty tax (and its exceptions), to the extent
that such prior Roth IRA contribution was subject to ordinary tax upon the
conversion or rollover (even if the Roth IRA distribution is otherwise
tax-free). Under the distribution ordering rules for a Roth IRA, all of an
individual's Roth IRAs and distri- butions therefrom are treated as made: first
from regular Roth IRA contributions; then from conversion or rollover Roth IRA
contributions on a first-in, first-out basis; and last from earnings. However,
whenever any Roth IRA distribution amount is attributable to any conversion or
rollover contribution made within the 5 most recent tax years, this distributed
amount is attributed first to the taxable portion of such prior contribution,
for purposes of determining the amount of this Roth IRA distribution that is
subject to the recapture of the 10% penalty tax (unless some exception to the
penalty tax applies to the current Roth IRA distribution, such as age 59 1/2,
disability or certain health, education or homebuyer expenses, as described
above in this Subsection 6(b)).
(c) Failure to Satisfy RMDs Upon Death. If the RMD rules described above in Part
II, Section 4(a) apply to the beneficiary of your Roth IRA after your death and
if the amount distributed during a calendar year is less than the minimum amount
required to be distributed, your beneficiary will be subject to a penalty tax
equal to 50% of the excess of the amount required to be distributed over the
amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction (such as any sale, exchange or leasing of any
property between you and the Roth IRA, or any interference with the independent
status of the Roth IRA), the Roth IRA will lose its tax exemption and be treated
as having been distributed to you. The value of any earnings on your Roth IRA
contributions will be includable in your gross income; and if at the time of the
prohibited transaction, you are under age 591/2 you may also be subject to the
10% penalty tax on early distributions, as described above in Part II, Section
5(b). If you borrow from or pledge your Roth IRA, or your benefits under the
contract, as a security for a loan, the portion borrowed or pledged as security
will cease to be tax-qualified, the value of that portion will be treated as
distributed to you, and you may be subject to the 10% penalty tax on early
distributions from a Roth IRA.
IRA PART III: OTHER INFORMATION
(1) Federal Estate and Gift Taxes
Any amount in or distributed from your Traditional and/or Roth IRAs upon your
death may be subject to federal estate tax, although certain credits and
deductions may be available. The exercise or non-exercise of an option that
would pay a survivor an annuity at or after your death should not be considered
a transfer for federal gift tax purposes.
(2) Tax Reporting
You must report contributions to, and distributions from, your Traditional IRA
and Roth IRA (including the year-end aggregate account balance of all
Traditional IRAs and Roth IRAs) on your federal income tax return for the year
(e.g., on IRS Form 8606). For Traditional IRAs, you must designate on the return
how much of your annual contribution is deductible and how much is
nondeductible. You need not file IRS Form 5329 with your income tax return for a
particular year unless for that year you are subject to a penalty tax because
there has been an excess contribution to, an early distribution from, or
insufficient RMDs from your Traditional IRA or Roth IRA, as applicable.
(3) Vesting
Your interest in your Traditional IRA or Roth IRA is nonforfeitable at all
times.
(4) Exclusive Benefit
Your interest in your Traditional IRA or Roth IRA is for the exclusive benefit
of you and your beneficiaries.
(5) IRS Publication 590
Additional information about your Traditional IRA or Roth IRA or about SEP-IRAs
and SIMPLE-IRAs can be obtained from any district office of the IRS or by
calling 1-800-TAX-FORM for a free copy of IRS Publication 590, Individual
Retirement Arrangements.
<PAGE>
Please forward (without charge) a copy of the Statement of Additional
Information concerning the Transamerica Seriessm Transamerica Catalystsm
Variable Annuity issued by Transamerica Life Insurance and Annuity Company to:
(Please print or type and fill in all information)
- -------------------------------------------------------------------------
Name
- -------------------------------------------------------------------------
Address
- -------------------------------------------------------------------------
City/State/Zip
- -------------------------------------------------------------------------
Date: ________________________ Signed:
- ------------------------------
Return to Transamerica Life Insurance and Annuity Company, Annuity Service
Center, 401 North Tryon Street, Suite 700, Charlotte, North Carolina 28202.
<PAGE>
TRANSAMERICA SERIES sm
TRANSAMERICA CATALYST sm VARIABLE ANNUITY
Contract Form 4-703, Certificate Form 313 The contract is not available in all
states.
Issued by Transamerica Life Insurance and Annuity Company
401 North Tryon Street, Suite 700, Charlotte, North Carolina, 28202
VIM 135-599
<PAGE>
22
STATEMENT OF ADDITIONAL INFORMATION FOR
TRANSAMERICA SERIES sm
TRANSAMERICA CATALYST sm
VARIABLE ANNUITY
Issued By
Transamerica Life Insurance and Annuity Company
This statement of additional information expands upon subjects
discussed in the May 1, 1999, prospectus for the Transamerica Catalyst Variable
Annuity ("contract") issued by Transamerica Life Insurance and Annuity Company
("Transamerica") through Separate Account VA-6. The owner may obtain a free copy
of the prospectus by writing to: Transamerica Life Insurance and Annuity
Company, 401 North Tryon Street, Charlotte, NC 28202 or calling 800-420-7749.
Terms used in the current prospectus for the contract are incorporated into this
statement.
The contract will be issued as a certificate under a group annuity
contract in some states and as an individual annuity contract in other states.
The term "contract" as used herein refers to both the individual contract and
the certificates issued under the group contract.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND SHOULD BE READ ONLY IN
CONJUNCTION WITH THE PROSPECTUS FOR THE
CONTRACT AND THE PORTFOLIOS.
Dated May 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
THE CONTRACT .................................................................................... 3
NET INVESTMENT FACTOR ........................................................................... 3
VARIABLE PAYMENT OPTIONS......................................................................... 3
Variable Annuity Units and Payments.............................................................. 3
Variable Annuity Unit Value...................................................................... 3
Transfers After the Annuity Date................................................................. 4
GENERAL PROVISIONS............................................................................... 4
IRS Required Distributions.............................................................. 4
Non-Participating....................................................................... 4
Misstatement of Age or Sex.............................................................. 4
Proof of Existence and Age.............................................................. 4
Annuity Data............................................................................ 4
Assignment.............................................................................. 5
Annual Report........................................................................... 5
Incontestability........................................................................ 5
Entire Contract......................................................................... 5
Changes in the Contract................................................................. 5
Protection of Benefits.................................................................. 5
Delay of Payments....................................................................... 5
Notices and Directions.................................................................. 6
CALCULATION OF YIELDS AND TOTAL RETURNS ......................................................... 6
Money Market Sub-Account Yield Calculation.............................................. 6
Other Sub-Account Yield Calculations.................................................... 7
Standard Total Return Calculations...................................................... 7
Adjusted Historical Portfolio Performance Data.......................................... 8
Other Performance Data.................................................................. 8
HISTORIC PERFORMANCE DATA........................................................................ 8
General Limitations..................................................................... 8
Adjusted Historical Performance Data.................................................... 8
DISTRIBUTION OF THE CONTRACT..................................................................... 18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS........................................................... 18
STATE REGULATION................................................................................. 18
RECORDS AND REPORTS.............................................................................. 18
FINANCIAL STATEMENTS............................................................................. 18
APPENDIX......................................................................................... 20
<PAGE>
</TABLE>
THE CONTRACT
The following pages provides additional information about the contract which may
be of interest to some owners.
NET INVESTMENT FACTOR
For any sub-account of the variable account, the net investment factor
for a valuation period, before the annuity date, is (a) divided by (b), minus
(c) minus (d):
Where (a) is:
The net asset value per share held in the sub-account, as of the end of
the valuation period; plus the per-share amount of any dividend or
capital gain distributions if the "ex-dividend" date occurs in the
valuation period; plus or minus a per-share charge or credit as
Transamerica may determine, as of the end of the valuation period, for
taxes.
Where (b) is:
The net asset value per share held in the sub-account as of the end of
the last prior valuation period.
Where (c) is:
The daily charge of 0.00329% (1.20% annually) for the mortality and
expense risk charge times the number of calendar days in the current
valuation period.
Where (d) is:
The daily administrative expense charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current valuation
period. This charge may be increased, but will not exceed 0.00096%
(0.35% annually).
A valuation day is defined as any day that the New York Stock
Exchange is open.
VARIABLE PAYMENT OPTIONS
The variable payment option provide for payments that fluctuate in
dollar amount, based on the investment performance of these elected variable
sub-account(s).
Variable Annuity Units and Payments
For the first monthly payment, the number of variable annuity units
credited in each variable sub-account will be determined by dividing: (a) the
product of the portion of the value to be applied to the variable sub-account
and the variable annuity purchase rate specified in the contract; by (b) the
value of one variable annuity unit in that sub-account on the annuity date.
The amount of each subsequent variable payment equals the product of
the number of variable annuity units in each variable sub-account and the
variable sub-account's variable annuity unit value as of the tenth day of the
month before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a variable annuity unit in a variable sub-account on any
valuation day is determined as described below.
The net investment factor for the valuation period (for the appropriate
payment frequency) just ended is multiplied by the value of the variable annuity
unit for the sub-account on the preceding valuation day. The net investment
factor after the annuity date is calculated in the same manner as before the
annuity date and then multiplied by an interest factor. The interest factor
equals (.999893)n where n is the number of days since the preceding valuation
day. This compensates for the 4% interest assumption built into the variable
annuity purchase rates. Transamerica may offer other assumed interest rates than
4%. The appropriate interest factor will be applied to compensate for the
assumed interest rate.
Transfers After the Annuity Date
After the annuity date, the owner may transfer variable annuity units
from one sub-account to another, subject to certain limitations. (See
"Transfers" page 29 of the prospectus.) The dollar amount of each subsequent
monthly annuity payment after the transfer must be determined using the new
number of variable annuity units multiplied by the variable sub-account's
variable annuity unit value on the tenth day of the month preceding payment.
Transamerica reserves the right to change this day of the month.
The formula used to determine a transfer after the annuity date can be
found in the Appendix to this statement of additional information.
GENERAL PROVISIONS
IRS Required Distributions
If any owner under a non-qualified contract dies before the entire
interest in the contract is distributed, the value generally must be distributed
to the designated beneficiary so that the contract qualifies as an annuity under
the Code. (See "Federal Tax Matters" page 44 of the prospectus.)
Non-Participating
The contract is non-participating. No dividends are payable and the
contract will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of the annuitant or any other measuring life has been
misstated in the application, the settlement option payments under the contract
will be whatever the annuity amount applied on the annuity date would purchase
on the basis of the correct age or sex of the annuitant and/or other measuring
life. Any overpayments or underpayments by Transamerica as a result of any such
misstatement may be respectively charged against or credited to the settlement
option payment or payments to be made after the correction so as to adjust for
such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the contract, Transamerica may require
proof of the existence and/or proof of the age of the annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the contract.
Annuity Data
Transamerica will not be liable for obligations which depend on
receiving information from a payee or measuring life until such information is
received in a satisfactory form.
Assignment
No assignment of a contract will be binding on Transamerica unless made
in writing and given to Transamerica at its Service Center. Transamerica is not
responsible for the adequacy of any assignment. The owner's rights and the
interest of any annuitant or non-irrevocable beneficiary will be subject to the
rights of any assignee of record.
Annual Report
At least once each contract year prior to the annuity date, the owner
will be given a report of the current account value allocated to each
sub-account of the variable account and any general account option. This report
will also include any other information required by law or regulation. After the
annuity date, a confirmation will be provided with every variable annuity
payment.
Incontestability
Each contract is incontestable from the contract effective date except
in certain states where medical questions are required on the application for
the optional Living Benefits Rider.
Entire Contract
Transamerica has issued the contract in consideration and acceptance of
the payment of the initial purchase payment and certain required information in
an acceptable form and manner or, where state law requires, the application. In
those states that require a written application, a copy of the application is
attached to and is part of the contract and along with the contract constitutes
the entire contract.
The group annuity contract has been issued to a trust organized under
Missouri law. However, the sole purpose of the trust is to hold the group
annuity contract. The owner has all rights and benefits under the individual
certificate issued under the group contract.
Changes in the Contract
Only two authorized officers of Transamerica, acting together, have the
authority to bind Transamerica or to make any change in the individual contract
or the group contract or individual certificates thereunder and then only in
writing. Transamerica will not be bound by any promise or representation made by
any other persons.
Transamerica may change or amend the individual contract or the group
contract or individual certificates thereunder if such change or amendment is
necessary for the individual contract or the group contract or individual
certificates thereunder to comply with any state or federal law, rule or
regulation.
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits)
under the contract will be subject to any claim or process of law by any
creditor.
Delay of Payments
Payment of any cash withdrawal, lump sum death benefit, or variable
payment or transfer due from the variable account will occur within seven days
from the date the election becomes effective, except that Transamerica may be
permitted to postpone such payment if: (1) the New York Stock Exchange is closed
for other than usual weekends or holidays, or trading on the Exchange is
otherwise restricted; or (2) an emergency exists as defined by the Securities
and Exchange Commission (Commission), or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of owners.
In addition, while it is our intention to process all transfers from
the sub-accounts immediately upon receipt of a transfer request, we have the
right to delay effecting a transfer from a variable sub-account for up to seven
days. We may delay effecting such a transfer if there is a delay of payment from
an affected portfolio. If this happens, then we will calculate the dollar value
or number of units involved in the transfer from a variable sub-account on or as
of the date we receive a transfer request in a acceptable form and manner, but
will not process the transfer to the transferee sub-account until a later date
during the seven-day delay period when the portfolio underlying the transferring
sub-account obtains liquidity to fund the transfer request through sales of
portfolio securities, new purchase payments, transfers by investors or
otherwise. During this period, the amount transferred would not be invested in a
variable sub-account.
Transamerica may delay payment of any withdrawal from any general
account options for a period of not more than six months after Transamerica
receives the request for such withdrawal. If Transamerica delays payment for
more than 30 days, Transamerica will pay interest on the withdrawal amount up to
the date of payment. (See "Cash Withdrawals" page 31 of the prospectus.)
Notices and Directions
Transamerica will not be bound by any authorization, direction,
election or notice which is not, in a form and manner acceptable to
Transamerica, and received at our Service Center.
Any written notice requirement by Transamerica to the owner will be
satisfied by our mailing of any such required written notice, by first-class
mail, to the owner's last known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, Transamerica
is required to compute the money market sub-account's current annualized yield
for a seven-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the money market series or
on its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the money market
sub-account at the beginning of such seven-day period, dividing such net change
in account value by the value of the account at the beginning of the period to
determine the base period return and annualizing this quotient on a 365-day
basis. The net change in account value reflects the deductions for the annual
account fee, the mortality and expense risk charge and administrative expense
charges and income and expenses accrued during the period. Because of these
deductions, the yield for the money market sub-account of the variable account
will be lower than the yield for the money market series or any comparable
substitute funding vehicle.
The Commission also permits Transamerica to disclose the effective
yield of the money market sub-account for the same seven-day period, determined
on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the money market sub-account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The money market sub-account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
money market series or substitute funding vehicle, the types and quality of
portfolio securities held by the money market series or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any contingent deferred sales load (of up to 6% of purchase
payments) that may be applicable to a contract.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of one or more of the variable sub-accounts (except the money market
sub-account) for 30-day periods. The annualized yield of a sub-account refers to
the income generated by the sub-account over a specified 30-day period. Because
this yield is annualized, the yield generated by a sub-account during the 30-day
period is assumed to be generated each 30-day period. The yield is computed by
dividing the net investment income per variable accumulation unit earned during
the period by the price per unit on the last day of the period, according to the
following formula:
YIELD= 2[{a-b + 1}6 - 1]
cd
Where:
a = net investment income earned during the period by the
portfolio attributable to the shares owned by the sub-account.
b = expenses for the sub-account accrued for the period (net of
reimbursements). c = the average daily number of variable accumulation
units outstanding during the period. d = the maximum offering price per
variable accumulation unit on the last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all contracts. The yield calculations do not reflect the
effect of any contingent deferred sales load that may be applicable to a
particular contract. contingent deferred sales load range from 8% to 0% of the
amount of account value withdrawn depending on the elapsed time since the
receipt of each purchase payment.
Because of the charges and deductions imposed by the variable account,
the yield for the sub-account will be lower than the yield for the corresponding
portfolio. The yield on amounts held in the variable sub-accounts normally will
fluctuate over time. Therefore, the disclosed yield for any given period is not
an indication or representation of future yields or rates of return. The
variable sub-account's actual yield will be affected by the types and quality of
portfolio securities held by the portfolio, and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average annual total
returns for one or more of the sub-accounts for various periods of time. Average
annual total return quotations are computed by finding the average annual
compounded rates of return over one, five and ten year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P{1 + T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period at the end of the one, five, or
ten-year period (or fractional portion of such
period).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
contingent deferred sales loads that may be applicable to a particular period.
Adjusted Historical Portfolio Performance Data
Transamerica may also disclose "historic" performance data for a
portfolio, for periods before the variable sub-account commenced operations.
Such performance information will be calculated based on the performance of the
portfolio and the assumption that the sub-account was in existence for the same
periods as those indicated for the portfolio, with a level of contract charges
currently in effect.
This type of adjusted historical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the contract is not surrendered
(i.e., with no deduction for the contingent deferred sales load) and assuming
that the contract is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable contingent deferred sales load).
Other Performance Data
Transamerica may from time to time also disclose average annual total
returns in a non-standard format in conjunction with the standard described
above. The non-standard format will be identical to the standard format except
that the contingent deferred sales load percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative total
returns in conjunction with the standard format described above. The cumulative
returns will be calculated using the following formula assuming that the
contingent deferred sales load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of sub-account
recurring charges for the period.
ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of the one,
five, or ten-year period at the end of the one, five,
or ten-year period (or fractional portion of the
period).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the
standard performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent past performance and are not indicative of
future performance. The figures may reflect the waiver of advisory fees and
reimbursement of other expenses which may not continue in the future.
Portfolio information, including historical daily net asset values and
capital gains and dividends distributions regarding each portfolio has been
provided by that portfolio. The adjusted historical sub-account performance data
is derived from the data provided by the portfolios. Transamerica has no reason
to doubt the accuracy of the figures provided by the portfolios. Transamerica
has not verified these figures.
Adjusted Historical Performance Data
The charts below show adjusted historical performance data for the
sub-accounts for the periods, prior to the inception of the sub-accounts, based
on the performance of the corresponding portfolios since their inception date,
with a level of charges equal to those currently assessed under the contract.
These figures are not an indication of the future performance of the
sub-accounts.
The dates next to each sub-account name indicates the date of
commencement of operation of the corresponding portfolio. The sub-accounts
commenced operations during January 1998. Hence, there is no actual performance
data for these sub-accounts.
Notes:
1. On September 16, 1994, an investment company which had
commenced operations on August 1, 1988, called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two
investment funds - The Old Trust and the present OCC Accumulation
Trust (the "Present Trust") at which time the Present Trust commenced
operations. The total net assets of the Small Cap Portfolio
immediately after the transaction were $139,812,573 in the Old Trust
and $8,129,274 in the Present Trust. For the period prior to September
16, 1994, the performance figures for the Small Cap Portfolio of the
Present Trust reflect the performance of the Small Cap Portfolio of
the Old Trust.
2. The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc.,
is the successor to Separate Account Fund C of Transamerica Occidental
Life Insurance Company, a management investment company funding
variable annuities, through a reorganization on November 1, 1996.
Accordingly, the performance data for the Transamerica VIF Growth
Portfolio includes performance of its predecessor.
3. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds The
Old Trust and the present OCC Accumulation Trust (the "Present Trust")
at the time of the transaction there was $682,601,380 in the Old Trust
and $51,345,102 in the Present Trust. For the period prior to September
16, 1994, the performance figures for the Managed Portfolio of the
Present Trust reflect the performance of the Managed Portfolio of the
Old Trust.
Adjusted Historical Performance Data Charts
1. Average Annual Total Returns - Assuming surrender but no
Living Benefits Rider
2. Average Annual Total Returns - Assuming surrender and Living
Benefits Rider
3. Average Annual Total Returns - Assuming no surrender or Living
Benefits Rider
4. Average Annual Total Returns - Assuming no surrender but
reflecting Living Benefits Rider
5. Cumulative Returns - Assuming surrender but no Living Benefits
Rider
6. Cumulative Returns - Assuming surrender and Living Benefits
Rider
7. Cumulative Returns - Assuming no surrender or Living Benefits
Rider
8. Cumulative Returns - Assuming no surrender but reflecting
Living Benefits Rider
<PAGE>
1. Average Annual Total Returns - Assuming surrender but no
Living Benefits Rider
Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance, for each sub-account are
as follows. These figures include mortality and expenses charges of 1.20% per
annum, administrative expenses charge of 0.15% per annum, an account fee of $30
per annum adjusted for average account size and the applicable contingent
deferred sales load (maximum of 8% of purchase payments) and do not reflect any
fee deduction for the optional Living Benefits Rider. Any credit is not
reflected in this calculation.
<TABLE>
<CAPTION>
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
SUB-ACCOUNT For the For the For the 5-year For the 10-year For the period
(date of commencement 1-year 3-year period period ending period ending from
of operation of period ending ending 12/31/98 12/31/98 commencement of
corresponding portfolio) 12/31/988 12/31/98 portfolio
operations to
12/31/98
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide Growth
(9/12/93)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF International
Magnum (1/1/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Small Cap (8/30/90)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
OCC Accumulation Trust Small
Cap (7/31/88) (1)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Emerging Growth
(7/23/95)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Premier Growth
(6/26/92)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Research (7/25/95)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Growth
(12/1/80) (2)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alger American Income & Growth
(11/14/88)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Growth & Income
(1/14/91)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Growth w/ Income
(10/5/95)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Janus Aspen Balanced (9/12/93)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
OCC Accumulation Trust Managed
(7/31/88) (3)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF High Yield
(1/1/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF Fixed Income
(1/1/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Money Market
(1/1/98)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
2. Average Annual Total Returns - Assuming surrender and reflecting Living Benefits Rider
Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance, for each sub-account are
as follows. These figures include mortality and expenses charges of 1.20% per
annum, administrative expenses charge of 0.15% per annum, an account fee of $30
per annum adjusted for average account size, the applicable contingent deferred
sales load (maximum 8% of purchase payments) and optional Living Benefits Rider
fee of 0.05% per annum. Any credit is not reflected in this calculation.
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
SUB-ACCOUNT For the For the 3-year For the For the For the period from
(date of commencement of 1-year period period ending 5-year period 10-year period commencement of
operation of ending 12/31/98 ending ending 12/31/98 portfolio operations
corresponding portfolio) 12/31/98 12/31/98 to 12/31/98
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Worldwide
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income &
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money
Market (1/1/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
<PAGE>
3. Average Annual Total Returns - Assuming no surrender or Living Benefits Rider
Non-standard average annual total returns for periods since inception
of the portfolio, including adjusted historical performance, for each
sub-account are as follows. These figures include mortality and expenses charges
of 1.20% per annum, administrative expenses charge of 0.15% per annum and an
account fee of $30 per annum adjusted for average account size, but do not
reflect any applicable contingent deferred sales load (maximum of 8% of purchase
payments) and do not reflect any fee deduction for the optional Living Benefits
Rider. Any credit is not reflected in this calculation.
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
SUB-ACCOUNT For the For the 3-year For the For the For the period from
(date of commencement of 1-year period period ending 5-year period 10-year period commencement of
operation of ending 12/31/98 ending ending 12/31/98 portfolio operations
corresponding portfolio) 12/31/98 12/31/98 to 12/31/98
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Worldwide
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income &
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money
Market (1/1/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
4. Average Annual Total Returns - Assuming no surrender but reflecting Living Benefits Rider
Non-standard average annual total returns for periods since inception
of the portfolio, including adjusted historical performance, for each
sub-account are as follows. These figures include mortality and expenses charges
of 1.20% per annum, administrative expenses charge of 0.15% per annum and, an
account fee of $30 per annum adjusted for average account size, but do not
reflect any applicable contingent deferred sales load (maximum 8% of purchase
payments). They do reflect deduction of the fee for the optional Living Benefits
Rider Fee of 0.05% per annum. Any credit is not reflected in this calculation.
- ------------------------------- --------------- --------------- -------------- --------------- ----------------------
SUB-ACCOUNT For the For the For the For the For the period from
(date of commencement of 1-year period 3-year period 5-year 10-year commencement of
operation of ending ending period period ending portfolio operations
corresponding portfolio) 12/31/98 12/31/98 ending 12/31/98 to 12/31/98
12/31/98
- ------------------------------- --------------- --------------- -------------- --------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF
International Magnum (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Small
Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier Growth
(6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & Income
(1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High Yield
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money Market
(1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
5. Cumulative Returns - Assuming surrender but no Living Benefits Rider
Adjusted historical cumulative total returns for periods since
inception of the portfolio for each sub-account are as follows. These figures
include mortality and expenses charges of 1.20% per annum, administrative
expenses charge of 0.15% per annum, an account fee of $30 per annum adjusted for
average account size and the applicable contingent deferred sales load (maximum
of 8% of purchase payments) and do not reflect any fee deduction for the
optional Living Benefits Rider. Any credit is not reflected in this calculation.
- --------------------------- --------------- ---------------- ---------------- ---------------- ----------------------
SUB-ACCOUNT For the 1- For the 3- For the 5- For the 10- For the period from
(date of commencement of year period year period year period year period commencement of
operation of ending ending 12/31/98 ending 12/31/98 ending 12/31/98 portfolio operations
corresponding portfolio) 12/31/98 to 12/31/98
- --------------------------- --------------- ---------------- ---------------- ---------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
<PAGE>
6. Cumulative Returns - Assuming surrender and Living Benefits Rider
Adjusted historical cumulative total returns for periods since
inception of the portfolio for each sub-account are as follows. These figures
include mortality and expenses charges of 1.20% per annum, administrative
expenses charge of 0.15% per annum, an account fee of $30 per annum adjusted for
average account size, the applicable contingent deferred sales load (maximum 8%
of purchase payments) and the optional Living Benefits Rider Fee of 0.05% per
annum. Any credit is not reflected in this calculation.
- --------------------------- ---------------- ---------------- --------------- --------------- -----------------------
SUB-ACCOUNT For the 1- For the 3-year For the For the For the period from
(date of commencement of year period period ending 5-year period 10-year commencement of
operation of ending 12/31/98 ending period ending portfolio operations
corresponding portfolio) 12/31/98 12/31/98 12/31/98 to 12/31/98
- --------------------------- ---------------- ---------------- --------------- --------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
<PAGE>
7. Cumulative Returns - Assuming no surrender or Living Benefits Rider
Adjusted historical non-standard cumulative total returns for periods
since inception of the portfolio for each sub-account are as follow. These
figures include mortality and expenses charges of 1.20% per annum,
administrative expenses charge of 0.15% per annum and an account fee of $30 per
annum adjusted for average account size but do not reflect any applicable
contingent deferred sales load (maximum of 8% of purchase payments) and do not
reflect any fee deduction for the optional Living Benefits Rider. Any credit is
not reflected in this calculation.
- ---------------------------- ---------------- ---------------- --------------- --------------- ----------------------
SUB-ACCOUNT For the 1- For the 3-year For the For the For the period from
(date of commencement of year period period ending 5-year period 10-year commencement of
operation of ending 12/31/98 ending period ending portfolio operations
corresponding portfolio) 12/31/98 12/31/98 12/31/98 to 12/31/98
- ---------------------------- ---------------- ---------------- --------------- --------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
<PAGE>
8. Cumulative Returns - Assuming no surrender but reflecting Living Benefits Rider
Adjusted historical non-standard cumulative total returns for periods
since inception of the portfolio for each sub-account are as follow. These
figures include mortality and expenses charges of 1.20% per annum,
administrative expenses charge of 0.15% per annum and an account fee of $30 per
annum adjusted for average account size, but do not reflect any applicable
contingent deferred sales load (maximum 8% of purchase payments). They do
reflect deductions of the fee for the optional Living Benefits Rider Fee of
0.05% per annum.
Any credit is not reflected in this calculation.
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
SUB-ACCOUNT For the For the 3-year For the For the For the period from
(date of commencement of 1-year period period ending 5-year period 10-year period commencement of
operation of ending 12/31/98 ending ending 12/31/98 portfolio operations
corresponding portfolio) 12/31/98 12/31/98 to 12/31/98
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Worldwide
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust
Small Cap (7/31/88)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth
(12/1/80)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income &
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust
Managed (7/31/88)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money
Market (1/1/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
</TABLE>
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the contracts. TSSC may also serve as principal underwriter and
distributor of other contracts issued through the variable account and certain
other separate accounts of Transamerica and any affiliated of Transamerica. TSSC
is a wholly owned subsidiary of Transamerica Insurance Corporation of
California, which is a subsidiary of Transamerica Corporation. TSSC is
registered with the Commission as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker-dealers to
solicit applications for the contracts through registered representatives who
are licensed to sell securities and variable insurance products. These
agreements provide that applications for the contracts may be solicited by
registered representatives of the broker-dealers appointed by Transamerica to
sell its variable life insurance and variable annuities. These broker-dealers
are registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, applications for contracts will be sold by
broker-dealers which will receive compensation as described in the Prospectus.
The offering of the contracts is expected to be continuous and TSSC
does not anticipate discontinuing the offering of the contracts. However, TSSC
reserves the right to discontinue the offering of the contracts.
During fiscal year 1998, $XXX in commissions were paid to TSSC as
underwriter of the contracts; no amounts were retained by TSSC. Under the sales
agreements, TSSC will pay broker-dealers compensation based on a percentage of
each purchase payment. This percentage may be up to 4% and in certain situations
additional amounts for marketing allowances, production bonuses, service fees,
sales awards and meetings, and asset based trailer commissions may be paid.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the variable account is held by Transamerica. The
assets of the variable account are kept separate and apart from Transamerica
general account assets. Records are maintained of all purchases and redemptions
of portfolio shares held by each of the sub-accounts.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain contract
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the contract will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be
maintained by Transamerica or by its Service Office. As presently required by
the provisions of the 1940 Act and regulations promulgated thereunder which
pertain to the variable account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will be
sent to owners semi-annually at their last known address of record.
FINANCIAL STATEMENTS
This Statement of Additional Information contains the financial statements of
the Variable Account as of December 31, 1998.
The financial statements for Transamerica included in this statement of
additional information should be considered only as bearing on the ability of
Transamerica to meet its obligations under the contracts. They should not be
considered as bearing on the investment performance of the assets in the
variable account.
<PAGE>
APPENDIX
Accumulation Transfer Formula
Transfers after the annuity date are implemented according to the following
formulas:
(1) Determine the number of units to be transferred from the variable variable
sub-account as follows:
= AT/AUV1
(2) Determine the number of variable accumulation units remaining in
such variable sub-account (after the transfer):
= UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the
transferee variable sub-account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes
in variable accumulation units in each variable sub-account as of the
next Variable Accumulation Payment's due date.
Where:
(AUV1) is the variable accumulation Unit value of the Variable
sub-account that the transfer is being made from as of the end of the
valuation Period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of the
valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the Variable
sub-account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable
sub-account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
All required financial statements are included in Parts A and B of this
Registration Statement.
(b) Exhibits:
(1) Resolutions of Board of Directors of Transamerica Life Insurance and
Annuity Company (the "Company") authorizing the creation of Separate Account
VA-6 (the "Separate Account"). 1/
(2) Not Applicable.
(3) Form of Underwriting Agreement between the Company, the Separate
Account and Transamerica Securities Sales Corporation.2/
(4) Forms of Flexible Premium Deferred Variable Annuity Contracts. A) Form
of Flexible Premium Deferred Variable Annuity Contract for Product A,
Transamerica Classic Variable Annuity3/
B)Form of Flexible Premium Deferred Variable Annuity Contract for Product
C, Transamerica Catalyst Variable Annuity4/
(5) Form of Application for Flexible Premium Variable Annuity. 2/
(6) (a) Articles of Incorporation of Transamerica Life Insurance and
Annuity Company.1/
(b) By-Laws of Transamerica Life Insurance and Annuity Company.1/
(7) Not Applicable.
(8) Form of Participation Agreements.
(a) re The Alger American Fund 3
(b) re Alliance Variable Products Series Fund, Inc.3 (c) re Dreyfus
Variable Investment Fund (d) re Janus Aspen Series 3 (e) re MFS
Variable Insurance Trust 3 (f) re Morgan Stanley Universal Funds, Inc.
3 (g) re OCC Accumulation Trust 3 (h) re Transamerica Variable
Insurance Fund, Inc.2/
(9) Opinion and Consent of Counsel.2/
(10) (a) Consent of Counsel./ 4/ 5/6
(b) Consent of Independent Auditors./6/
(11) No financial statements are omitted from Item 23.
(12) Not Applicable.
(13) Performance Data Calculations.3/
(14) Not Applicable.
(15) Powers of Attorney.2/6
- ----------------------------
1/ Incorporated by reference to the like numbered exhibit to the initial filing
of the Registration Statement of Transamerica Life Insurance and Annuity
Company's Separate Account VA-6 on Form N-4, File No. 333-9745, (August 8,
1996).
2/ Incorporated by reference to the like numbered exhibit to the Pre-Effective
Amendment No. 1 to the Registration Statement of Transamerica Life Insurance and
Annuity Company's Separate Account VA-6 on Form N-4, File No. 333-9745 (August
22, 1997).
3/ Incorporated by reference to the like numbered exhibit to the Post-Effective
Amendment No. 1 to the Registration Statement of Transamerica Life Insurance and
Annuity Company's Separate Account VA-6 on Form N-4, File No. 333-9745 (December
22, 1997).
4/ Incorporated by reference to the like numbered exhibit to the Post-Effective
Amendment No. 2 to the Registration Statement of Transamerica Life Insurance and
Annuity Company's Separate Account VA-6 on Form N-4, File No. 333-9745 (December
24, 1997).
5/ Incorporated by reference to the like-numbered exhibit to the Post-Effective
Amendment No, 3 to the Registration Statement of Transamerica Life Insurance and
Annuity Company's Separate Account VA-6 on Form N-4 File No. 333-9745 (February
25, 1998).
6/Incorporated by reference to the like-numbered exhibit to the Post-Effective
Amendment No. 4 to the Registration Statement of Transamerica Life Insurance and
Annuity Company's Separate Account VA-6 on Form N-4 File No. 333-9745 (April 29,
1998). .
<PAGE>
Items 25. Directors and Officers of the Depositor.
The names of Directors and Executive Officers of the Company, their
positions and offices with the Company, and their other affiliations are as
follows. The address of Directors and Executive Officers is 1150 South Olive
Street, Los Angeles, California 90015-2211, unless indicated by asterisk.
List of Directors of Transamerica Life Insurance and Annuity Company
Richard N. Latzer
Thomas J. Cusack
James W. Dederer Karen MacDonald
Gary U. Rolle'
Richard H. Finn
David E. Gooding T. Desmond Sugrue
Edgar H. Grubb Nooruddin Veerjee
Frank C. Herringer Robert A. Watson
List of Officers for Transamerica Life Insurance and Annuity Company
Thomas J. Cusack Chairman
Frank Beardsley President - Asset Management
Paul E. Rutledge III President - Reinsurance Division
Nooruddin S. Veerjee FSA President
James W. Dederer CLU General Counsel and Secretary
Nicki Bair FSA Senior Vice President
Roy Chong-Kit Senior Vice President and Chief Actuary
Karen MacDonald Senior Vice President and Corporate Actuary
John O. Myers Senior Vice President
Larry H. Roy Senior Vice President
William R. Wellnitz FSA Senior Vice President and Actuary
Virgina M. Wilson Senior Vice President and Controller
Richard N. Latzer Chief Investment Officer
Gary U. Rolle' CFA Chief Investment Officer
Stephen J. Ahearn Investment Officer
John M. Casparian Investment Officer
Heather E. Creeden Investment Officer
Colin Funai Investment Officer
William L. Griffin Investment Officer
Heidi Y. Hu Investment Officer
Matthew W. Kuhns Investment Officer
Michael G. Luongo Investment Officer
Dennis J. McNamara Investment Officer
Matthew A. Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Susan A. Silbert Investment Officer
Philip W. Treick Investment Officer
Jeffrey S. Van Harte Investment Officer
Paul Wintermute Investment Officer
Lawrence M. Agin FSA Vice President & Associate Actuary
Michael Barnhart RegionalVice President
Nancy Blozis Vice President and Controller
Jim Bowman Vice President
Rose Ann Bremser Vice President
Sandy Brown Vice President
Matt Coben Vice President
Ken Cochrane Vice President
Catherine Collinson Vice President
Glen Cunningham Vice President
Roberto Demarco Vice President
John Dohmen Vice President
Thomas P. Dolan Vice President
J. Peter Donlon Vice President
Harry Dunn Vice President & Chief Actuary
Paul Hankowitz MD Vice President & Chief Medical Director
Meheriar Hasan Vice President
Tom Hauptli Vice President
Zahid Hussain Vice President and Associate Actuary
Ahmad Kamil Vice President & Associate Actuary
Michael Kappos Vice President
Patrick Kelleher Vice President and
Reinsurance Financial Officer
Ken Kilbane Vice President
Carl Macero Vice President and Chief Reinsurance
Underwriter
Susan Mack Vice President and Associate General Counsel
Maureen McCarthy Vice President
Philip McHale Vice President and Chief Underwriter
Vic Modugno Vice President & Associate Actuary
Paul L. Norris FSA Vice President & Actuary
Thomas P. O'Neill Vice President
Donald P. Radisich Vice President
William N. Scott FLMI Vice President
Christina Stiver Vice President
Karen Stout Vice President
James O. Strand Vice President
Alice Su Vice President
Bill Tate Vice President
Barry Tobin Vice President
Colleen Vandermark Vice President
Richard L. Weinstein FSA Vice President & Associate Actuary
Timothy Weis Vice President
Ronald Wolfe Regional Vice President
Sally S. Yamada CPA, FLMI Vice President & Treasurer
Sandra Bailey-Whichard Second Vice President
Daniel J. Bohmfalk Second Vice President and Associate Actuary
Barry Buner Second Vice President
Reid A. Evers Second Vice President & Assistant General
Counsel
David Fairhall FSA Second Vice President & Associate Actuary
Toni Forge Second Vice President
Selma Fox Second Vice President
Linda Goodwin M.D. Second Vice President and Reinsurance
Medical Director
Andrew G. Kanelos Second Vice President
Catherine A. Lenton Second Vice President
Liwen Lien Second Vice President
Danny Mahoney Second Vice President
Clay Moye Second Vice President
Daniel A. Norwick Second Vice President
Paul W. Reisz Second Vice President
Beverly Rockecharlie Second Vice President
Frank Snyder Second Vice President
Michael Stein Second Vice President
Suzette Stover-Hoyt Second Vice President and Assistant
Secretary
Boning Tong Second Vice President and Associate Actuary
Emily Urbano Second Vice President
Joan Ward Second Vice President
Kamran Haghighi Tax Officer
Kim A. Tursky Assistant Secretary
Susan Vivino Assistant Secretary
James Wolfenden Statement Officer
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Registrant is a separate account of Transamerica Life Insurance and Annuity
Company, is controlled by the Contract Owners, and is not controlled by or under
common control with any other person. The Depositor, Transamerica Life Insurance
and Annuity Company, is wholly owned by Transamerica Occidental Life Insurance
Company, which is wholly owned by Transamerica Insurance Corporation of
California (Transamerica-California). Transamerica-California may be deemed to
be controlled by its parent, Transamerica Corporation.
The following chart indicates the persons controlled by or under common
control with Transamerica.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation - DE
ARC Reinsurance Corporation - HI
Transamerica Management, Inc. - DE
Criterion Investment Management Company - TX
Inter-America Corporation - CA
Mortgage Corporation of America - CA
Pyramid Insurance Company, Ltd. - HI
Pacific Cable Ltd. - Bmda.
TC Cable, Inc. - DE
RTI Holdings, Inc. - DE
Transamerica Airlines, Inc. - DE
Transamerica Business Technologies Corporation - DE
Transamerica CBO I, Inc. - DE
Transamerica Corporation (Oregon) - OR
Transamerica Delaware, L.P. - DE
Transamerica Finance Corporation - DE
TA Leasing Holding Co., Inc. - DE
Trans Ocean Ltd. - DE
Trans Ocean Container Corp. - DE
SpaceWise Inc. - DE
TOD Liquidating Corp. - CA
TOL S.R.L. - Itl.
Trans Ocean Container Finance Corp. - DE
Trans Ocean Leasing Deutschland GmbH - Ger.
Trans Ocean Leasing PTY Limited - Aust.
Trans Ocean Management Corporation - CA
Trans Ocean Management S.A. - SWTZ
Trans Ocean Regional Corporate Holdings - CA
Trans Ocean Tank Services Corporation - DE
Transamerica Leasing Inc. - DE
Better Asset Management Company LLC - DE
Transamerica Leasing Holdings Inc. - DE
Greybox Logistics Services Inc. - DE
Greybox L.L.C. - DE
Transamerica Trailer Leasing S.N.C. - Fra.
Greybox Services Limited - U.K.
Intermodal Equipment, Inc. - DE
Transamerica Leasing N.V. - Belg.
Transamerica Leasing SRL - Itl.
Transamerica Distribution Services Inc. - DE
Transamerica Leasing Coordination Center - Belg.
Transamerica Leasing do Brasil Ltda. - Braz.
Transamerica Leasing GmbH - Ger.
Transamerica Leasing Limited - U.K.
ICS Terminals (UK) Limited - U.K.
Transamerica Leasing Pty. Ltd. - Aust.
Transamerica Leasing (Canada) Inc. - Can.
Transamerica Leasing (HK) Ltd. - H.K.
Transamerica Leasing (Proprietary) Limited - S.Afr.
Transamerica Tank Container Leasing Pty. Limited - Aust.
Transamerica Trailer Holdings I Inc. - DE
Transamerica Trailer Holdings II Inc. - DE
Transamerica Trailer Holdings III Inc. - DE
Transamerica Trailer Leasing AB - Swed.
Transamerica Trailer Leasing AG - SWTZ
Transamerica Trailer Leasing A/S - Denmk.
Transamerica Trailer Leasing GmbH - Ger.
Transamerica Trailer Leasing (Belgium) N.V. - Belg.
Transamerica Trailer Leasing (Netherlands) B.V. - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
Transamerica Commercial Finance Corporation, I - DE
BWAC Credit Corporation - DE
BWAC International Corporation - DE
BWAC Twelve, Inc. - DE
TIFCO Lending Corporation - IL
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Company (Europe) - MD
Transamerica Insurance Finance Corporation, California - CA
Transamerica Insurance Finance Corporation, Canada - ON
Transamerica Business Credit Corporation - DE
Direct Capital Equity Investment, Inc. - DE
TA Air East, Corp. -
TA Air III, Corp. - DE
TA Air II, Corp. - DE
TA Air IV, Corp. - DE
TA Air I, Corp. - DE
TBC III, Inc. - DE
TBC II, Inc. - DE
TBC IV, Inc. -
TBC I, Inc. - DE
TBC Tax III, Inc. -
TBC Tax II, Inc. -
TBC Tax IV, Inc. -
TBC Tax IX, Inc. -
TBC Tax I, Inc. -
TBC Tax VIII, Inc. -
TBC Tax VII, Inc. -
TBC Tax VI, Inc. -
TBC Tax V, Inc. -
TBC Tax XII, Inc. -
TBC Tax XI, Inc. -
TBC V, Inc. -
The Plain Company - DE
Transamerica Distribution Finance Corporation - DE
Transamerica Accounts Holding Corporation - DE
Transamerica Commercial Finance Corporation - DE
Inventory Funding Trust - DE
Inventory Funding Company, LLC - DE
TCF Asset Management Corporation - CO
Transamerica Joint Ventures, Inc. - DE
Transamerica Inventory Finance Corporation - DE
BWAC Seventeen, Inc. - DE
Transamerica Commercial Finance Canada, Limited - ON
Transamerica Commercial Finance Corporation, Canada - Can.
BWAC Twenty-One, Inc. - DE
Transamerica Commercial Finance Limited - U.K.
WFC Polska Sp. Zo.o -
Transamerica Commercial Holdings Limited - U.K.
Transamerica Commercial Holdings, Inc. -
Transamerica Trailer Leasing Limited - NY
Transamerica Commercial Finance France S.A. - Fra.
Transamerica GmbH Inc. - DE
Transamerica Retail Financial Services Corporation - DE
Transamerica Consumer Finance Holding Company - DE
Metropolitan Mortgage Company - FL
Easy Yes Mortgage, Inc. - FL
Easy Yes Mortgage, Inc. - GA
First Florida Appraisal Services, Inc. - FL
First Georgia Appraisal Services, Inc. - GA
Freedom Tax Services, Inc. - FL
J.J. & W. Advertising, Inc. - FL
J.J. & W. Realty Corporation - FL
Liberty Mortgage Company of Ft. Myers, Inc. - FL
Metropolis Mortgage Company - FL
Perfect Mortgage Company - FL
Whirlpool Financial National Bank - DE
Transamerica Vendor Financial Services - DE
Transamerica Distribution Finance Corporation de Mexico -
Transamerica Corporate Services de Mexico -
Transamerica Federal Savings Bank -
Transamerica HomeFirst, Inc. - CA
Transamerica Home Loan - CA
Transamerica Lending Company - DE
Transamerica Financial Products, Inc. - CA
Transamerica Foundation - CA
Transamerica Insurance Corporation of California - CA
Arbor Life Insurance Company - AZ
Plaza Insurance Sales, Inc. - CA
Transamerica Advisors, Inc. - CA
Transamerica Annuity Service Corporation - NM
Transamerica Financial Resources, Inc. - DE
Financial Resources Insurance Agency of Texas - TX
TBK Insurance Agency of Ohio, Inc. - OH
Transamerica Financial Resources Insurance Agency of Alabama Inc.
- AL
Transamerica Financial Resources Insurance Agency of Massachusetts
Inc. - MA
Transamerica International Insurance Services, Inc. - DE
Home Loans and Finance Ltd. - U.K.
Transamerica Occidental Life Insurance Company - CA
NEF Investment Company - CA
Transamerica China Investments Holdings Limited - H.K.
Transamerica Life Insurance and Annuity Company - NC
Transamerica Assurance Company - CO
Transamerica Life Insurance Company of Canada - Can.
Transamerica Life Insurance Company of New York - NY
Transamerica South Park Resources, Inc. - DE
Transamerica Variable Insurance Fund, Inc. - MD
USA Administration Services, Inc. - KS
Transamerica Products, Inc. - CA
Transamerica Leasing Ventures, Inc. - CA
Transamerica Products II, Inc. - CA
Transamerica Products IV, Inc. - CA
Transamerica Products I, Inc. - CA
Transamerica Securities Sales Corporation - MD
Transamerica Service Company - DE
Transamerica Intellitech, Inc. - DE
Transamerica International Holdings, Inc. - DE
Transamerica Investment Services, Inc. - DE
Transamerica Income Shares, Inc. (managed by TA Investment Services)
- MD
Transamerica LP Holdings Corp. - DE
Transamerica Real Estate Tax Service (A Division of Transamerica
Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of TA Real Estate
Tax Service) - N/A
Transamerica Realty Services, Inc. - DE
Bankers Mortgage Company of California - CA
Pyramid Investment Corporation - DE
The Gilwell Company - CA
Transamerica Affordable Housing, Inc. - CA
Transamerica Minerals Company - CA
Transamerica Oakmont Corporation - CA
Ventana Inn, Inc. - CA
Transamerica Senior Properties, Inc. - DE
Transamerica Senior Living, Inc. - DE
*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
Limited Partner; Transamerica Corporation is General Partner
Item 27. Number of Contractowners
As of 12/31/97:
Product A (Classic) 0
Product C (Catalyst) 0
Item 28. Indemnification
Transamerica Life Insurance and Annuity Company's Articles of Incorporation
provide in Article VIII as follows:
To the full extent from time to time permitted by law, no person who is
serving or who has served as a director of the Corporation shall be personally
liable in any action for monetary damages for breach of his or her duty as a
director, whether such action is brought by or in the right of the corporation
or otherwise. Neither the amendment or repeal of this Article nor inconsistent
with this Article, shall eliminate or reeduce the protection afforded by this
Article to a director of the Corporation with respect to any matter which
occurred, or any cause of action, suit or claim which but for this Article would
have accrued or arising prior to such amendment, repeal or adoption.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling person of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liability (other than the payment by the registrant of expenses incurred or paid
by the 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 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of Transamerica Life Insurance and Annuity
Company are covered under a Directors and Officers liability program which
includes direct coverage to directors and officers (Coverage A) and corporate
reimbursement (Coverage B) to reimburse the Company for indemnification of its
directors and officers. Such directors and officers are indemnified for loss
arising from any covered claim by reason of any Wrongful Act in their capacities
as directors or officers. In general, the term "loss" means any amount which the
insureds are legally obligated to pay for a claim for Wrongful Acts. In general,
the term "Wrongful Acts" means any breach of duty, neglect, error, misstatement,
misleading statement or omission caused, committed or attempted by a director or
officer while acting individually or collectively in their capacity as such,
claimed against them solely by reason of their being directors and officers. The
limit of liability under the program is $95,000,000 for Coverage A and
$80,000,000 for Coverage B for the period 11/15/98 to 11/15/2000. Coverage B is
subject to a self insured retention of $15,000,000. The primary policy under the
program is with CNA Lloyds, Gulf, Chubb and Travelers.
Item 29. Principal Underwriter
(a) Transamerica Securities Sales Corporation, the principal underwriter, is
also the underwriter for: Transamerica Investors, Inc.; Transamerica Variable
Insurance
Fund, Inc.; Transamerica Occidental Life Insurance Company's Separate Accounts:
VA-2L; VA-2NL; VA-5; and VL; Transamerica Life Insurance and Annuity Company's
Separate Accounts VA-1 and VA-7 and VA-7, and Transamerica Life Insurance
Company of New York's Separate Accounts VA-2LNY and VA-5NLNY. The Underwriter is
wholly-owned by Transamerica Insurance Corporation of California.
(b) The following table furnishes information with respect to each director
and officer of the principal Underwriter currently distributing securities of
the registrant:
Barbara Kelley Director & President
Regina Fink Director & Secretary
Nooruddin Veerjee Director
Dan Trivers Senior Vice President
Nicki Bair Vice President
Chris Shaw Second Vice President
Ben Tang Treasurer
(c) The following table lists the amounts of commissions paid to the
principal underwriter during the last fiscal year.
<TABLE>
<CAPTION>
Name of
Principal Net Underwriting Compensation on Brokerage
Underwriter Discounts & Commission Redemption Commissions Compensation
<S> <C> <C> <C> <C>
TSSC 0 0 0 0
</TABLE>
Item 30. Location of Accounts and Records
Physical possession of each account, book, or other document required to be
maintained is kept at the Company's offices at 401 North Tryon Street,
Charlotte, North Carolina 28202.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The 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 as long as purchase payments under the contracts offered
herein are being accepted.
(b) Registrant hereby undertakes to 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 hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
Form N-4 promptly upon written or oral request.
(d) Transamerica hereby represents that the fees and the charges deducted
under the Contracts, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred, and the
risks assumed by Transamerica.
<PAGE>
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Transamerica Occidental Life Insurance Company certifies that this
Amendment meets the requirements of Securities Act Rule 485(a) for effectiveness
of this Registration Statement and has caused this Registration Statement to be
signed on its behalf by the undersigned in the City of Los Angeles, State of
California on the 5th day of February, 1999.
SEPARATE ACCOUNT VA-6 OF
TRANSAMERICA LIFE INSURANCE
AND ANNUITY COMPANY
(REGISTRANT)
TRANSAMERICA LIFE INSURANCE
AND ANNUITY COMPANY
(DEPOSITOR)
----------------------------------
David M. Goldstein
Vice President
As required by the Securities Act of 1933, this Registration Statement has been
signed below on February 5, 1999February 5, 1999 by the following persons or by
their duly appointed attorney-in-fact in the capacities specified:
<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C>
______________________* Director and President February 5, 1999
Nooruddin S. Veerjee
______________________* Director and Chairman February 5, 1999
Thomas J. Cusack
______________________* Director February 5, 1999
James W. Dederer
______________________* Director February 5, 1999
Richard H. Finn
______________________* Director February 5, 1999
George A. Foegele
______________________* Director February 5, 1999
David E. Gooding
______________________* Director February 5, 1999
Edgar H. Grubb
______________________* Director February 5, 1999
Frank C. Herringer
______________________* Director February 5, 1999
Richard N. Latzer
______________________* Director February 5, 1999
Karen MacDonald
______________________* Director February 5, 1999
Gary U. Rolle'
______________________* Director February 5, 1999
Paul E. Rutledge III
______________________* Director February 5, 1999
T. Desmond Sugrue
______________________* Director February 5, 1999
Robert A. Watson
</TABLE>
_________________________ On February 5, 1999 as Attorney-in-Fact pursuant to
*By: David M. Goldstein powers of attorney filed herewith.
