As filed with the Securities and Exchange Commission on April 29, 1999
Registration Nos. 333-47219
No. 811-08677
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933 Pre-Effective Amendment No.
Post-Effective Amendment No. _1___[ X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X]
Amendment No. 2
SEPARATE ACCOUNT VA-6NY
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
100 Manhattanville Road, Purchase, New York 10577
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (914) 701-6000
Name and Address of Agent for Service: Copy to:
JAMES W. DEDERER, Esq. FREDERICK R. BELLAMY, Esq.
General Counsel Sutherland, Asbill & Brennan, L.L.P.
Transamerica Life Insurance 1275 Pennsylvania Avenue, N.W.
Company of New York Washington, D.C. 20004-2404
100 Manhattanville Road
Purchase, New York 10577
Approximate date of proposed public offering: As soon as practicable after
effectiveness of the Registration Statement.
Title of securities being registered: Interests in a separate account under
flexible premium deferred variable annuity contracts.
It is proposed that this filing will become effective:
__immediately upon filing pursuant to paragraph (b)
x on May 1, 1999 pursuant to paragraph (b)
__60 days after filing pursuant to paragraph (a)(1)
__on _ pursuant to paragraph (a)(1)
If appropriate, check the following box:
___ 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 CLASSICsm VARIABLE ANNUITY
Issued by
Transamerica Life Insurance Company of New York
May 1, 1999
This Profile is a summary of some of the more important points that you
should know and consider before purchasing the policy. The policy is
more fully described in the full prospectus that accompanies this
Profile. Please read the prospectus carefully.
1. The Policy. The Transamerica Classicsm Variable Annuity is a policy between
you and Transamerica Life Insurance Company of New York that allows you to
invest your premiums in your choice of 17 mutual fund portfolios ("portfolios")
in the variable account and the fixed account. 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 fixed account.
We guarantee the safety of money invested in the fixed account.
The policy 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 to your policy, 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 and/or subject to penalty. Tax deferral is not
available for non-qualified policies owned by corporations and some trusts.
During the annuitization phase, we 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 us. 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 Policy. Generally you must invest at least $5,000 ($2,000 for
IRAs) to purchase a policy. You can make additional payments of at least $200
each ($100 each if made under an automatic payment plan deducted from your bank
account). You may cancel your policy during the free look period (see item 10).
The Transamerica Classic 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 policy 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
20 portfolios:
<TABLE>
<CAPTION>
----------------------------------------------- -------------------------------------------------
<S> <C> <C>
Alger American Income & Growth MFS VIT Research
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Alliance VPF Growth & Income MSDW UF Fixed Income
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Alliance VPF Premier Growth MSDW UF High Yield
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Dreyfus VIF Capital Appreciation MSDW UF International Magnum
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Dreyfus VIF Small Cap OCC Accumulation Trust Managed
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Janus Aspen Balanced MFS VIT Growth with Income
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Janus Aspen Worldwide Growth OCC Accumulation Trust Small Cap
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
MFS VIT Emerging Growth
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Transamerica VIF Growth Transamerica VIF Money Market
----------------------------------------------- -------------------------------------------------
</TABLE>
You can earn or lose money in any of these portfolios. These portfolios are
described in their own prospectuses.
FIXED ACCOUNT: You can also allocate payments to the fixed account, where we
guarantee the principal invested plus an annual interest rate of at least 3%.
5. Expenses. We make certain charges and deductions in order to provide the
benefits and features available under the policy:
If you withdraw your money within seven years of investing it, there
may be a contingent deferred sales load of up to 6% of the amount
invested.
We deduct an annual account fee of no more than $30 (the fee is waived
for policy values over $50,000).
We deduct insurance and administrative charges of 1.35% per year from
your average daily value in the variable account.
The first 18 transfers each year are free (then we 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 any transfer fees). 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,
the investment grew 5% each year, and you withdrew your entire investment after
one year or 10 years. Year one includes the contingent deferred sales load and
year 10 does not.
<TABLE>
<CAPTION>
------------------------------------------------------------------
Total Total 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% 0.70% 2.125 $73 $246
Alliance VPF Growth & Income 1.425% 0.73% 2.155 $73 $249
Alliance VPF Premier Growth 1.425% 1.06% 2.485 $76 $282
Dreyfus VIF Capital Appreciation Growth 1.425% 0.81% 2.235 $74 $257
Dreyfus VIF Small Cap 1.425% 0.77% 2.195 $73 $253
Janus Aspen Balanced 1.425% 0.74% 2.165 $73 $250
Janus Aspen Worldwide Growth 1.425% 0.72% 2.145 $73 $248
MFS Emerging Growth 1.425% 0.85% 2.275 $74 $261
MFS Growth & Income 1.425% 0.88% 2.305 $74 $264
MFS Research 1.425% 0.86% 2.285 $74 $262
MSDW UF Fixed Income 1.425% 0.70% 2.125 $73 $246
MSDW UF High Yield 1.425% 0.80% 2.225 $74 $256
MSDW UF International Magnum 1.425% 1.15% 2.575 $77 $291
OCC Accumulation Trust Managed 1.425% 0.82% 2.245 $74 $258
OCC Accumulation Trust Small Cap 1.425% 0.88% 2.305 $74 $264
Transamerica VIF Growth 1.425% 0.85% 2.275 $74 $261
Transamerica VIF Money Market 1.425% 0.60% 2.025 $72 $235
- -----------------------------------------------------------------------------------------------------------
</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
Classic Variable Annuity prospectus for more detailed information.
6. Federal Income Taxes. Individuals generally are not taxed on increases in the
account 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
policy). 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 policies that are not individuals may
be currently taxed on increases in the account value, whether distributed or
not. Qualified policies 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. We may assess a contingent deferred sales load of up to 6%
of a premium, but no contingent deferred sales load will be assessed on money
that has been in the policy for seven years or longer. Subject to certain
conditions, each policy year you may withdraw up to 15% of premiums received
less than seven years ago, without incurring a contingent deferred sales load.
Withdrawals from qualified policies 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.
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
contingent deferred sales load or any transfer fees which would reduce
performance if applied.
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> <C>
Alger American Income & Growth 30.55% 34.37% 17.98% 33.23% -9.59%
Alliance VPF Growth & Income 19.20% 26.98% 22.34% 33.96% -1.85%
Alliance VPF Premier Growth 45.93% 31.98% 20.97% 42.82% -4.34%
Dreyfus VIF Capital Appreciation Growth 28.36% 26.29% 23.78% 31.65% 1.57%
Dreyfus VIF Small Cap -4.80% 15.10% 14.94% 27.56% 6.22%
Janus Aspen Balanced 32.42% 20.38% 14.54% 23.03% -0.59%
Janus Aspen Worldwide Growth 27.13% 20.43% 27.22% 25.58% 0.09%
MFS Emerging Growth 32.38% 20.11% 15.36% NA NA
MFS Growth & Income 20.62% 27.96% 22.69% NA NA
MFS Research 21.59% 18.64% 20.60% NA NA
MSDW UF Fixed Income 6.39% NA NA NA NA
MSDW UF High Yield 3.33% NA NA NA NA
MSDW UF International Magnum 7.44% NA NA NA NA
OCC Accumulation Trust Managed 5.62% 20.57% 21.03% 43.52% 1.16%
OCC Accumulation Trust Small Cap -10.32% 20.52% 17.03% 13.60% -2.42%
Transamerica VIF Growth 41.29% 44.45% 26.00% 51.34% 6.10%
Transamerica VIF Money Market NA NA NA NA NA
- -----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------
SUB-ACCOUNT 1993 1992 1991 1990 1989
----------------------------------------------------------------
- -------------------------------------------
Alger American Income & Growth 8.78% 7.09% 21.77% -1.15% 5.88%
Alliance VPF Growth & Income 10.11% 6.40% NA NA NA
Alliance VPF Premier Growth 11.03% NA NA NA NA
Dreyfus VIF Capital Appreciation Growth NA NA NA NA NA
Dreyfus VIF Small Cap 65.82% 69.04% 156.16% NA NA
Janus Aspen Balanced NA NA NA NA NA
Janus Aspen Worldwide Growth NA NA NA NA NA
MFS Emerging Growth NA NA NA NA NA
MFS Growth & Income NA NA NA NA NA
MFS Research NA NA NA NA NA
MSDW UF Fixed Income NA NA NA NA NA
MSDW UF High Yield NA NA NA NA NA
MSDW UF International Magnum NA NA NA NA NA
OCC Accumulation Trust Managed 8.82% 16.96% 43.94% -5.01% 30.69%
OCC Accumulation Trust Small Cap 17.82% 19.77% 46.05% -11.06% 16.68%
Transamerica VIF Growth 20.98% 12.19% 39.32% -12.05% 32.24%
Transamerica VIF Money Market NA NA NA NA NA
- -----------------------------------------------------------------------------------------------------------
</TABLE>
9. Death Benefit. If you or your joint owner die during the accumulation phase,
a death benefit will be paid to your beneficiary.
If you or your joint owner die before either of you turn 85, the death benefit
will be the greatest of three amounts: (1) the policy value; (2) the sum of all
premiums less withdrawals taken and applicable premium tax charges; or (3) the
highest policy value on any policy anniversary prior to the earlier of your or
your joint owner's 85th birthday, plus premiums paid, less withdrawals taken and
premium tax charges since that policy anniversary. If death occurs after your or
your joint owner's 85th birthday, the death benefit will be equal to the account
value.
10. Other Information. The Transamerica Classic Variable Annuity offers other
features you might be interested in. Some of these features are as follows:
Free Look. After you get your policy, you have 10 days to look it over and
decide if it is really right for you. If you decide not to keep the policy, you
can cancel it during this period by delivering a written notice of cancellation
and returning the policy to our Service Center at the address listed in item 11
below. Except for IRAs, we will refund the premiums allocated to the fixed
account (less any withdrawals) plus the value in the variable account as of the
date the written notice and the policy are received by our Service Center.
Dollar Cost Averaging. You can instruct us 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 us to
periodically automatically rebalance the amounts in the sub-accounts by
reallocating amounts among them.
Systematic Withdrawal Option. You can arrange to have us send you money
automatically each month out of your policy, 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 amount of withdrawals
(including systematic withdrawals) made in a policy year exceed the allowed
amount to be withdrawn without a charge for that year, any applicable contingent
deferred sales load will then apply.
Automatic Payout Option. For qualified policies, many pension and retirement
plans require that minimum 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
policy, please write or call:
Transamerica Annuity Service Center
401 North Tryon Street, Suite 700
Charlotte, North Carolina 28202
800-420-7749
<PAGE>
2
3
PROSPECTUS FOR THE
TRANSAMERICA SERIESsm CLASSIC VARIABLE ANNUITY
A Flexible Premium Deferred Variable Annuity
Issued By
Transamerica Life Insurance Company
of New York
Offering 17 Sub-Accounts within the Variable Account
Designated as Separate Account VA-6NY
In Addition to
A Fixed Account
<TABLE>
<CAPTION>
<S> <C> <C>
This prospectus contains Variable Sub-Account Portfolio Options
information you should Alger American Income and Growth
know before investing. Alliance VPF Growth and Income
Alliance VPF Premier Growth
Please keep this prospectus Dreyfus VIF Capital Appreciation
for future reference. Dreyfus VIF Small Cap
Janus Aspen Balanced
You can obtain more information about Janus Aspen Worldwide Growth
the policy by requesting a copy of the MFS VIT Emerging Growth
Statement of Additional Information MFS VIT Growth with Income
("SAI") dated May 1, 1999. The SAI is MFS VIT Research
available free by writing to Transamerica MSDW UF Fixed Income
Life Insurance Company of New York, MSDW UF High Yield
Annuity Service Center, MSDW UF International Magnum
401 N. Tryon St., Suite 700, OCC Accumulation Trust Managed
Charlotte, NC 28202 or OCC Accumulation Trust Small Cap
by calling 800-420-7749. Transamerica VIF Growth
Transamerica VIF Money Market
</TABLE>
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.
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
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SUMMARY.....................................................................................................6
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT...................................19
Transamerica Life Insurance Company of New York...................................................19
Published Ratings.................................................................................19
Insurance Marketplace Standards Association.........................................................
The Variable Account..............................................................................19
THE PORTFOLIOS.............................................................................................19
THE POLICY.................................................................................................24
PREMIUMS...................................................................................................25
Premiums..........................................................................................25
Allocation of Premiums............................................................................26
Investment Option Limit...........................................................................26
POLICY VALUE...............................................................................................27
How Variable Accumulation Units Are Valued........................................................27
TRANSFERS..................................................................................................28
Before the Annuity Date...........................................................................28
Other Restrictions................................................................................28
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..............................................................................................32
Payment of Death Benefit..........................................................................33
Designation of Beneficiaries......................................................................33
Death of Owner of Joint Owner Before Annuity Date.................................................34
If Annuitant Dies Before Annuity Date.............................................................35
Death After Annuity Date..........................................................................35
Survival Provision................................................................................35
CHARGES, FEES AND DEDUCTIONS...............................................................................35
Contingent Deferred Sales Load/Surrender Charge...................................................35
Free Withdrawal - Allowed Amount..................................................................35
Other Free Withdrawals............................................................................36
Administrative Charges............................................................................36
Mortality and Expense Risk Charge.................................................................37
Premium Tax Charges...............................................................................38
Transfer Fee......................................................................................38
Option and Service Fees...........................................................................38
Taxes.............................................................................................38
Portfolio Expenses................................................................................38
Interest Adjustment...............................................................................38
Sales in Special Situations.......................................................................38
DISTRIBUTION OF THE POLICY...................................................................................
SETTLEMENT OPTION PAYMENTS.................................................................................39
Annuity Date......................................................................................39
Settlement Option Payments........................................................................39
Election of Settlement Option Forms and Payment Options...........................................39
Payment Options...................................................................................40
Fixed Payment Option..............................................................................40
Variable Payment Option...........................................................................40
Settlement Option Forms...........................................................................40
FEDERAL TAX MATTERS........................................................................................42
Introduction......................................................................................42
Premiums..........................................................................................42
Taxation of Annuities.............................................................................42
Qualified Policies................................................................................44
Taxation of Transamerica .........................................................................46
Tax Status of Policy..............................................................................47
Possible Changes in Taxation......................................................................48
Other Tax Consequences............................................................................48
PERFORMANCE DATA...........................................................................................48
YEAR 2000 ISSUE............................................................................................50
LEGAL PROCEEDINGS..........................................................................................50
LEGAL MATTERS..............................................................................................50
ACCOUNTANTS AND FINANCIAL STATEMENTS.......................................................................50
VOTING RIGHTS..............................................................................................50
AVAILABLE INFORMATION......................................................................................51
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS....................................................52
APPENDIX A - THE FIXED ACCOUNT.............................................................................53
APPENDIX B.................................................................................................56
Example of Variable Accumulation Unit Value Calculations..........................................56
Example of Variable Annuity Unit Value Calculations...............................................56
Example of Variable Annuity Payment Calculations..................................................56
APPENDIX C.................................................................................................57
Disclosure Statement for Individual Retirement Annuities..........................................57
APPENDIX D...................................................................................................
Definitions.........................................................................................
APPENDIX E...................................................................................................
Condensed Financial Information.....................................................................
</TABLE>
The policy is available only in New York
<PAGE>
7
<PAGE>
SUMMARY
The Policy
The Transamerica Seriessm Transamerica Classicsm Variable Annuity is a flexible
premium deferred annuity. It is designed to aid:
your long-term financial planning needs; and
your long-term retirement needs
The policy 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 policies may not be available in all states or in all situations.
The policy is issued by Transamerica Life Insurance Company of New York, an
indirect wholly-owned subsidiary of Transamerica Corporation.
The principal office for Transamerica Life Insurance Company of New York is:
100 Manhattanville Road
Purchase, New York 10577
Telephone (914) 701-6000
The terms owner and you refer to the owner or owners of the individual policy.
We will establish and maintain an account for each policy. Each owner will
receive an individual policy.
The policy provides that the policy value, after certain adjustments, will be
applied to a settlement option on a future date you select. This date will be
the annuity date.
You may allocate all or portions of your premiums to:
one or more variable sub-accounts; or
the fixed account.
Sub-Account Values Will Vary According to Investment Experience. The policy
value before the annuity date, except for amounts in the fixed account, will
vary depending on the investment experience of each of the variable sub-accounts
selected by you as the owner. All benefits and values provided under the policy,
when based on the investment experience of the variable account, are variable
and are not guaranteed as to dollar amount. Therefore, before the annuity date,
you bear the entire investment risk under the policy 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 premium for each policy must be at least $5,000, or, if for
contributory IRAs, SEP/IRAs and Roth IRAs, $2,000. Generally each additional
premium must be at least $200, unless an automatic premium plan is selected. See
Premiums on page 25.
The Variable Account
The variable account is a separate account, designated Separate Account VA-6NY,
that is subdivided into variable sub-accounts. Assets of each variable
sub-account are invested in a specified mutual fund portfolio. The variable
sub-accounts currently available for investment are:
Alger American Income & Growth Alliance VPF Growth & Income Alliance VPF Premier
Growth Dreyfus VIF Capital Appreciation Dreyfus VIF Small Cap Janus Aspen
Balanced Janus Aspen Worldwide Growth MFS VIT Emerging Growth MFS VIT Growth
with Income MFS VIT Research MSDW UF Fixed Income MSDW UF High Yield MSDW UF
International Magnum OCC Accumulation Trust Managed OCC Accumulation Trust Small
Cap Transamerica VIF Growth Transamerica VIF Money Market
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 policy 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. For
more information see Charges, Fees and Deductions on page 35, The Portfolios on
page 19, and the accompanying portfolio pro-spectuses.
The Fixed Account
The policy provides an option to invest premiums in the fixed account which is
part of our general account.
The amounts in the fixed account will be credited interest at a rate of not less
than 3% annually. We may credit interest at a rate in excess of 3% at our
discretion for any class. Each interest rate will be guaranteed to be credited
for at least 12 months.
Investment Options Limit
Currently, you may not elect more than a total of 18 investment options over the
life of the policy. Investment options include variable sub-accounts and fixed
account.
Transfers Before the Annuity Date
Before the annuity date, you may transfer values between the variable
sub-accounts and the fixed account, within limits. For transfers after the
annuity date, see After the Annuity Date on page 30.
Transfers out of the fixed account are restricted to four per policy year and to
a limited percentage of the fixed policy value. We may allow more frequent
transfers under certain services and options, for example, dollar cost
averaging.
We currently impose a transfer fee of $10 for each transfer in excess of 18 made
during the same policy year.
Withdrawals
You may withdraw all or part of the cash surrender value on or before the
annuity date. The cash surrender value of your policy is the policy value less
any policy fee, contingent deferred sales load and premium tax charges. The
policy fee generally will be deducted on a full surrender of a policy if the
policy value is then less than $50,000. We may delay payment of any withdrawal
from the fixed account for up to six months.
Withdrawals may be taxable, subject to withholding and a penalty tax.
Withdrawals from qualified policies may be subject to severe restrictions and,
in certain circumstances, prohibited. See Federal Tax Matters on page 42.
Contingent Deferred Sales Load/
Surrender Charge
We do not deduct a sales charge when premiums are made, although premium tax
charges may be deducted. However, if any part of the policy value is withdrawn,
we may deduct a contingent deferred sales load, or surrender charge, of up to 6%
of premiums. After we have held a premium for seven years, you may withdraw it
without charge. See Contingent Deferred Sales Load/Surrender Charge on page 35.
Also, beginning 30 days from the policy effective date, or at the end of the
free look period if this ends later, you may withdraw any portion of the allowed
amount each policy year without imposition of any contingent deferred sales
load/surrender charge. The allowed amount for each policy year, determined as of
the last policy anniversary, is equal to 15% of premiums received during the
last seven years less any withdrawals already taken that policy year.
All premiums not previously withdrawn that have been held at least seven years
are not subject to a contingent deferred sales load/surrender charge. In
calculating the charge, we will consider withdrawals to be taken first from
premiums, on a first in/first out basis, and then from earnings.
<PAGE>
Other Charges and Deductions
We deduct:
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 we guarantee it won't exceed a
maximum effective annual rate of 0.35%.
We deduct a policy fee of currently $30, or 2% of the policy value, if less, at
the end of each policy year and upon surrender. If the policy value is more than
$50,000 on the last business day of a policy year, or as of the date the policy
is surrendered, we will waive the policy fee for that year.
After the annuity date, we will deduct the annual annuity fee of $30 in equal
installments from each periodic payment under the variable payment option.
For each transfer in excess of 18 during a policy year, we will impose a
transfer fee of $10. See Transfer Fee on page 38.
Also, New York currently has no premium tax or retaliatory premium tax. If New
York imposes these taxes in the future, or if you become a resident of a state
other than New York where such taxes apply, the charges could be deducted from
premiums, amounts withdrawn and/or the annuity purchase amount at annuitization.
See Premium Tax Charges on page 38.
Currently, we do not deduct fees for any other services or options under the
policy. However, we do reserve the right to impose fees to cover processing for
certain services and options in the future. This may include dollar cost
averaging, systematic withdrawals, automatic payouts, asset allocation and asset
rebalancing.
Variable Policy Fee Table
The purpose of this table is to assist you 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 policy value is in the variable
account. You should consider the information below together with the narrative
provided under the heading Charges, Fees and Deductions on page 35 of this
prospectus, and with the prospectuses for the portfolios. In addition to the
expenses listed below, premium tax charges may be applicable.
<PAGE>
29
<PAGE>
<TABLE>
<CAPTION>
Sales Load(1)
<S> <C>
Sales Load Imposed on Premiums 0%
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time:
Contingent Deferred
Years Since Sales Load
Premium Receipt as a percentage of premium
Less than 1 year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 5%
5 years but less than 6 years 4%
6 years but less 7 years 2%
7 or more years 0%
</TABLE>
<PAGE>
Other Policy Expenses
Transfer Fee, first 18 per policy year(3) 0
Fees For Other Services and Options(4) 0
Policy fee(5) $30
Variable Account Annual Expenses(6)
as a percentage of the variable accumulated value
Mortality and Expense Risk Charge 1.20%
Administrative Expense Charge(7) 0.15%
Total Variable Account Annual Expenses 1.35%
<TABLE>
<CAPTION>
Portfolio Expenses
as a percentage of assets after fee waiver and/or expense reimbursement(8)
Total
Management Other Portfolio
Portfolio Fees Expenses Annual
Expenses
<S> <C> <C> <C>
Alger American Income & Growth 0.63% 0.08% 0.70%
Alliance VPF Growth & Income 0.63% 0.11% 0.73%
Alliance VPF Premier Growth 0.97% 0.09% 1.06%
Dreyfus VIF Capital Appreciation 0.75% 0.06% 0.81%
Dreyfus VIF Small Cap 0.75% 0.02% 0.77%
Janus Aspen Balanced 0.72% 0.02% 0.74%
Janus Aspen Worldwide Growth 0.65% 0.07% 0.72%
MFS VIT Emerging Growth 0.75% 0.10% 0.85%
MFS VIT Growth with Income 0.75% 0.13% 0.88%
MFS VIT Research 0.75% 0.11% 0.86%
MSDW UF Fixed Income 0.06% 0.64% 0.70%
MSDW UF High Yield 0.15% 0.65% 0.80%
MSDW UF International Magnum 0.15% 1.00% 1.15%
OCC Accumulation Trust Managed 0.78% 0.04% 0.82%
OCC Accumulation Trust Small Cap 0.80% 0.08% 0.88%
Transamerica VIF Growth 0.64% 0.21% 0.85%
Transamerica VIF Money Market 0.00% 0.60% 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, we have relied on the figures provided by the portfolios. We have no
reason to doubt the accuracy of that information, but we have 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 policy, regardless of
how the policy value is allocated between the variable account and the
fixed account.
2. A portion of the premiums may be withdrawn each policy year without
imposition of any contingent deferred sales load, and after seven years, a
premium may be withdrawn free of any contingent deferred sales load.
See Charges, Fees and Deductions on page 35.
3. A transfer fee of $10 will be imposed for each transfer in excess of 18
in a policy year.
4. We currently do not impose fees for any other services, or options.
However, we reserve 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 policy fee is $30, or 2% of the policy value, if less, per
policy year. This fee will be waived for policy values over $50,000.
6. The variable account annual expenses do not apply to the fixed account.
7. The current annual administrative expense charge of 0.15% may be
increased to no more than 0.35%.
8. 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 Premier Growth 1.00% 0.09% 1.09%
Janus Aspen Worldwide Growth 0.67% 0.07% 0.74%
MSDW UF Fixed Income 0.40% 0.64% 1.04%
MSDW UF High Yield 0.50% 0.65% 1.15%
MSDW UF International Magnum 0.80% 1.00% 1.80%
Transamerica VIF Growth 0.75% 0.21% 0.96%
Transamerica VIF Money Market 0.35% 2.68% 3.03%
</TABLE>
There were no fee waivers or expense reimbursements during 1998 for the Alger
American Income and Growth Portfolio, Alliance VPF Growth and Income Portfolio,
Dreyfus VIF Capital Appreciation Portfolio, Dreyfus VIF Small Cap Portfolio,
Janus Aspen Balanced Portfolio, MFS VIT Emerging Growth Portfolio, MFS VIT
Growth with Income 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 policy value of $40,000 and, therefore, a
deduction of 0.075% has been made to reflect the $30 policy fee. 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 on page 38.
Examples 1 through 3 show expenses for policies 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 policy anniversary, and for annuitizations under
a form that does not include life contingencies, the contingent deferred sales
load may apply. Expense examples in column 1 illustrate this occurrence.
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
3. If the owner
Examples 1-3 1. If the owner elects to
An owner would pay the following surrenders the 2. If the owner annuitize at the
expenses on a $1,000 investment, policy at the end does not surrender end of the
assuming a 5% annual return on of the applicable and does not applicable period
assets: time period: annuitize the under a Settlement
policy: Option with life
contingencies
-------------------------------------------------------------
--------------------------------------
1 Year 3 Years 1 Year 3 Years 1 Year 3 Years
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alger American Income & Growth $73 $109 $22 $67 $22 $67
Alliance VPF Growth & Income $73 $110 $22 $67 $22 $67
Alliance VPF Premier Growth $76 $120 $25 $77 $25 $77
Dreyfus VIF Capital Appreciation $74 $112 $23 $70 $23 $70
Growth
Dreyfus VIF Small Cap $73 $111 $22 $69 $22 $69
Janus Aspen Balanced $73 $110 $22 $68 $22 $67
Janus Aspen Worldwide Growth $73 $110 $22 $67 $22 $67
MFS Emerging Growth $74 $114 $23 $71 $23 $71
MFS Growth & Income $74 $114 $24 $72 $23 $72
MFS Research $74 $114 $23 $71 $23 $71
MSDW UF Fixed Income $73 $109 $22 $67 $22 $67
MSDW UF High Yield $74 $112 $23 $70 $23 $70
MSDW UF International Magnum $77 $123 $26 $80 $26 $80
OCC Accumulation Trust Managed $74 $113 $23 $70 $23 $70
OCC Accumulation Trust Small Cap $74 $115 $23 $72 $23 $72
Transamerica VIF Growth $74 $114 $23 $71 $23 $71
Transamerica VIF Money Market $72 $106 $21 $64 $21 $64
---------------------------------------------------------------------------------------------------
</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 policy. 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.
<PAGE>
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 an annuitant's 90th birthday. Certain qualified policies may have
restrictions as to the annuity date and the types of settlement options
available.
Four settlement options are available under the policy:
1. life annuity;
2. life and contingent annuity;
3. life annuity with period certain; or
4. joint and survivor annuity.
Death of Owner Before the Annuity Date
If you die before the annuity date and before you or a joint owner turn 85, the
death benefit will be the greatest of three amounts:
1. the policy value;
2. the sum of all premiums, less withdrawals taken and applicable premium tax
charges; or
3. the highest policy value on any policy anniversary before the earlier of
your or a joint owner's 85th birthday, plus premiums paid, less withdrawals
taken and premium tax charges since that policy anniversary.
If or the joint owner die before the annuity date and after your or a joint
owner's 85th birthday, the death benefit will be the policy value.
The death benefit will generally be paid within seven days of receipt of the
required proof of death of an owner and election of the method of settlement or
as soon thereafter as we have sufficient information to make the payment. 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.
If the owner is not a natural person, we will treat the annuitant as the owner
for purposes of the death benefit.
Federal Income Tax Consequences
An owner who is a natural person generally should not be taxed on increases in
the policy value until a distribution under the policy 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 policy. Generally, a 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 policies. In addition, a federal penalty tax may apply to
certain distributions. See Federal Tax Matters on page 42.
Right to Cancel
As the owner, you have the right to examine the policy for a limited period,
known as a "free look period." You may cancel the policy during this period by
delivering or mailing a written notice of cancellation, or sending a telegram
to:
a) the agent through whom you purchased the policy; or
b) our Service Center.
You must return the policy before midnight of the tenth day after receipt of the
policy, or longer in some situations or if required by state law. Notice given
by mail and the return of the policy, properly addressed and postage prepaid, by
mail will be deemed by us to have been made on the date postmarked. Unless
otherwise required by law, we will refund the premiums allocated to the fixed
account, minus any withdrawals, plus the variable accumulated value as of the
date your written notice to cancel and your policy are received by us. See
Premiums on page 25.
Questions
We will answer your questions about procedures or the policy if you write to:
The Transamerica Annuity Service Center
P.O. Box 31848
Charlotte, North Carolina
28231-1848
Or call us at: 1- 800-258-4260
All inquiries should include the policy 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. Please refer to this prospectus and the portfolio prospectuses for
more detailed information. With respect to qualified policies, the requirements
of a particular retirement plan, an endorsement to the policy, 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. These limits or
restrictions may be on premiums, withdrawals, distributions, or benefits, or on
other provisions of the policy. This prospectus does not describe such
limitations or restrictions. See Federal Tax Matters on page 42.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
AND THE VARIABLE ACCOUNT
Transamerica Life Insurance Company of New York
Transamerica Life Insurance Company of New York, hereafter referred to simply as
Transamerica is a stock life insurance company incorporated under the laws of
the State of New York on February 5, 1986. It is principally engaged in the sale
of life insurance and annuity policies. The address of Transamerica is 100
Manhattanville Road, Purchase, New York 10577.
<PAGE>
On February 18, 1999, Transamerica Corporation announced that it had signed a
merger agreement with AEGON N.V., one of the world's leading international
insurance groups, providing for AEGON's acquisition of all of Transamerica's
outstanding common stock for a combination of cash and AEGON stock worth $9.7
billion. The closing of the transaction is expected to occur during the summer
of 1999.
Transamerica Corporation indirectly owns the issuer, Transamerica Life Insurance
Company of New York.
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 fixed account of this policy. 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.
Insurance Marketplace Standards
Association
In recent years, the insurance industry has recognized the need to develop
specific principles and practices to help maintain the highest standards of
marketplace behavior and enhance credibility with consumers. As a result, the
industry established the Insurance Marketplace Standards Association (IMSA).
As an IMSA member, we agree to follow a set of standards in our advertising,
sales and service for individual life insurance and annuity products. The IMSA
logo, which you will see on our advertising and promotional materials,
demonstrates that we take our commitment to ethical conduct seriously.
The Variable Account
Separate Account VA-6NY of Transamerica, also referred to as the variable
account was established by Transamerica as a separate account under the laws of
the State of New York following September 11, 1996, resolutions adopted by
Transamerica's Board of Directors. The variable account is registered with the
Securities and Exchange Commission, hereafter referred to simply as the
Commission under the Investment Company Act of 1940 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 4240 of the New York
Insurance Code provides that the assets of a separate account are not chargeable
with liabilities incurred in any other business operation of the insurance
company. This is the case 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 17 variable sub-accounts available under the
policy, 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 policy 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
adviser's policy 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: 0.63%.
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 managers 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: 0.63%.
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, such as common stocks,
securities convertible into common stocks and rights and warrants to subscribe
for or purchase common stocks. Equity investments will be of a limited number of
large, carefully selected, high-quality U.S. companies. In the Adviser's
judgement, the companies chosen will be those which are likely to achieve
superior earnings growth. Approximately 25 companies believed by the Adviser 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: 1.00%.
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 periods 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, defined as 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 of
domestic and foreign issuers. 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 or
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. The balance of its holdings are invested
in securities selected primarily for their 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" and commonly known
as junk bonds. It may also invest 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% of its net assets in
foreign securities, including emerging market securities and Brady Bonds, which
are not traded on a U.S. exchange. Generally, however, it expects to invest not
more than 15% of its net assets in these securities.
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% of its net assets in
foreign securities, including emerging market securities and Brady Bonds, which
are not traded on a U.S. exchange. Generally, however, it expects to invest no
more than 15% of its net assets in these securities.
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 MSDW 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 MSDW 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 MSDW Universal Funds, Inc., seeks
long-term capital appreciation by investing primarily in equity securities of
non-U.S. issuers domiciled in EAFE countries such as those of Europe, Australia
and the Far East. 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, we refer to these as 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: MSDW Investment 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 Advisers. 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 Advisers. 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 of 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 policy is not a deposit or obligation of, or guaranteed or
endorsed, by any bank. Nor is the policy federally insured by the Federal
Deposit Insurance Corporation or any other government agency. Investing in the
policy 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 detail on this subject.
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 in, 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 policy or any
of the portfolios will always be available to you for investment purposes. We
retain the right to make changes in the variable account and in its investments.
Subject to the approval of the New York Insurance Department, 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 our
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 policies. Nor does it prevent the
variable account from effecting an exchange between series or classes of
variable policies on the basis of requests made by owners.
We reserve the right to create new variable sub-accounts for the policies 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 us. 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
policy that we deem necessary or appropriate to reflect substitutions or
changes. Furthermore, if we believe it to be in the best interest of persons
having voting rights under the policies, 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 deregistered 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 POLICY
The policy is a flexible premium deferred variable annuity policy. Other
variable policies are also available from Transamerica. The rights and benefits
of this policy are described below. However, we reserve the right to modify the
policy if required by law. We also reserve the right to give the owner the
benefit of any federal or state statute, rule or regulation. The obligations
under the policy are obligations of Transamerica. The policies are available on
a non-qualified basis and on a qualified basis. Policies available on a
qualified basis are as follows:
1. rollover and contributory individual retirement annuities, also referred
to as 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, also referred to as 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; and
5. qualified pension and profit sharing plans intended to qualify under Code
Section 401.
Generally, qualified policies contain certain restrictive provisions limiting
the timing and amount of premiums to, and distributions from, the qualified
policy.
Ownership
As the owner, you are entitled to the rights granted by the policy. 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 policies, the owner is
entitled to designate the annuitant(s) and, if the owner is an individual, as
opposed to a trust, 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 annuitants 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
policy is issued. Different rules apply to qualified policies.
For each policy, a different account will be established and values, benefits
and charges will be calculated separately. The various admini-strative rules
described below will apply separately to each policy, unless otherwise noted.
PREMIUMS
All premiums must be paid to our Service Center. A confirmation will be issued
to you, as the owner, upon the acceptance of each premium.
The initial premium must be at least $5,000 or, if for contributory IRAs,
SEP/IRAs and Roth IRAs, it must be for at least $2,000.
Your policy will be issued and your initial premium generally will be credited
within two business days after the receipt of: sufficient information to issue a
policy and the initial premium at our Service Center. For us to issue you a
policy, you must provide sufficient information in a form acceptable to us. We
reserve the right to reject any premium or request for issuance of a policy.
Normally we will not issue policies to owners, joint owners, or annuitants more
than 85 years old. Nor will we normally accept premiums after any owners', or
annuitants' if non-individual owner, 86th birthday. In our discretion we may
waive these restrictions in appropriate cases.
If the initial premium 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. We will explain the reason for the
delay and will refund the initial premium within five business days. If you
consent to us retaining the initial premium we will credit it to the variable
sub-account of your choice as soon as the requirements are fulfilled.
You may make additional premiums at any time before the annuity date. They must
be at least $200 each, or at least $100 if made through an automatic premium
plan. If you elect to use this option additional premiums will be automatically
deducted from your bank account and allocated to the policy. In addition,
minimum allocation amounts apply. See Allocation of Premiums on page 26.
Additional premiums are credited to the policy as of the date we receive payment
from you.
Total premiums for any policy may not exceed $1,000,000 without our prior
approval.
In no event may the sum of all premiums for a policy during any taxable year
exceed the limits imposed by any applicable federal or state law, rules, or
regulations.
Allocation of Premiums
You specify how premiums will be allocated under the policy. You may allocate
premiums among one or more of the variable sub-accounts and the fixed account 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. We may
waive this minimum allocation amount under certain options and circumstances.
Each premium will be subject to the allocation percentages in effect at the time
of receipt of such premium. You may change the allocation percentages for
additional premiums at any time by submitting a request for such change to our
Service Center in a form and manner acceptable to us. Any changes to the
allocation percentages are subject to the limitations above. Any change will
take effect with the first premium we receive which accompanies your request. If
we receive your request separately, all premiums 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 for an IRA, we are legally required to
return the greater of:
1. the premium; or
2. the policy value.
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
18 transfers allowed free of charge during the first policy year.
Investment Option Limit
Currently, you may not allocate monies to more than eighteen investment options
over the life of the policy. Investment options include variable sub-accounts
and fixed account. Each variable sub-account, each guarantee period of the
guarantee period account, and the fixed account that ever received a transfer or
premium allocation counts as one towards this total of eighteen limit. We 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.
POLICY VALUE
Before the annuity date, the policy value is equal to:
a) the fixed account 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 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
Premiums 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 premium allocated to the variable sub-account by the variable
accumulation unit value for that variable sub-account. In the case of the
initial premium, variable accumulation units for that payment will be credited
to the variable accumulated value within two valuation days of the later 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 premium.
In the case of any additional premium, variable accumulation units for that
payment will be credited at the end of the valuation period during which we
receive 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 policy value
among the variable sub-accounts and the fixed account. Transfers are restricted
into or out of the fixed account.
Transfers among the variable sub-accounts and the fixed account may be made by
submitting a request to our Service Center in a form and manner acceptable to
us. The transfer request must specify:
1. the variable sub-accounts and/or the fixed account from which your transfer
is to be made;
2. the amount of your transfer; and
3. the variable sub-accounts and/or fixed account to receive the transferred
amount.
The minimum amount which you may transfer from the variable sub-accounts and the
fixed account is $1,000. Transfers among the variable sub-accounts are also
subject to the terms and conditions imposed by the portfolios.
We currently impose a transfer fee of $10 for each transfer in excess of 18 made
during the same policy year. We reserve 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 Other Restrictions below for additional limitations
regarding transfers. A transfer generally will be effective on the date the
request for transfer is received by our Service Center.
If a transfer reduces the value in a variable sub-account 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
according to the transfer instructions provided by you. Under current law, there
will not be any tax liability for transfers within the policy.
Other Restrictions
We reserve the right without prior notice to modify, restrict, suspend or
eliminate the transfer privileges 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. We have determined that the movement of significant variable sub-policy
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, we reserve 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 us. We also reserve the right to require that each
transfer request be submitted in writing and be manually signed by owners. We
may choose not to allow telephone or facsimile transfer requests.
Dollar Cost Averaging
Before 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
our Service Center in a form and manner acceptable to us. Other source accounts
may be available; call our Service Center for information regarding
availability.
You may only dollar cost average from one source account at a time. The
transfers will begin when you request, 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 policy effective date; or
b) the estimated end of the free look period which allows 5 days for delivery.
Transfers will continue for the number of consecutive months which you selected
unless:
1. you terminate the transfers;
2. we automatically terminate the transfers because there are insufficient
amounts in the source account; or
3. for other reasons that are described in the election form.
You may request that monthly transfers be continued for a specific length of
time. You can do this by giving notice to our Service Center in a form and
manner acceptable to us within 30 days before 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; and
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 nor do they
count toward the number of transfers allowed without charge per policy year. We
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 premiums 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 us 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 your
instructions to us and accepted by us. 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. The guaranteed period
account and/or fixed account cannot be rebalanced.
You may elect to establish, change or terminate the automatic asset rebalancing
by submitting a request to our Service Center in a form and manner acceptable to
us. Automatic asset rebalancing currently will not count towards the number of
transfers without charge in a policy year. We reserve 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. We 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, you may make transfers among variable
sub-accounts after the annuity date by giving a written request to our Service
Center, subject to the following provisions:
1. transfers after the annuity date may be made no more than four times during
any policy year; and
2. the minimum amount transferred from one variable sub-account to another is
the amount supporting a current $50 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 policy you may withdraw all or part of
the cash surrender value at any time before the annuity date by giving a written
request to our Service Center. For qualified policies, 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. The
cash surrender value is equal to the policy value, minus any policy 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 us. 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 our Service Center to
withdraw amounts from specific variable sub-accounts and/or from the fixed
account. If you do not specify, the withdrawal will be taken pro rata from the
policy value.
A partial withdrawal request cannot be fulfilled if it would reduce your policy
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,
we may postpone such payment if:
the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
an emergency exists as defined by the Commission, or the Commission requires
that trading be restricted; or
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 premium 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.
We may delay payment of any withdrawal from the fixed account 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 policy may be more or less than the total premiums.
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.
Systematic Withdrawal Option
Before the annuity date, you may elect to have withdrawals automatically made
from one or more variable sub-accounts on a monthly basis. Other distribution
modes may be permitted. The withdrawals will not begin until the later of:
a) 30 days after the policy effective date; or
b) the end of the free look period
Withdrawals will be from the variable sub-accounts and/or the fixed account in
the percentage allocations that you specify. Unless you specify otherwise,
withdrawals will be pro rata based on policy value. You cannot make systematic
withdrawals from a variable sub-account from which dollar cost averaging
transfers are being made. Likewise, systematic withdrawals cannot be used at the
same time that the automatic payment option is in effect.
To be eligible for the systematic withdrawal option, the policy value must be at
least $12,000 at the time of election. The minimum monthly amount that can be
withdrawn is $100. Currently you can elect any amount over $100 to be withdrawn
systematically. You may also make partial withdrawals while receiving systematic
withdrawals.
If the total of your withdrawals (systematic, automatic or partial) in a policy
year exceeds the allowed amount to be withdrawn without charge for that year,
your policy value 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.
We reserve 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 policy
year.
Systematic withdrawals may be taxable and, before age 59 1/2, subject to a 10%
federal tax penalty.
Automatic Payout Option
Before the annuity date, for certain qualified policies, you may elect the
automatic payout option, hereafter referred to simply as APO to satisfy minimum
distribution requirements under the following sections of the Code:
401(a)(9);
403(b); and
408(b)(3).
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 policies, APO can be elected no earlier than six months
before the later of:
a) when you attain age 70 1/2; or
b) when you retire from employment
Additionally, APO withdrawals may not begin before the later of:
a) 30 days after the policy 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 your
84th birthday.
Other Automatic Payout Option Information. Withdrawals will be from the variable
sub-accounts and/or the fixed account you designate and in the percentage
allocations you specify. If you do not indicate otherwise, withdrawals will be
pro rata from policy value. You can not make withdrawals from a variable
sub-account from which you have designated that dollar cost averaging transfers
be made. The calculation of the APO amount will reflect the total policy value
although the withdrawals are only from the variable sub-accounts. This
calculation and APO are based solely on the value in this policy.
To be eligible for this option, you must meet the following conditions:
1. your policy value must be at least $12,000 at the time at which you select
this option; and
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 death occurs before the annuity date and before any owner's or joint owner's
85th birthday, the death benefit will be equal to the greatest of:
a) the policy value; or
b) the sum of all premiums less withdrawals taken, adjusted as described
below, and the applicable premium tax charges; or
c) the highest policy value on any policy anniversary before the earlier of
the owner's or joint owner's 85th birthday, plus premiums made, less
withdrawals taken, adjusted as described below, and applicable premium tax
charges since that policy anniversary.
If death occurs 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 policy value.
Payment of Death Benefit
The death benefit is generally payable upon receipt of proof of death of an
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 we have sufficient information 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; and
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 an owner's death. No contingent deferred
sales load nor interest adjustment will apply.
Until the death benefit is paid, the policy value allocated to the variable
account remains in the variable account, and fluctuates with investment
performance of the applicable portfolios. For this reason, the amount of the
death benefit depends on the policy 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 or
persons to receive the amounts payable under the policy. The individuals you
designate will receive the percentage you establish if:
you die before the annuity date and there is no joint owner; or
you die after the annuity date and settlement option payments have begun
under a selected settlement option that guarantees payments for a certain
period of 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 the policy unless the owner gives us other
instructions at the time the beneficiaries are named.
We 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, the policy will remain in force
with the annuitant's surviving spouse as the new annuitant if:
The policy is owned by a trust; and
The beneficiary is either the annuitant's surviving spouse, or a trust
holding the policy solely for the benefit of such spouse.
The manner in which we will pay the death benefit depends on the status of the
persons involved in the policy. The death benefit will be payable to the first
person from the applicable list below:
If the owner is the annuitant:
The joint owner, if any; or
The beneficiary, if any
If the owner is not the annuitant:
The joint owner, if any; or
The beneficiary, if any; or
The annuitant; or
The 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 the policy 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 than 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 or persons selects another option as provided below.
In lieu of the automatic form of death benefit specified above, the person or
persons to whom the death benefit is payable may elect to receive it:
In a lump sum; or
As 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 before 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 the policy 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 premiums, although we reserve the right to
charge for any applicable premium tax charges. Therefore, the full amount of the
premiums are invested in one or more of the variable sub-accounts and/or the
fixed account.
Contingent Deferred Sales Load/
Surrender Charge
No deduction for sales charges is made from premiums at the time they are made.
However, a contingent deferred sales load, or surrender charge, of up to 6% of
premiums may be imposed on certain withdrawals or surrenders. This charge is
designed to partially cover certain expenses incurred by us relating to the sale
of the policy, including commissions paid to salespersons, the costs of
preparation of sales literature and other promotional costs and acquisition
expenses.
The contingent deferred sales load/surrender charge percentage varies according
to the number of years between when a premium was credited to the policy and
when the withdrawal is made. The amount of this charge is determined by
multiplying the amount withdrawn that is subject to the charge by the contingent
deferred sales load percentage according to the following table. In no event
will the total contingent deferred sales load/surrender charge assessed against
the policy exceed 6% of the total premiums.
Contingent
Number of Years Deferred
Since Receipt of Sales Load As A
Premium Percentage of
Premium
Less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 years or more 0%
Free Withdrawals-Allowed Amount
Beginning 30 days after the policy effective date, or the end of the free look
period, if later, you may make a withdrawal up to the allowed amount without
incurring a contingent deferred sales load/surrender charge each policy year
before the annuity date.
The allowed amount each policy year is equal to 15% of:
the total premiums received during the last seven years determined as of
the last policy anniversary; minus
any withdrawals during the present policy year.
In the first policy year, the 15% will be applied to the total premiums at the
time of the first withdrawal.
Premiums held for seven full years may be withdrawn without charge.
Withdrawals will be made first from premiums 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 policy is issued. If the allowed amount is not fully
withdrawn or paid out during a policy year, it does not carry over to the next
policy year.
Other Free Withdrawals
In addition, no contingent deferred sales load is assessed:
upon annuitization after the first policy year to an option involving life
contingencies; or upon payment of the death benefit before the annuity
date.
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 you elect
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
Policy Fee. At the end of each policy year and before the annuity date, we
deduct an annual policy fee as partial compensation for expenses relating to the
issue and maintenance of the policy and the variable account. The annual policy
fee is equal to the lesser of $30 or 2% of the policy value. If the policy is
surrendered, the policy fee, unless waived, will be deducted from a full
surrender before the application of any contingent deferred sales load. The
policy fee will be deducted on a pro rata basis, based on values, from the
policy value. The fee deductions will be based on both the variable sub-accounts
and the fixed account. The policy fee for a policy year will be waived if the
policy value exceeds $50,000 on the last business day of that policy year or as
of the date you, as owner, surrender the policy.
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. This fee is $2.50 each month if monthly payments are made.
This fee will not be changed. No annuity fee will be deducted from fixed
payments. This fee may be waived.
Administrative Expense Charge. We also make a daily deduction for the
administrative expense charge from the variable account before and after the
policy effective date at an effective current annual rate of 0.15% of assets
held in each variable sub-account to reimburse us for administrative expenses.
We have the ability in most states to increase or decrease this charge, but the
charge is guaranteed not to exceed 0.35%. We 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 policy. 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
We deduct a charge for bearing certain mortality and expense risks under the
policies. This is a daily charge at an effective annual rate of 1.20% of the
assets in the variable account. We guarantee 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 us. The mortality
risks assumed by us arise from our contractual obligations to make settlement
option payments determined in accordance with the settlement option tables and
other provisions contained in the policy and to pay death benefits before the
annuity date.
The expense risk assumed by us is the risk that our actual expenses in
administering the policies and the variable account will exceed the amount
recovered through the administrative expense charge, policy 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, we will bear these losses. If this charge is more than
sufficient, any excess will accrue to us. Currently, we expect a profit from
this charge.
We anticipate that the contingent deferred sales load will not generate
sufficient funds to pay the cost of distributing the policies. To the extent
that the contingent deferred sales load is insufficient to cover the actual cost
of policy distribution, the deficiency will be met from our general corporate
assets which may include amounts, if any, derived from the mortality and expense
risk charge.
Premium Tax Charges
New York currently has no premium tax or retaliatory tax. If New York imposes
these taxes in the future, or if you become a resident of a state where such
taxes apply, we reserve the right to deduct a charge for these premium taxes
from premium payments, from amounts withdrawn, or from amounts applied on the
annuity date.
Transfer Fee
We currently impose a fee for each transfer in excess of the first 18 in a
single policy year. We will deduct the charge from the amount transferred. This
fee is $10 and will be used to help cover our costs of processing transfers. We
reserve 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
We reserve 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 policy year.
Taxes
No charges are currently made for taxes. However, we reserve 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 we determine to be
attributable to the policies.
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.
Sales in Special Situations
We may sell the policies in special situations that are expected to involve
reduced expenses for us. 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;
sales to officers, directors, and employees, and their families, and the
portfolios' investment advisers and their affiliates; or
sales to officers, directors, employees and sales agents also known as
registered representatives, and their families, and broker-dealers and
other financial institutions that have sales agreements with us to sell the
policies.
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 policy value (for examples, amounts
related to commissions or sales compensation otherwise payable to a
broker-dealer may be credited to the policy value.
These reductions in fees or charges or credits to policy value will not unfairly
discriminate against any policy owner. These reductions in fees or charges or
credits to policy value may be taxable and treated as premiums for purposes of
income tax and any possible premium tax charge.
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation (TSSC), is the principal underwriter
of the policies under a Distribution Agreement with Transamerica. TSSC may also
serve as an underwriter and distributor of other policies 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 policies 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 premium. The percentage may be up to 5.75%, 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. The compensation amounts paid broker-dealers by TSSC are not deducted
directly from or directly reduce a policy's value.
SETTLEMENT OPTION PAYMENTS
Annuity Date
The annuity date is the date that the annuitization phase of the policy begins.
On the annuity date, we will apply the annuity amount, defined below, to provide
payments under the settlement option selected by you. You select the annuity
date and you may change the date from time to time by giving notice to our
Service Center in a form and manner acceptable to us. Notice of each change must
be received by our Service Center at least 30 days before the then-current
annuity date. The annuity date cannot be earlier than the first policy
anniversary except for certain qualified policies. The latest annuity date which
may be elected is the first day of the calendar month immediately preceding the
month of the annuitant's or joint annuitants' 85th birthday.
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 policies may have restrictions as to the annuity
date and the types of settlement options available.
Settlement Option Payments
The annuity amount is the policy value, 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 policy anniversary.
If the amount of the monthly payment from the settlement option you selected
would result in a monthly settlement option payment of less than $20, or if the
annuity amount is less than $2,000, we reserve 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 $50 from each variable sub-account
from which such payments are made.
You may choose from the settlement options below. We 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 policies and in some jurisdictions. We reserve
the right to ask for satisfactory proof of the annuitant's or joint annuitant's
age. We 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.
You may choose from the two payment options described below. The annuity date
and settlement options available for qualified policies 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, you may, by written
request, change the settlement option or payment option. The request for change
must be received by our Service Center at least 30 days before 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, we will make settlement option payments
according to the 120 month period certain and life settlement option and the
applicable provisions of the policy.
Payment Options
You 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 fixed account
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 policy 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 you select. 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 by the age and sex, if sex-distinct rates are
allowed by law, of the annuitants. 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
policy, 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-accounts. The
variable settlement option purchase rate tables in the policy reflect an
assumed, but not guaranteed, annual interest rate of 5.35%. If the actual net
investment performance of the variable sub-accounts is less than 5.35%, then the
dollar amount of the actual payments will decrease. If the actual net investment
performance of the variable sub-accounts is higher than 5.35%, then the dollar
amount of the actual payments will increase. If the net investment performance
exactly equals the 5.35% rate, then the dollar amount of the actual payments
will remain constant. We 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 our approval, you may select any other settlement option forms
offered by us 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. We 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, 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 death 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 you provide
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. We 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 our 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 premiums will be accepted under the policy; and
c) no further withdrawals will be allowed.
As the owner of a non-qualified policy, you may, at any time after the policy
date, write to us at our Service Center to change the payee of benefits being
provided under the policy. The effective date of change in payee will be the
later of:
a) the date we receive the written request for such change; or
b) the date specified by you.
As the owner of a qualified policy, you 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 policy 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
policy. 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, or simply,
the 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 policy may be purchased on a non-tax qualified basis, as a non-qualified
policy, or purchased and used in connection with plans or arrangements
qualifying for special tax treatment as a qualified policy. Qualified policies
are designed for use in connection with plans or arrangements entitled to
special income tax treatment under Code Sections 401, 403(b), 408 and 408A. The
ultimate effect of federal income taxes on the amounts held under a policy, 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 policy is
purchased;
the tax and employment status of the individual concerned; or
Transamerica's tax status.
In addition, certain requirements must be satisfied when purchasing a qualified
policy with proceeds from a tax qualified retirement plan or other arrangement.
Certain requirements must also be met when receiving distributions from a
qualified policy, in order to continue receiving favorable tax treatment.
Therefore, purchasers of qualified policies should seek competent legal and tax
advice regarding the suitability of the policy for their individual situation,
the applicable requirements, and the tax treatment of the rights and benefits of
the policy. The following discussion is based on the assumption that the policy
qualifies as an annuity for federal income tax purposes and that all premiums
made to qualified policies are in compliance with all requirements under the
Code and the specific retirement plan or arrangement.
Premiums
At the time the initial premium is paid, as prospective purchaser, you must
specify whether you are purchasing a non-qualified policy or a qualified policy.
If the initial premium is derived from an exchange, transfer, conversion or
surrender of another annuity policy, we may require that the prospective
purchaser provide information with regard to the federal income tax status of
the previous annuity policy. We will require that persons purchase separate
policies if they desire to invest monies qualifying for different annuity tax
treatment under the Code. Each such separate policy would require the minimum
initial premium previously described. Additional premiums under a policy must
qualify for the same federal income tax treatment as the initial premium under
the policy. We will not accept an additional premium under a policy if the
federal income tax treatment of such premium would be different from that of the
initial premium.
Taxation of Annuities
In General. Code Section 72 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 policy until distribution occurs by
withdrawing all or part of the policy value for example, via withdrawals or
settlement option payments. For this purpose, the assignment, pledge, or
agreement to assign or pledge any portion of the policy value, and in the case
of a qualified policy, 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 policy who is not a natural person generally must include in
income any increase in the excess of the policy value over the "investment in
the policy" 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 policy owned by a natural
person.
Withdrawals. With respect to non-qualified policies, partial withdrawals,
including withdrawals under the systematic withdrawal option, are generally
treated as taxable income to the extent that the policy value immediately before
the withdrawal exceeds the investment in the policy at that time. The investment
in the policy generally equals the amount of non-deductible premiums made.
In the case of a withdrawal from qualified policies, 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 policy to the individual's total accrued benefit under the
retirement plan or arrangement. The investment in the policy generally equals
the amount of non-deductible premiums made by or on behalf of any individual.
For certain qualified policies, the investment in the policy can be zero.
Special tax rules applicable to certain distributions from qualified policies
are discussed below, under Qualified Policies.
Full surrenders are treated as taxable income to the extent that the amount
received exceeds the investment in the policy.
Settlement Option Payments. Although the tax consequences may vary depending on
the settlement option elected under the policy, in general a ratable portion of
each payment that represents the amount by which the policy value exceeds the
investment in the policy will be taxed based on the ratio of the investment in
the policy to the total benefit payable; after the investment in the policy 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 policy
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 policy.
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 policy 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 policy 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
policy, 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 policies, 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 described in
Code Section 408.
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:
1. made on or after the date on which the owner attains age 59 1/2;
2. made as a result of death or disability of the 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 policy.
Taxation of Death Benefit Proceeds. Amounts may be distributed from the policy
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 policy is not affected by the owner's
death. That is, the investment in the policy remains the amount of any premiums
paid which are not excluded from gross income.
Transfers, Assignments, or Exchanges of the Policy. For non-qualified policies,
a transfer of ownership of a policy, the designation of an annuitant, payee, or
other beneficiary who is not also the owner, or the exchange of a policy 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 policies may not be assigned or transferred,
except as permitted by the Code or the Employee Retirement Income Security Act
of 1974, also referred to as ERISA.
Multiple Policies. All deferred non-qualified policies that are issued by
Transamerica or its affiliates to the same owner during any calendar year are
treated as one policy for purposes of determining the amount includible in gross
income under Code Section 72(e). In addition, the Treasury Department has
specific authority to issue regulations that prevent the avoidance of Section
72(e) through the serial purchase of policies or otherwise. Congress has also
indicated that the Treasury Department may have authority to treat the
combination purchase of an immediate annuity policy and separate deferred
annuity policies as a single annuity policy under its general authority to
prescribe rules that may be necessary to enforce the income tax laws.
Qualified Policies
In General. The qualified policies 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 before 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
policies 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 policies may be
subject to the terms and conditions of the plans themselves, regardless of the
terms and conditions of the policy (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
policies. Owners are responsible for determining that contributions and other
transactions with respect to the policies satisfy applicable law. Purchasers of
policies for use with any retirement plan should consult their legal counsel and
tax adviser regarding the suitability of the policy.
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 distribution must be made in a specified 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 reaches 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 before the
owner's death.
Qualified Pension and Profit Sharing Plans. Code Section 401(a) permits
employers to establish various types of retirement plans for employees. Such
retirement plans may permit the purchase of the policy 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 policy is assigned or transferred to
any individual as a means to provide benefits payments. If you are buying a
policy for use with such plans, you should seek competent advice. Advice you
receive should address the suitability of the proposed plan documents and the
policy to your specific needs.
Individual Retirement Annuities (IRA), Simplified Employee Plans (SEP) and Roth
IRAs. The sale of a policy for use with any IRA may be subject to special
disclosure requirements of the Internal Revenue Service (IRS). If you purchase a
policy for use with an IRA you will be provided with supplemental information
required by the IRS 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 policy you are considering purchasing for use with an
IRA.
The policy is designed for use with IRA rollovers and contributory IRAs. A
contributory IRA is a policy to which initial and subsequent premiums are
subject to limitations imposed by the Code. Code Section 408 permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity or Individual Retirement Account (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 is
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 before 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, referred to as 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 policy may also be used for Roth IRA conversions and contributory Roth IRAs.
A contributory Roth IRA is a policy to which initial and subsequent premiums are
subject to limitations imposed by the Code. Code Section 408A 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. 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; or
2. during the five taxable years starting with the year in which you first
contributed to the Roth IRA.
If you intend to purchase such a policy, you should seek competent advice as to
the suitability of the policy 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 policies
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 policies of:
1. elective contributions made in years beginning after December 31, 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
policy from a Section 403(b)(7) custodial account will be subject to the
restrictions.
Restrictions under Qualified Policies. There may be other restrictions that
apply to the election, commencement, or distribution of benefits under qualified
policies, or under the terms of the plans under which policies are issued. A
qualified policy 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 policies. 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 policies.
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
policies) in order to set aside provisions to pay such taxes.
Tax Status of the Policy
Diversification Requirements. Code Section 817(h) requires that with respect to
non-qualified policies, the investments of the portfolios be adequately
diversified in accordance with Treasury regulations in order for the policies to
qualify as annuity policies 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 policies may be considered
the owners, for federal income tax purposes, of the assets of the separate
accounts used to support their policies. In those circumstances, income and
gains from the separate account assets would be includible in the variable
policy owner's gross income. The IRS has stated in published rulings that a
variable policy owner will be considered the owner of separate account assets if
the policy 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, as 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 policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policy owners were not owners of separate account assets. For example, the
owner has additional flexibility in allocating premium payments and policy
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 policy 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 policy for federal
income tax purposes, Code Section 72(s) requires any non-qualified policy to
provide that:
a) if any owner dies on or after the annuity date but before the time the
entire interest in the policy 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 before the annuity date, the entire interest in the
policy 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 policy passes
to the "designated beneficiary." However, if the owner's "designated
beneficiary" is the surviving spouse of the deceased owner, the policy may be
continued with the surviving spouse as the new owner.
The non-qualified policies contain provisions which are intended to comply with
the requirements of Code Section 72(s), although no regulations interpreting
these requirements have yet been issued. All provisions in the policy will be
interpreted to maintain this tax qualification. We may make changes in order to
maintain this qualification or to conform the policy to any applicable changes
in the tax qualification requirements. We will provide you with a copy of any
changes made to the policy.
Possible Changes in Taxation
Legislation has been proposed in the past that, if enacted, would adversely
modify the federal taxation of certain insurance and annuity policies. For
example, one proposal would tax transfers among investment options and tax
exchanges involving variable policies. A second proposal would reduce the
investment in the policy under cash value life insurance and certain annuity
policies 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
policies could be changed by legislation or other means. Moreover, it is also
possible that any change could be retroactive, that is, effective before the
date of the change. You should consult a tax adviser with respect to legislative
developments and their effect on the policy.
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 policy 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 policy. To
the extent that the contingent deferred sales load or premium taxes are
applicable to a particular policy, the yield of that policy 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 policy under which policy 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 policy, 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 policy;
the effects of the policy's lifetime payout options; and
the operation of certain special investment features of the policy -- 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 premiums between the fixed
account 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 before the time the
variable account commenced operations.
YEAR 2000 ISSUE
Many computer software systems in use today cannot distinguish the year 2000
from the year 1900 because dates are encoded using the standard six-place format
that allows entry of only the last two digits of the year. This is commonly
known as the "Year 2000 Problem".
Regarding our systems and software that administer the policies, we believe that
our own internal systems will be Year 2000 ready. Additionally, we require any
third party vendor that supplies software or administrative services to us in
connection with the policy administration, to certify that such software and/or
services will be Year 2000 ready.
The "Year 2000 Problem" could adversely impact the portfolios if the computer
systems used by the portfolios' investment adviser, sub-adviser, custodian and
transfer agent (including service providers' systems) do not accurately process
date information after January 1, 2000. The investment advisers are addressing
this issue by testing the computer systems they use to ensure that those systems
will operate properly after January 1, 2000, and seeking assurances from other
service providers they use that their computer systems will be adapted to
address the "Year 2000 Problem" in time to prevent adverse consequences after
January 1, 2000. However, especially when taking into account interaction with
other systems, it is difficult to predict with precision that there will be no
disruption of services in connection with the year 2000.
We continue to believe that we will achieve Year 2000 readiness. However, the
size and complexity of our systems and the need for them to interface with other
systems internally and with those of our customers, vendors, partners,
governmental agencies and other outside parties, creates the possibility that
some systems may experience Year 2000 problems. Although we believe we will be
properly prepared for the date change, we are also developing contingency plans
to minimize any potential disruptions to operations, especially from externally
interfaced systems over which we have limited or no control.
This issue could also adversely impact the value of the securities that the
portfolios invest in if the issuing companies' systems do not operate properly
after January 1, 2000, and this risk could be heightened for portfolios that
invest internationally. Refer to the prospectuses for the portfolios for more
information.
The above information is subject to the Year 2000 Readiness Disclosure Act. This
act may limit your legal rights in the event of a dispute.
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
The organization of Transamerica, its authority to issue the policy and the
validity of the form of the policy have been passed upon by David M. Goldstein,
Counsel to Transamerica.
ACCOUNTANTS AND FINANCIAL
STATEMENTS
Transamerica Separate Account VA-6NY had not commenced operations as of December
31, 1998, and, therefore, no financial statements are included for the separate
account.
<PAGE>
The financial statements of Transamerica should be considered as bearing upon
our ability to meet our obligations under the contract. They should not be
considered as bearing on the investment performance of the separate account.
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 policy value
is allocated. After the annuity date, the number of votes decreases as
settlement option payments are made and as the reserves for the policy 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 before such meeting in accordance with
procedures established by the respective portfolios.
Shares for which no timely instructions are received and shares held by
Transamerica for which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
policies 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 with the Securities and Exchange
Commission under the 1933 Act relating to the policy 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 policy. Statements contained in
this prospectus, as to the content of the policy 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 POLICY ......................................................................................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 Policy...........................................................................5
Changes in the Policy...................................................................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
HISTORICAL PERFORMANCE DATA......................................................................8
General Limitations.....................................................................8
Adjusted Historical Performance Data....................................................8
DISTRIBUTION OF THE POLICY.......................................................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS...........................................................18
STATE REGULATION.................................................................................18
RECORDS AND REPORTS..............................................................................18
FINANCIAL STATEMENTS.............................................................................18
APPENDIX.........................................................................................19
</TABLE>
<PAGE>
Appendix A
THE FIXED ACCOUNT
This prospectus is generally intended to serve as a disclosure document only for
the policy and the variable account. For complete details regarding the fixed
account, see the policy itself.
The policy value allocated to the fixed account 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 fixed account.
The fixed account 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 fixed account does not entitle the
owner to share in the investment performance of Transamerica's general account.
Currently, we guarantee that we will credit interest at a rate of not less than
3% per year, compounded annually, to amounts allocated to the fixed account
under the policies. However, we reserve the right to change the minimum rate
according to state insurance law. We 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 we 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; and
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, we 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 premiums made to the policy 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 we may be offering.
Transfers
Each policy 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 accounts.
The maximum percentage that may be transferred will be declared annually by us.
This percentage will be determined by us at our sole discretion, but will not be
less than 10% of the value of the fixed account on the preceding policy
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
policy year, and the total of all such transfers cannot exceed the current
maximum. If we permit 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. the Transamerica VIF Money Market Sub-Account; or
2. any variable sub-account identified by Transamerica and investing in a
portfolio of fixed income investments.
We reserve 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.
<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 policy.
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 Company of New York
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 Company of New York's Individual Retirement
Annuity, also referred to as a Transamerica Life IRA Policy has been approved as
to form by the IRS. In addition, we are using an IRA and a Roth IRA Endorsement
based on the IRS-approved text. Please note that IRS approval applies only to
the form of the policy and does not represent a determination of the merits of
such IRA policy.
It may be necessary for us to amend your Transamerica Life IRA or Roth IRA
Policy 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 policy 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 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 before the expiration of the two year period
beginning on the date you first participated in the employer's SIMPLE plan. In
addition, depending on the annuity policy 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, the Health
Insurance Portability and Accountability Act of 1996, the Tax Relief Act of 1997
and the IRS Restructuring and Reform Act of 1998.
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 January 1, 1999. 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 policy will be the policy
effective date. This seven day calendar period may or may not coincide with the
free look period of your policy.
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 to your premium will be
returned to you without any adjustment.
Definitions
Code - Internal Revenue Code of 1986, as amended, and regulations issued
thereunder.
Contributions - Premiums paid to your policy.
Policy - The annuity policy, certificate or policy 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,
also referred to as 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 or
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. Such contributions are also subject to the minimum
amount under the Transamerica IRA policy. 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, or 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 1999, 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, referred to as a SARSEP, that was
established by an employer before 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 1999;
is eligible to make a before tax salary reduction 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 you, 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 each, 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 filing 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, also referred to as 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:
<PAGE>
<TABLE>
<CAPTION>
Married Filing Jointly Unmarried
Taxable Threshold Taxable Threshold
Year Level Year Level
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
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, or $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, that is, to 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, or simply, 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:
a) distributions begin when required;
b) distributions are made at least once a year; and
c) 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:
a) your life or the joint lives of you and your beneficiary; or
b) 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 settlement option payments start before 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 policy 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:
a) December 31 of the year following the year you died; or
b) 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 RMD 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.
Remaining nondeductible contributions
Divided by
Year-end total adjusted Traditional IRA balances
Multiplied by
Total distributions
for the year
Equals:
Nontaxable distributions
for the year
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,
specifically 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 Company of New York 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 treatment or income
averaging to reduce the federal income tax on your distribution. Also, no
portion of your distribution 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 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 IRA contributions for such year.
(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
policy, 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 income 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 policy. 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 Company of New York 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 as
unmarried or $150,000 when 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 as unmarried or
$160,000 when 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 adviser 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, specifically, on Form 8606.
(b) Spousal Roth IRAs. Contributions to your lower-earning spouse's Spousal Roth
IRA may not exceed the lesser of:
1. 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
2. $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 deposited to your
Roth IRA within 60 days.
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 converted 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.
For reconversions following a recharacterization, see Publication 590 and
Treasury Regulation Section 1.408A-5.
5. Distributions
(a) Required Minimum Distribution, or simply, 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 qualifying 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 Life Roth IRA on the same
basis as before your death. If your surviving spouse does not wish to continue
the Transamerica Life 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:
a) December 31 of the year following the year you died; or
b) December 31 of the year in which you would have reached age 70 1/2. Your
beneficiary is responsible for assuring that the RMD 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:
a) upon your death or disability; or
b) 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 before 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
allowances. 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 Company of New York
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.
(a) 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 before age 59 1/2 that is made within 5
years after a conversion or rollover contribution from a Traditional IRA. This
recapture rule exists 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 before 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 distributions 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
policy, 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
specifically 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>
APPENDIX D
DEFINITIONS
Annuity Date: The date on which the annuitization phase of the policy begins.
Cash Surrender Value: The amount we will pay to the owner if the policy is
surrendered on or before the annuity date. The cash surrender value is equal to:
the policy value; less any policy fee, 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.
Contingent Deferred Sales Load: A charge equal to a percentage of premiums
withdrawn from the policy that are less than seven years old. See Contingent
Deferred Sales Load/Surrender Charge on page 35 for the specific percentages.
Fixed Account: An account which credits a rate of interest for a period of at
least twelve months for each allocation or transfer.
Fixed Account Accumulated Value: The total dollar value of all amounts the owner
allocates or transfers to the fixed account; plus interest credited; less any
amounts withdrawn, applicable fees or premium tax charges, and/or transfers out
to the variable account before the annuity date.
General Account: The assets of Transamerica that are not allocated to a separate
account.
Guaranteed Interest Rate: The annual effective rate of interest after daily
compounding credited to a guarantee period.
Policy Anniversary: The anniversary of the policy effective date each year.
Policy Effective Date: The effective date of the policy as shown in the policy.
Policy Value: The sum of the variable accumulated value and the fixed account
accumulated value.
Policy Year: A 12-month period starting on the policy effective date and ending
with the day before the policy anniversary, and each 12-month period thereafter.
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 policy has a qualified status if it is
issued in connection with a retirement plan or program. Otherwise, the status is
non-qualified.
Surrender Charge: See Contingent Deferred Sales Load.
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, which is generally 4:00
p.m. Eastern Time of the New York Stock Exchange on consecutive valuation days.
Variable Account: Separate Account VA-6NY, a separate account established and
maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 4240 of the New York 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 the policy before 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.
<PAGE>
TRANSAMERICA SERIESsm
TRANSAMERICA CLASSICsm VARIABLE ANNUITY
Policy Form 3-504 11-198
Issued by Transamerica Life Insurance Company of New York
100 Manhattanville Road, Purchase, New York 10577
VIM ______-599
<PAGE>
15
STATEMENT OF ADDITIONAL INFORMATION FOR
TRANSAMERICA SERIES sm
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
Separate Account VA-6NY
Issued By
Transamerica Life Insurance Company of New York
This statement of additional information expands upon subjects discussed in
the May 1, 1999, prospectus for the Transamerica Classic Variable Annuity
("policy") issued by Transamerica Life Insurance Company of New York
("Transamerica") through Separate Account VA-6NY. You may obtain a free copy of
the prospectus by writing to: Transamerica Life Insurance Company of New York,
Annuity Service Center, 401 North Tryon Street, Suite 700, Charlotte, NC 28202
or calling 800-420-7749. Terms used in the current prospectus for the policy are
incorporated into this statement.
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectus for the policy and the portfolios.
Dated May 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
THE POLICY ...................................................................................... 3
NET INVESTMENT FACTOR ........................................................................... 3
SETTLEMENT OPTION PAYMENTS....................................................................... 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 Policy............................................................................... 5
Changes in the Policy....................................................................... 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
HISTORICAL PERFORMANCE DATA...................................................................... 8
General Limitations......................................................................... 8
Adjusted Historical Performance Data........................................................ 8
DISTRIBUTION OF THE POLICY....................................................................... 18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS........................................................... 18
STATE REGULATION................................................................................. 18
RECORDS AND REPORTS.............................................................................. 18
FINANCIAL STATEMENTS............................................................................. 18
APPENDIX - Accumulation Transfer Formula......................................................... 19
</TABLE>
<PAGE>
THE POLICY
The following pages provides additional information about the policy 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 or minus 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 we 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 mortality and expense risk charge of 0.00329% (1.20% annually)
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.
SETTLEMENT OPTION PAYMENTS
The variable settlement options provide for payments that fluctuate in
dollar amount, based on the investment performance of the 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 policy; 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. We may offer assumed interest rates other 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, you 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. We reserve 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 policy dies before the entire interest
in the policy is distributed, the value generally must be distributed to the
designated beneficiary so that the policy qualifies as an annuity under the
Code. (See "Federal Tax Matters" page 44 of the prospectus.)
Non-Participating
The policy is non-participating. No dividends are payable and the policy
will not share in our profits or surplus earnings.
Misstatement of Age or Sex
If the age or sex of the annuitant or any other measuring life has been
misstated, the settlement option payments under the policy 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 us 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 policy, we may require proof of the
existence and/or proof of the age of an owner and/or an annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the policy.
Annuity Data
We 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 policy will be binding on us unless made in writing and
given to us at our Service Center. We are not responsible for the adequacy of
any assignment. Your 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 policy year prior to the annuity date, you will be given
a report of the current account value allocated to each sub-account of the
variable account and the fixed account. 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 policy is incontestable from the policy effective date.
Entire Policy
We have issued the policy in consideration and acceptance of the payment of
the initial premium. All statements you made, as owner, are considered
representations and not warranties. We will not use any statement in defense of
a claim unless it is made in the application and a copy of the application is
attached to the policy when issued.
The group annuity policy has been issued to a trust organized under
Missouri law. However, the sole purpose of the trust is to hold the group
annuity policy. You have all rights and benefits under the individual
certificate issued under the group policy.
Changes in the Policy
Only two authorized officers of Transamerica, acting together, have the
authority to bind us or to make any change in the individual policy or the group
policy or individual certificates thereunder and then only in writing. We will
not be bound by any promise or representation made by any other persons.
We may not change or amend the policy, except as provided in the policy,
without your consent. However, we may change or amend the policy if such change
or amendment is necessary for the policy 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 policy 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 we 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 an 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 premiums, transfers by investors or otherwise. During
this period, the amount transferred would not be invested in a variable
sub-account.
We may delay payment of any withdrawal from the fixed account for a period
of not more than six months after we receive the request for such withdrawal. If
we delay payment for more than 10 days, we will pay interest on the withdrawal
amount up to the date of payment. (See "Cash Withdrawals" page 31 of the
prospectus.)
Notices and Directions
We will not be bound by any authorization, direction, election or notice
which is not received at our Service Center in a form and manner acceptable to
us.
Any written notice requirement by us to you will be satisfied by our
mailing of any such required written notice, by first-class mail, to your 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, we are 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 us 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 premiums) that
may be applicable to a policy.
Other Sub-Account Yield Calculations
We 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 policies. The yield calculations do not reflect the
effect of any contingent deferred sales load that may be applicable to a
particular policy. Contingent deferred sales loads range from 6% to 0% of the
amount of account value withdrawn depending on the elapsed time since the
receipt of each premium.
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
We 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 load that may be applicable to a particular period.
Adjusted Historical Portfolio Performance Data
We 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 policy 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 policy is not surrendered (i.e., with no
deduction for the contingent deferred sales load) and assuming that the policy
is surrendered at the end of the applicable period (i.e., reflecting a deduction
for any applicable contingent deferred sales load).
Other Performance Data
We 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. We have no reason to doubt
the accuracy of the figures provided by the portfolios. We have 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 policy.
These figures are not an indication of the future performance of the
sub-accounts.
The date next to each sub-account name indicates the date of commencement of
operation of the corresponding portfolio.
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
2. Average Annual Total Returns - Assuming no surrender
3. Cumulative Returns - Assuming surrender
4. Cumulative Returns - Assuming no surrender
<PAGE>
1. Average Annual Total Returns - Assuming surrender
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 expense charges of 1.20% per annum,
administrative expense charge of 0.15% per annum, a policy fee of $30 per annum
adjusted for average account size and the applicable contingent deferred sales
load (maximum of 6% of premiums).
<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) 12/31/98 12/31/98 portfolio
operations to
12/31/98
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Janus Aspen Worldwide Growth 19.93% 23.52% 19.17% N/A 21.97%
(9/12/93)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MSDW UF International Magnum 0.24% N/A N/A N/A 3.18%
(1/2/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Small Cap (8/30/90) -12.00% 6.16% 10.69% N/A 35.30%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
OCC Accumulation Trust Small -17.52% 6.32% 6.30% N/A 11.25%
Cap (7/31/88) (1)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Emerging Growth 25.18% 20.99% N/A N/A 23.80%
(7/23/95)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Premier Growth 38.73% 31.36% 25.70% N/A 23.53%
(6/26/92)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Capital 21.16% 24.80% 21.41% N/A 19.63%
Appreciation (4/25/93)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Research (7/25/95) 14.39% 18.80% N/A N/A 19.75%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Growth 34.09% 35.88% 32.50% 24.69% N/A
(12/1/80) (2)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alger American Income & Growth 23.35% 26.13% 19.61% 13.98% 13.87%
(11/14/88)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Growth & Income 12.00% 21.39% 19.03% N/A 14.35%
(1/14/91)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Growth w/ Income 13.42% 22.33% N/A N/A 23.12%
(10/5/95)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Janus Aspen Balanced (9/12/93) 25.22% 20.80% 16.95% N/A 17.46%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
OCC Accumulation Trust Managed -1.58% 13.91% 17.00% 17.67% 17.31%
(7/31/88) (3)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MSDW UF High Yield (1/2/97) -3.87% N/A N/A N/A 4.15%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MSDW UF Fixed Income (1/2/97) -0.81% N/A N/A N/A 3.98%
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Money Market N/A N/A N/A N/A -3.63%
(1/2/98)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
<PAGE>
2. Average Annual Total Returns - Assuming no surrender
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 expense charges of 1.20% per annum,
administrative expense charge of 0.15% per annum, a policy fee of $30 per annum
adjusted for average account size, the applicable contingent deferred sales load
(maximum 6% of premiums).
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
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 19.88% 23.47% 19.12% N/A 21.92%
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MSDW UF International 0.19% N/A N/A N/A 3.13%
Magnum (1/2/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap -12.05% 6.11% 10.64% N/A 35.25%
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust -17.57% 6.27% 6.25% 11.56% 11.20%
Small Cap (7/31/88) (1)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth 25.13% 20.94% N/A N/A 23.75%
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier 38.68% 31.31% 25.65% N/A 23.48%
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital 21.11% 24.75% 21.36% N/A 19.58%
Appreciation (4/25/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95) 14.34% 18.75% N/A N/A 19.70%
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth 34.04% 35.83% 32.45% 24.64% N/A
(12/1/80) (2)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income & 23.30% 26.08% 19.56% 13.93% 13.82%
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth & 11.95% 21.34% 18.98% N/A 14.30%
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income 13.37% 22.28% N/A N/A 23.07%
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced 25.17% 20.75% 16.90% N/A 17.40%
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust -1.63% 13.86% 16.95% 17.62% 17.26%
Managed (7/31/88) (3)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MSDW UF High Yield (1/2/97) -3.92% N/A N/A N/A 4.09%
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MSDW UF Fixed Income -0.86% N/A N/A N/A 3.92%
(1/2/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money N/A N/A N/A N/A -3.68%
Market (1/2/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
<PAGE>
3. Cumulative Returns - Assuming surrender
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, a policy fee of $30 per annum adjusted for average
account size and the applicable contingent deferred sales load (maximum of 6% of
premiums).
- --------------------------- --------------- ---------------- ---------------- ---------------- ----------------------
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 19.93% 89.37% 141.20% N/A 186.74%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
MSDW UF International 0.24% N/A N/A N/A 6.46%
Magnum (1/2/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap -12.00% 20.54% 67.04% N/A 1145.17%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -17.52% 21.10% 36.63% 199.96% 203.83%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 25.18% 78.02% N/A N/A 108.58%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 38.73% 127.57% 214.68% N/A 296.57%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 21.16% 95.26% 164.73% N/A 180.03%
Appreciation (4/25/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 14.39% 68.56% N/A N/A 85.84%
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 34.09% 151.76% 309.36% 808.27% N/A
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 23.35% 101.57% 145.71% 270.18% 273.01%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 12.00% 79.78% 139.87% N/A 191.18%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 13.42% 83.97% N/A N/A 95.88%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 25.22% 77.18% 119.70% N/A 134.76%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -1.58% 48.72% 120.16% 408.96% 428.19%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
MSDW UF High Yield -3.87% N/A N/A N/A 8.45%
(1/2/97)
- ---------------------------------------------------------------------------------------------------------------------
MSDW UF Fixed Income -0.81% N/A N/A N/A 8.10%
(1/2/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A -3.62%
Market (1/2/98)
- ---------------------------------------------------------------------------------------------------------------------
<PAGE>
4. Cumulative Returns - Assuming no surrender
Adjusted historical cumulative total returns for periods since inception of
the portfolio for each sub-account are as follows. These figures include
mortality and expense charges of 1.20% per annum, administrative expense charge
of 0.15% per annum, a policy fee of $30 per annum adjusted for average account
size, the applicable contingent deferred sales load (maximum 6% of premiums).
- --------------------------- ---------------- ---------------- --------------- --------------- -----------------------
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 19.88% 89.14% 140.69% N/A 186.11%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
MSDW UF International 0.19% N/A N/A N/A 6.36%
Magnum (1/2/97)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap -12.05% 20.36% 66.66% N/A 1141.33%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -17.57% 20.92% 36.30% 198.61% 202.41%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 25.13% 77.80% N/A N/A 108.28%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 38.68% 127.30% 214.05% N/A 295.51%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 21.11% 95.03% 164.18% N/A 179.35%
Appreciation (4/25/93)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 14.34% 68.34% N/A N/A 85.57%
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 34.04% 151.48% 308.58% 804.63% N/A
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 23.30% 101.33% 145.19% 268.56% 271.36%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 11.95% 79.55% 139.36% N/A 190.17%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 13.37% 83.74% N/A N/A 95.62%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 25.17% 76.95% 119.22% N/A 134.22%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -1.63% 48.52% 119.68% 406.80% 425.84%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
MSDW UF High Yield -3.92% N/A N/A N/A 8.34%
(1/2/97)
- ---------------------------------------------------------------------------------------------------------------------
MSDW UF Fixed Income -0.86% N/A N/A N/A 7.99%
(1/2/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A -3.67%
Market (1/2/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation ("TSSC") is principal underwriter
of the policies under a Distribution Agreement with Transamerica. TSSC may also
serve as principal underwriter and distributor of other policys 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 Insurance 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 policies through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the policies 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 policies will be sold by
broker-dealers which will receive compensation as described in the prospectus.
The offering of the policies is expected to be continuous and TSSC does not
anticipate discontinuing the offering of the policies. However, TSSC reserves
the right to discontinue the offering of the policies.
During fiscal year 1998, $XXX in commissions were paid to TSSC as
underwriter of the policies; no amounts were retained by TSSC. Under the sales
agreements, TSSC will pay broker-dealers compensation based on a percentage of
each premium. This percentage may be up to 5.75% 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
We are subject to the insurance laws and regulations of all the states
where we are licensed to operate. The availability of certain policy rights and
provisions depends on state approval and/or filing and review processes. Where
required by state law or regulation, the policy will be modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be
maintained by us or by our Service Center. 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 our ability to
meet our obligations under the policies. 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
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>
Audited Financial Statements
Transamerica Life
Insurance Company of New York
December 31, 1998
<PAGE>
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
Audited Financial Statements
December 31, 1998
Report of Independent Auditors................ 1
Balance Sheet................................. 2
Statement of Income........................... 3
Statement of Shareholder's Equity............. 4
Statement of Cash Flows....................... 5
Notes to Financial Statements................. 6
<PAGE>
1
04/28/99 3:28 PM
REPORT OF INDEPENDENT AUDITORS
Transamerica Corporation
and
Board of Directors
Transamerica Life Insurance Company of New York
We have audited the accompanying balance sheet of Transamerica Life Insurance
Company of New York as of December 31, 1998 and 1997, and the related statements
of income, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transamerica Life Insurance
Company of New York at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
January 22, 1999
<PAGE>
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BALANCE SHEET
December 31
1998 1997
--------------------- --------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 602,299 $ 489,053
Policy loans 15,577 13,595
Other long-term investments 333 343
Short-term investments 29,696 -
--------------------- ---------------------
647,905 502,991
Cash 16,107 3,029
Accrued investment income 11,206 9,245
Other receivables 1,528 3,419
Reinsurance recoverable on paid and unpaid losses 13,631 10,204
Deferred policy acquisitions costs 85,066 52,181
Other assets 1,260 5,364
Separate account assets 424,092 308,590
--------------------- ---------------------
$ 1,200,795 $ 895,023
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy and contract liabilities:
Policyholder contract deposits $ 618,169 $ 483,477
Reserves for future policy benefits 9,682 10,449
Policy claims and other 3,175 1,810
--------------------- ---------------------
631,026 495,736
Income tax liabilities 16,892 8,008
Accounts payable and other liabilities 30,874 7,418
Separate account liabilities 424,092 308,590
--------------------- ---------------------
1,102,884 819,752
Shareholder's equity:
Common Stock ($1,000 par value):
Authorized--2,000 shares
Issued and outstanding--2,000 shares 2,000 2,000
Additional paid-in capital 57,320 52,320
Retained earnings 17,768 13,224
Net unrealized investment gains 20,823 7,727
--------------------- ---------------------
97,911 75,271
--------------------- ---------------------
$ 1,200,795 $ 895,023
===================== =====================
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
1998 1997 1996
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 20,896 $ 17,833 $ 15,624
Net investment income 38,819 37,068 34,834
Net realized investment gains 1,422 6 99
--------------- --------------- ---------------
TOTAL REVENUES 61,137 54,907 50,557
Benefits:
Benefits paid or provided 39,545 37,680 34,455
Increase (decrease) in policy reserves and liabilities 473 (424) (711)
--------------- --------------- ---------------
40,018 37,256 33,744
Expenses:
Amortization of deferred policy acquisition costs 6,059 3,974 3,002
Salaries and salary related expenses 3,365 3,486 3,518
Other expenses 4,704 4,789 3,789
--------------- --------------- ---------------
14,128 12,249 10,309
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 54,146 49,505 44,053
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 6,991 5,402 6,504
Provision for income taxes 2,447 1,575 2,175
--------------- --------------- ---------------
NET INCOME $ 4,544 $ 3,827 $ 4,329
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDER'S EQUITY
Net
Unrealized
Additional Investments
Common Stock Paid-in Comprehensive Retained Gains
-----------------------------
Shares Amount Capital Income Earnings (Losses)
---------------------------------------------------------------------------------------
(In thousands, except for share data)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 2,000 $2,000 $52,320 $ 5,068 $ 6,881
Comprehensive Income
Net income $ 4,329 4,329
Other comprehensive income,
net of tax:
Unrealized losses from
investments marked at fair
value (4,560) (4,560)
Reclassification adjustment
for gains included in net (64) (64)
--------
income
Comprehensive Income $ (295)
------ ------- -------- ========
Balance at December 31, 1996 2,000 2,000 52,320 9,397 2,257
Comprehensive Income
Net income $ 3,827 3,827
Other comprehensive income,
net of tax:
Unrealized gains from
investments marked at fair
value 5,474 5,474
Reclassification adjustment
for gains included in net (4) (4)
--------
income
Comprehensive Income $ 9,297
------ ------- -------- ========
Balance at December 31, 1997 2,000 2,000 52,320 13,224 7,727
Comprehensive Income
Net income $ 4,544 4,544
Other comprehensive income,
net of tax:
Unrealized gains from
investments marked at fair
value 14,020 14,020
Reclassification adjustment
for gains included in net (924) (924)
--------
income
Comprehensive Income $ 17,640
========
Contribution by Parent 5,000
------ ------- --------
Balance at December 31, 1998 2,000 $2,000 $57,320 $17,768 $20,823
======= ======= ======== ======== ========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
STATEMENT OF CASH FLOWS
Year Ended December 31
1998 1997 1996
--------------- --------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 4,544 $ 3,827 $ 4,329
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Changes in:
Reinsurance recoverable (3,427) 2,037 (1,013)
Other receivables 1,891 (205) 1,236
Accrued investment income (1,961) (405) (1,329)
Policy and contract liabilities 1,320 (1,893) 7,850
Other assets, accounts payable and other
liabilities, and income taxes 29,149 3,525 (4,130)
Policy acquisition costs deferred (22,063) (13,256) (12,288)
Amortization of deferred policy acquisition costs 6,059 3,974 3,002
Net realized gains on investment transactions (1,422) (6) (99)
Other 1,738 (43) 1,179
--------------- ---------------- ---------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 15,828 (2,445) (1,263)
INVESTMENT ACTIVITIES
Purchases of securities and other investments (200,354) (92,398) (92,243)
Sales of investments 50,820 84,805 39,469
Maturities of securities 7,905 3,668 2,500
Other (91) (596) (75)
--------------- ---------------- ---------------
NET CASH USED
BY INVESTING ACTIVITIES (141,720) (4,521) (50,349)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 173,119 40,978 75,283
Withdrawals from policyholder contract deposits (39,149) (40,062) (30,849)
Capital contributions from parent 5,000 - -
--------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 138,970 916 44,434
--------------- --------------- ---------------
INCREASE (DECREASE) IN CASH 13,078 (6,050) (7,178)
Cash at beginning of year 3,029 9,079 16,257
--------------- --------------- ---------------
CASH AT END OF YEAR $ 16,107 $ 3,029 $ 9,079
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Life Insurance Company of New York (the "Company")
is domiciled in New York. The Company is a wholly owned subsidiary of
Transamerica Occidental Life Insurance Company ("TOLIC"), which is an
indirect subsidiary of Transamerica Corporation. Prior to 1997, the Company
was named First Transamerica Life Insurance Company.
The Company engages primarily in providing fixed and variable annuities, life
insurance and structured settlement products. The Company's customers are
primarily in the state of New York.
Basis of Presentation: The accompanying financial statements have been prepared
in accordance with generally accepted accounting principles which differ from
statutory accounting practices prescribed or permitted by regulatory
authorities.
Reclassifications: Certain prior year amounts have been reclassified to conform
with current year presentation.
Use of Estimates: Certain amounts reported in the accompanying financial
statements are based on management's best estimates and judgment. Actual results
could differ from those estimates.
New Accounting Standards: In 1997, the Financial Accounting Standards Board
issued a new standard on reporting comprehensive income, which establishes
standards for reporting and displaying comprehensive income and its components
in the financial statements. This standard is effective for 1998 and prior years
have been reclassified to reflect the 1998 presentation. Application of this
statement did not change recognition or measurement of net income and,
therefore, did not impact the Company's results of operations or financial
position.
Investments: Investments are reported on the following bases:
Fixed maturities--All debt securities are classified as available for sale
and carried at fair value. The Company does not carry any debt securities
principally for the purpose of trading. Prepayments are considered in
establishing amortization periods for premiums and discounts and amortized
cost is further adjusted for other-than-temporary fair value declines. See
Note M--Financial Instruments.
Policy loans--at unpaid balances.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Realized gains and losses on disposal of investments are determined on a
specific identification basis. Changes in fair values of fixed maturities
available for sale are included in net unrealized investment gains or losses
after adjustment of deferred policy acquisition costs and deferred income taxes
as a separate component of shareholder's equity and, accordingly, have no effect
on net income.
Deferred Policy Acquisition Costs (DPAC): Certain costs of acquiring new and
renewal insurance contracts, principally commissions, medical examination and
inspection report fees, and certain variable sales, underwriting and issue
expenses, all of which vary with and are primarily related to the production of
such business, have been deferred. DPAC for non-traditional life and
investment-type products are amortized over the life of the related policies
generally in relation to estimated future gross profits. DPAC for traditional
life insurance products are amortized over the premium-paying period of the
related policies in proportion to premium revenue recognized, using principally
the same assumptions used for computing future policy benefit reserves. DPAC
related to non-traditional and investment-type products is adjusted as if
unrealized gains or losses on securities available for sale were realized.
Changes in such adjustments are included in net unrealized investment gains or
losses on an after tax basis as a separate component of shareholder's equity
and, accordingly, have no effect on net income.
Separate Accounts: The Company administers segregated asset accounts for
variable annuity contracts. The assets held in these Separate Accounts are
invested in various mutual fund portfolios managed by third party companies. The
Separate Account assets are stated at fair value and are not subject to
liabilities arising out of any other business the Company may conduct.
Investment risks associated with fair value changes are borne by the contract
holders. Accordingly, investment income and realized investment gains and losses
attributable to Separate Accounts are not reported in the Company's results of
operations.
Policyholder Contract Deposits: Non-traditional life insurance products include
universal life and other interest-sensitive life insurance policies.
Investment-type products include single and flexible premium deferred annuities
and single premium immediate annuities. Policyholder contract deposits on
universal life and investment products represent premiums received plus
accumulated interest, less mortality charges on universal life products and
other administration charges as applicable under the contract. Interest credited
to these policies ranged from 4.75% to 8.25% in 1998 and 5.0% to 8.25% in 1997
and from 5.2% to 8.25% in 1996.
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and certain annuities with life
contingencies. The reserve for future policy benefits for traditional life
insurance products has been provided on a net-level premium method based upon
estimated investment yields, withdrawals, mortality, and other assumptions which
were appropriate at the time the policies were issued. Such estimates are based
upon past experience with a margin for adverse deviation. The initial interest
assumptions range from 5.0% to 7.15%.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances.
Claim reserves include provisions for reported claims and claims incurred but
not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. Premiums ceded and recoverable losses have been
reported as a reduction of premium income and benefits, respectively. The ceded
amounts related to policy liabilities have been reported as an asset.
Income Taxes: The Company is included in the consolidated federal income tax
return of TOLIC which, with its domestic subsidiaries and affiliates, is
included in the consolidated federal income tax returns filed by Transamerica
Corporation, which by the terms of a tax sharing agreement generally requires
the Company to accrue and settle income tax obligations in amounts that would
result if the Company filed separate tax returns with federal taxing
authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
Fair Values of Financial Instruments: Fair values for debt securities are based
on quoted market prices, where available. For debt securities not actively
traded and private placements, fair values are estimated using values obtained
from independent pricing services.
Fair values for policy loans approximate their carrying values.
The carrying amounts of short-term investments, cash and accrued investment
income approximate their fair value.
Fair values for liabilities under investment-type contracts are estimated using
discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturities consistent with those remaining for
the contracts being valued. The liabilities under investment-type contracts are
included in policyholder contract deposits in the accompanying balance sheet.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE B--INVESTMENTS
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale are as follows
(in thousands):
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1998
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 812 $ 101 $ - $ 913
Obligations of states and political
subdivisions 17,214 1,545 - 18,759
Corporate securities 446,726 28,623 2,058 473,291
Public utilities 98,238 10,036 140 108,134
Mortgage-backed securities 1,102 100 - 1,202
---------------- ---------------- ---------------- ----------------
$ 564,092 $ 40,405 $ 2,198 $ 602,299
================ ================ ================ ================
December 31, 1997
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 828 $ 75 $ - $ 903
Obligations of states and political
subdivisions 21,195 1,672 - 22,867
Corporate securities 345,198 25,661 139 370,720
Public utilities 84,557 7,542 79 92,020
Mortgage-backed securities 2,334 209 - 2,543
---------------- ---------------- ---------------- ----------------
$ 454,112 $ 35,159 $ 218 $ 489,053
================ ================ ================ ================
</TABLE>
The cost and fair value of fixed maturities available for sale at December 31,
1998, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
Fair
Cost Value
Maturity:
Due in 1999 $ 9,005 $ 9,055
Due in 2000-2003 69,113 73,322
Due in 2004-2008 154,708 161,647
Due after 2008 330,164 357,073
---------------- ----------------
562,990 601,097
Mortgage-backed securities 1,102 1,202
---------------- ----------------
$ 564,092 $ 602,299
================ ================
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE B--INVESTMENTS (Continued)
As of December 31, 1998, the Company held investments in three issuers other
than the United States Government or a United States Government agency or
authority, which exceeded 10% of total shareholder's equity as follows (in
thousands):
Name of Issuer Carrying Value
Hill Street Funding L.P. $ 18,543
Time Warner Entertainment 11,687
Merril Lynch 11,517
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements was $0.9 million at December 31, 1998
and 1997.
<TABLE>
<CAPTION>
Net investment income by major investment category is summarized as follows (in
thousands):
1998 1997 1996
-------------- -------------- ---------
<S> <C> <C> <C>
Fixed maturities $ 37,191 $ 35,740 $ 34,431
Short-term, policy loans, real estate and
other long-term investments 1,866 1,686 631
-------------- -------------- --------------
39,057 37,426 35,062
Investment expenses (238) (358) (228)
-------------- -------------- --------------
Net investment income $ 38,819 $ 37,068 $ 34,834
============== ============== ==============
The following summarizes realized investment gains and losses and other
information related to investments (in thousands):
1998 1997 1996
-------------- -------------- ---------
Gross gains on disposition of investment in
fixed maturities $ 1,547 $ 664 $ 99
Gross losses on disposition of investment in
fixed maturities (125) (658) -
------------- ------------- -------------
Net gains on disposition of investment in
fixed maturities $ 1,422 $ 6 $ 99
============= ============= =============
Proceeds from disposition of investment in
fixed maturities $ 50,820 $ 84,805 $ 39,469
============= ============= =============
The components of change in net unrealized investment gains in the accompanying
statement of shareholder's equity are as follows (in thousands):
1998 1997
-------------- ---------
Unrealized gains on investment in fixed
maturities $ 38,207 $ 34,941
Fair value adjustments to DPAC (6,172) (23,053)
Related deferred taxes (11,212) (4,161)
-------------- ------------
$ 20,823 $ 7,727
============== ============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
<TABLE>
<CAPTION>
Significant components of changes in DPAC are as follows (in thousands):
1998 1997 1996
-------------- -------------- ---------
<S> <C> <C> <C>
Balance at beginning of year $ 52,181 $ 56,632 $ 35,588
Amounts deferred:
Commissions 19,299 10,204 9,045
Other 2,764 3,052 3,243
Amortization (6,059) (3,974) (3,002)
Fair value adjustment 16,881 (13,733) 11,758
-------------- -------------- --------------
Balance at end of year $ 85,066 $ 52,181 $ 56,632
============== ============== ==============
</TABLE>
As part of its ongoing evaluation of the recoverability of its DPAC, the Company
wrote down DPAC related to its traditional life insurance business by $1.0
million in 1998.
NOTE D--POLICY LIABILITIES
<TABLE>
<CAPTION>
Components of policyholder contract deposits are as follows (in thousands):
December 31
1998 1997
Liabilities for investment type contracts:
<S> <C> <C>
Annuity investment contracts $ 303,952 $ 316,628
Liabilities for non-traditional life insurance
products 314,217 166,849
------------- -------------
$ 618,169 $ 483,477
============= =============
</TABLE>
NOTE E--COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
The Components of comprehensive income in the statement of shareholder's equity
are shown net of the following tax provision (benefit) (in thousands):
1998 1997 1996
-------------- -------------- ---------
<S> <C> <C> <C>
Unrealized investment gains (losses) $ 7,549 $ 3,112 $ (2,420)
Reclassification adjustment for gains
included in net income (498) (2) (35)
-------------- -------------- --------------
Income tax effect on comprehensive income $ 7,051 $ 3,110 $ (2,455)
============== ============== ---------------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE F--INCOME TAXES
Components of income tax liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1998 1997
<S> <C> <C>
Current tax liabilities (assets) $ (728) $ 294
Deferred tax liabilities 17,620 7,714
------------- -------------
$ 16,892 $ 8,008
============= =============
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1998 1997
Deferred policy acquisition costs $ 26,681 $ 21,897
Unrealized investment gains 11,212 4,161
------------- -------------
Total deferred tax liabilities 37,893 26,058
Life insurance policy liabilities (20,273) (18,344)
------------- -------------
Total deferred tax assets (20,273) (18,344)
------------- -------------
$ 17,620 $ 7,714
============= =============
</TABLE>
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the balance sheet.
Components of provisions for income taxes (benefits) are as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- ---------
<S> <C> <C> <C>
Current tax expense (benefit) $ (407) $ (238) $ 751
Deferred tax expense 2,854 1,813 1,424
-------------- -------------- --------------
$ 2,447 $ 1,575 $ 2,175
============== ============== ==============
</TABLE>
The differences between federal income taxes computed at the statutory rate and
provision for income taxes are primarily due to tax exempt income.
An income tax payment of $0.6 million and income tax refunds of $0.4 million and
$0.3 million in 1998, 1997 and 1996, respectively, were paid to and received
from TOLIC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE G--REINSURANCE
The Company is involved in the cession of reinsurance to affiliated and
nonaffiliated companies. Risks are reinsured with other companies to permit the
recovery of a portion of the direct losses; however, the Company remains liable
to the extent the reinsuring companies do not meet their obligations under these
reinsurance agreements.
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Ceded to
Gross Ceded to Non-affiliated Net
Amount Affiliates Companies Amount
1998
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 4,521,321 $ 258,795 $ 2,539,998 $ 1,722,528
================== ================= ================== ==================
Premiums and other
considerations $ 29,756 $ 561 $ 8,299 $ 20,896
================== ================= ================== ==================
Benefits paid or
provided $ 43,896 $ 67 $ 4,284 $ 39,545
================== ================= ================== ==================
1997
Life insurance in force,
at end of year $ 4,588,120 $ 297,518 $ 2,765,285 $ 1,525,317
=============== ================= ================== ==================
Premiums and other
considerations $ 23,686 $ 768 $ 5,085 $ 17,833
================== ================= ================== ==================
Benefits paid or
provided $ 45,434 $ 1,400 $ 6,354 $ 37,680
================== ================= ================== ==================
1996
Life insurance in force,
at end of year $ 4,769,031 $ 177,437 $ 2,323,447 $ 2,268,147
================== ================= ================== ==================
Premiums and other
considerations $ 24,652 $ 753 $ 8,275 $ 15,624
================== ================= ================== ==================
Benefits paid or
provided $ 43,440 $ 539 $ 8,446 $ 34,455
================== ================= ================== ==================
</TABLE>
NOTE H--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by the Retirement Plan
for Salaried Employees of Transamerica Corporation and Affiliates (the "Plan").
Pension benefits are based on the employee's compensation during the highest
paid 60 consecutive months during the 120 months before retirement. Annual
contributions to the Plan generally include a provision for current service
costs plus amortization of prior service costs over periods ranging from 10 to
30 years. Assets of the plans are primarily invested in publicly traded stocks
and bonds.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE H--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (Continued)
The Company's pension costs charged to income were not significant in 1998, 1997
or 1996.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. Postretirement benefit costs charged to income
were not significant.
NOTE I--RELATED PARTY TRANSACTIONS
The Company has various transactions with TOLIC and certain of its other
affiliates in the normal course of operations, including reinsurance
transactions, computer services, investment services and advertising services.
The reinsurance recoverable from TOLIC, including the amount receivable for
policy claims paid, amounted to $.5 million and $.1 million at December 31, 1998
and 1997, respectively.
NOTE J--LEASES
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expense for properties occupied by the Company was
$0.8 million in 1998 and $1.0 million in 1997 and $0.9 million in 1996. The
following is a schedule by year of future minimum rental payments required under
operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 1998 (in thousands):
1999 $ 1,016
2000 743
2001 328
2002 328
Later years 4,096
-------------
$ 6,511
NOTE K--LITIGATION
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company (along with TOLIC and Transamerica Assurance Company, an affiliate) and
plaintiff's counsel entered into a settlement which was approved on June 26,
1997. The settlement required prompt notification to affected policyholders.
Administrative and policy benefit costs associated with the settlement for the
Company were not material and have been borne to date by TOLIC. Additional costs
related to the settlement, which are not currently determinable, are not
expected to be material and will be incurred over a period of years. In the
opinion of the Company, any ultimate liability which might result from other
litigation would not have a materially adverse effect on the financial position
of the Company or the results of its operations
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE L--REGULATORY MATTERS
The Company is subject to state insurance laws and regulations, principally
those of the State of New York. Such regulations include the risk based capital
requirement and the restriction on the payment of dividends. Generally,
dividends during any year may not be paid, without prior regulatory approval, in
excess of the greater of 10% of the Company's statutory capital and surplus as
of the preceding year end or the Company's statutory net income from operations
for the preceding year. Those statutory amounts are determined in conformity
with statutory accounting practices prescribed or permitted by the Department of
Insurance of New York ("New York Department"). Currently, no dividends can be
paid by the Company without prior approval of New York Department.
The Company's statutory net income (loss) and capital and surplus are summarized
as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- ---------
<S> <C> <C> <C>
Statutory net income (loss) $ (4,891) $ 395 $ (551)
Statutory capital and surplus, at end of year 23,022 23,591 22,822
</TABLE>
NOTE M--FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
December 31
1998 1997
------------------------------- ------------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities $ 602,299 $ 602,299 $ 489,053 $ 489,053
Policy loans 15,577 15,577 13,595 13,595
Short-term investments 29,696 29,696 - -
Cash 16,107 16,107 3,029 3,029
Accrued investment income 11,206 11,206 9,245 9,245
Financial Liabilities:
Liabilities for investment-type
contracts:
Single and flexible premium
deferred annuities 133,568 130,940 151,173 150,577
Single premium immediate
annuities 170,384 180,724 165,455 165,881
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE N--SUBSEQUENT EVENT (UNAUDITED)
On February 18, 1998, Transamerica Corporation announced that it had signed an
agreement with AEGON N.V. (AEGON) providing for AEGON's acquisition of
Transamerica Corporation for cash and stock worth $9.7 billion. In addition,
AEGON N.V. will assume on a consolidated basis approximately $1.1 billion of
Transamerica Corporation's debt. Transamerica Corporation's corporate and
insurance operations will merge with AEGON USA's operations immediately after
closing, which is expected to occur during the summer of 1999.
NOTE O--YEAR 2000 (UNAUDITED)
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations, causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar business
activities.
Based upon recent assessments, the Company has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Company presently believes that with modifications and replacements of
existing software and certain hardware, disruptions to business activities
caused by the Year 2000 Issue can be mitigated. However, if such modifications
and replacements are not made, or are not completed on time, the Year 2000 Issue
could have an impact on the operations of the Company.
The Company's plan to address the Year 2000 Issue involves the following four
phases: (1) problem determination; (2) planning and resource acquisition, (3)
remediation, and (4) testing and acceptance. The Company has completed phase one
and phase two. A significant portion of the remediation phase was completed as
of December 31, 1998, and remediation is expected to be substantially complete
by March 1999. As of December 31, 1998, Year 2000 readiness testing was well
underway and is expected to be substantially complete by June 1999.
The Company's Year 2000 project also addresses issues related to non-information
technology, embedded software and equipment, the readiness of key business
partners, and updating business continuity plans.
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Not Applicable.
(b) Exhibits:
(1) Resolutions of Board of Directors of Transamerica Life Insurance
Company of New York (the "Company") authorizing the creation of Separate
Account VA-6NY (the "Separate Account"). 1/
(2) Not Applicable.
(3) Form of Underwriting Agreement between the Company, the Separate
Account and Transamerica Securities Sales Corporation. 1/
(4) Form of Flexible Premium Deferred Variable Annuity Contract. 1/
(5) Form of Application for Flexible Premium Variable Annuity. 1/
(6) (a) Articles of Incorporation of Transamerica Life Insurance Company of
New York. 1/2/
(b) By-Laws of Transamerica Life Insurance Company of New York. 1/2/
(7) Not Applicable.
(8) Form of Participation Agreements regarding the Portfolio.
(a) re The Alger American Fund 1/
(b) re Alliance Variable Products Series Fund, Inc. 1/
(c) re Dreyfus Variable Investment Fund 2/
(d) re Janus Aspen Series 1/
(e) re MFS Variable Insurance Trust 1/
(f) re Morgan Stanley Universal Funds, Inc. 1/
(g) re OCC Accumulation Trust 1/
(h) re Transamerica Variable Insurance Fund, Inc. 1/
(9) Opinion and Consent of Counsel. 1/
(10) (a) Consent of Counsel. 1/
(b) Consent of Independent Auditors. 1/2/ 3/
(11) No financial statements are omitted from Item 23.
(12) Not Applicable.
(13) Performance Data Calculations. 1/
(14) Not Applicable.
(15) Powers of Attorney. 1/2
Thomas O'Neill
- ----------------------------
1/ Incorporated by reference to the like-numbered exhibit to the initial
filing of the Registration Statement of Transamerica Life Insurance
Company of New York's Separate Account VA-6NY on Form N-4, File No.
333-47219 (March 4, 1998).
2/ Incorporated by reference to the like-numbered exhibit to Pre-Effective
Amendment No. 1 of the Registration Statement of Transamerica Life
Insurance Company of New York's Separate Account VA-6NY on Form N-4,
File No. 333-47219 (June 11, 1998).
3/ Filed herewith.
<PAGE>
Item 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 Company of New York:
Marc C. Abrahms*
James T. Byrne, Jr.*
Alan T. Cunningham*
John A. Fibiger
Daniel E. Jund
Thomas O'Neill**
James B. Roszak
Robert Rubinstein*
Nooruddin S. Veerjee
*100 Manhattanville Road, Purchase, New York 10577 **Transamerica Square,
401 N. Tryon Street, Charlotte, North Carolina 28202
<TABLE>
<CAPTION>
List of Officers for Transamerica Life Insurance Company of New York:
<S> <C> <C>
Nooruddin S. Veerjee Chairman
James W. Dederer CLUGeneral Counsel Alan T. Cunningham President
Robert Rubinstein Senior Vice President,
Chief Actuary, & Chief Operating Officer and
Secretary
Gary U. Rolle Investment Officer
Susan A. Silbert Investment Officer
Nicki Bair FSA,MAAA Vice President
Roy Chong-Kit FSA,MAAA Vice President
Paul Hankwitz MD Vice President and Chief Medical Director
Ken Kilbane Vice President
William J. Lyons Vice President and Chief Underwriter
Alexander Smith, Jr. Vice President, Administration and Controller
Kamran Haghighi Tax Officer
William M. Hurst Assistant Secretary
Timothy Weis Vice President
Sally S. Yamada CPA,FLMI Treasurer
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
Registrant is a separate account of Transamerica Life
Insurance Company of new York, is controlled by the Contract
Owners, and is not controlled by or under common control with
any other person. The Depositor, Transamerica Life Insurance
Company of New York, 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
- -
ARC Reinsurance Corporation
Transamerica Management, Inc. -- DE
BWAC Seventeen, Inc.
Transamerica Commercial Finance Canada, Limited -- ON Transamerica Commercial
Finance Corporation, Canada -- Can.
BWAC Twelve, Inc.
TIFCO Lending Corporation -- IL
Transamerica Insurance Finance Corporation -- MD
BWAC Twenty-One, Inc.
Transamerica Commercial Holdings Limited -- U.K.
First Florida Appraisal Services, Inc.
First Georgia Appraisal Services, Inc. -- GA
Greybox L.L.C.
Transamerica Trailer Leasing S.N.C. -- Fra.
Intermodal Equipment, Inc.
Transamerica Leasing N.V. -- Belg.
Transamerica Leasing SRL -- Itl.
Inventory Funding Trust
Inventory Funding Company, LLC -- DE
Metropolitan Mortgage Company
Easy Yes Mortgage, Inc. -- FL
Easy Yes Mortgage, Inc. -- GA
First Florida Appraisal Services, Inc. -- FL
Freedom Tax Services, Inc. -- FL
J.J. & W. Advertising, Inc. -- FL
J.J. & W. Realty Services, Inc. -- FL
Liberty Mortgage Company of Ft. Myers, Inc. -- FL
Metropolis Mortgage Company -- FL
Perfect Mortgage Company -- FL
Pyramid Insurance Company, Ltd.
Pacific Cable Ltd. -- Bmda.
TA Leasing Holding Co., Inc.
Trans Ocean Ltd. -- DE
Transamerica Leasing Inc. -- DE
Trans Ocean Container Corp.
SpaceWise Inc. -- DE
Trans Ocean Container Finance Corp. -- DE
Trans Ocean Leasing Deutschland GmbH -- Ger.
Trans Ocean Leasing PTY Limited -- Aust.
Trans Ocean Management S.A. -- SWTZ
Trans Ocean Regional Corporate Holdings -- CA
Trans Ocean Tank Services Corporation -- DE
Trans Ocean Ltd.
Trans Ocean Container Corp. -- DE
Transamerica Accounts Holding Corporation
ARS Funding Corporation -- DE
Transamerica Acquisition Corporation
Camtrex Group, Inc. --
Transamerica Business Credit Corporation
Bay Capital Corporation -- DE
Coast Funding Corporation -- DE
Direct Capital Equity Investment, Inc. -- DE
Gulf Capital Corporation -- DE
TA Air East, Corp. --
TA Air III, Corp. -- DE
TA Air IV, Corp. -- DE
TA Air IX, Corp. -- DE
TA Air I, Corp. -- DE
TA Air VIII, Corp. --
TA Air VII, Corp. --
TA Air VI, Corp. --
TA Air V, Corp. --
TA Air X Corp. -- DE
TA Marine I Corp. -- DE
TA Marine II Corp. -- DE
TBC III, Inc. -- DE
TBC II, Inc. -- DE
TBC IV, Inc. -- DE
TBC I, Inc. -- DE
TBC Tax III, Inc. -- DE
TBC Tax II, Inc. -- DE
TBC Tax IV, Inc. -- DE
TBC TAX IX, Inc. -- DE
TBC Tax I, Inc. -- DE
TBC Tax VIII, Inc. -- DE
TBC Tax VII, Inc. -- DE
TBC Tax VI, Inc. -- DE
TBC Tax V, Inc. -- DE
TBC V, Inc. -- DE
TBCC Funding Trust I --
TBCC Funding Trust II --
The Plain Company -- DE
Transamerica Mezzanine Financing, Inc. --
Transamerica Small Business Services, Inc. --
Transamerica Business Credit Corporation - DE
TA Air II, Corp. -- DE
Transamerica Commercial Finance Canada, Limited
Transamerica Acquisition Corporation -- Can.
Transamerica Commercial Finance Corporation
Inventory Funding Trust -- DE
TCF Asset Management Corporation -- CO
Transamerica Distribution Finance Corporation de Mexico --
Transamerica Joint Ventures, Inc. -- DE
Transamerica Commercial Finance Corporation, I
BWAC Credit Corporation -- DE
BWAC International Corporation -- DE
BWAC Twelve, Inc. -- DE
Transamerica Business Credit Corporation -- DE
Transamerica Distribution Finance Corporation -- DE
Transamerica Equipment Financial Services Corporation --
Transamerica Commercial Finance Limited
WFC Polska Sp. Zo.o --
Transamerica Commercial Holdings Limited
Transamerica Commercial Finance Limited -- U.K.
Transamerica Trailer Leasing Limited -- NY
Transamerica Trailer Leasing Limited -- U.K.
Transamerica Consumer Finance Holding Company
Metropolitan Mortgage Company -- FL
Pacific Agency, Inc. -- IN
Transamerica Consumer Mortgage Receivables Corporation -- DE
Transamerica Mortgage Company -- DE
Transamerica Corporation
ARC Reinsurance Corporation -- HI
Inter-America Corporation -- CA
Pyramid Insurance Company, Ltd. -- HI
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
Transamerica Financial Products, Inc. -- CA
Transamerica Foundation -- CA
Transamerica Insurance Corporation of California -- CA
Transamerica Intellitech, Inc. -- DE
Transamerica International Holdings, Inc. -- DE
Transamerica Investment Services, Inc. -- DE
Transamerica LP Holdings Corp. -- DE
Transamerica Pacific Insurance Company, Ltd. -- HI
Transamerica Real Estate Tax Service (A Division of Transamerica Corporation)
-- N/A
Transamerica Realty Services, Inc. -- DE
Transamerica Senior Properties, Inc. -- DE
TREIC Enterprises, Inc. -- DE
Transamerica Distribution Finance Corporation Transamerica Accounts Holding
Corporation -- DE Transamerica Commercial Finance Corporation -- DE
Transamerica Inventory Finance Corporation -- DE Transamerica Retail Financial
Services Corporation -- DE Transamerica Vendor Financial Services Corporation
-- DE
Transamerica Distribution Finance Corporation de Mexico
TDF de Mexico --
Transamerica Distribution Finance Corporation de Mexico and TDF de Mexico
Transamerica Corporate Services de Mexico --
Transamerica Finance Corporation
TA Leasing Holding Co., Inc. -- DE
Transamerica Commercial Finance Corporation, I -- DE
Transamerica Home Loan -- CA
Transamerica HomeFirst, Inc. -- CA
Transamerica Lending Company -- DE
Transamerica Financial Resources, Inc.
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 GmbH Inc.
Transamerica Financieringsmaatschappij B.V. -- Neth.
Transamerica GmbH - Germany -- Ger.
Transamerica Insurance Corporation of California
Arbor Life Insurance Company -- AZ
Bulkrich Trading --
Gemini Investments, Inc. --
Plaza Insurance Sales, Inc. -- CA
Transamerica Advisors, Inc. -- CA
Transamerica Annuity Service Corporation -- NM
Transamerica Financial Resources, Inc. -- DE
Transamerica International Insurance Services, Inc. -- DE
Transamerica Occidental Life Insurance Company -- CA
Transamerica Products, Inc. -- CA
Transamerica Securities Sales Corporation -- MD
Transamerica Service Company -- DE
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Company (Europe) -- MD
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Corporation, California -- CA
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Corporation, Canada -- ON
Transamerica Intellitech, Inc.
Information Service Corp. --
Transamerica International Insurance Services, Inc.
Home Loans and Finance Ltd. -- U.K.
Transamerica Inventory Finance Corporation
BWAC Seventeen, Inc. -- DE
BWAC Twenty-One, Inc. -- DE
Transamerica Commercial Finance France S.A. -- Fra.
Transamerica GmbH Inc. -- DE
Transamerica Investment Services, Inc.
Transamerica Income Shares, Inc. (managed by TA Investment Services) -- MD
Transamerica Leasing Holdings Inc.
Greybox Logistics Services Inc. -- DE
Greybox L.L.C. -- DE
Greybox Services Limited -- U.K.
Intermodal Equipment, Inc. -- DE
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.
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 Leasing Inc.
Better Asset Management Company LLC -- DE
Transamerica Leasing Holdings Inc. -- DE
Transamerica Leasing Limited
ICS Terminals (UK) Limited -- U.K.
Transamerica Life Insurance and Annuity Company
Transamerica Assurance Company -- MO
Transamerica Management, Inc.
Criterion Investment Management Company -- TX
Transamerica Occidental Life Insurance Company
NEF Investment Company -- CA
Transamerica China Investments Holdings Limited -- H.K.
Transamerica International RE (Bermuda) Ltd. -- Bmda.
Transamerica Life Insurance and Annuity Company -- NC
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.
Transamerica Products II, Inc. -- CA
Transamerica Products IV, Inc. -- CA
Transamerica Products I, Inc. -- CA
Transamerica Real Estate Tax Service
Transamerica Flood Hazard Certification (A Division of TA Real Estate Tax
Service) -- N/A Transamerica Realty Services, Inc.
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 Retail Financial Services Corporation
Transamerica Consumer Finance Holding Company -- DE
Whirlpool Financial National Bank -- DE
Transamerica Senior Properties, Inc.
Transamerica Senior Living, Inc. -- DE
Transamerica Small Business Services, Inc.
Emergent Business Capital Holdings, Inc. --
*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
Item 27. Number of Contractowners
Non-qualified: 11
Qualified: 4
Item 28. Indemnification
Transamerica Life Insurance Company of New York's ByLaws
provide in Article VIII as follows:
The Corporation shall indemnify to the fullest extent now or
hereafter provided for or permitted by law each person
involved in, or made or threatened to be made a party to, any
action suit, claim or proceeding, whether civil or criminal,
including any investigative, administrative, legislative, or
other proceeding, and including any action by or in the right
of the Corporation or any other corporation, or any
partnership, joint venture, trust, employee benefit plan, or
other enterprise (any such entity, other than the Corporation,
being hereinafter referred to as an "Enterprise"), and
including appeals therein (any such action or process being
hereinafter referred to as a "Proceeding"), by reason of the
fact that such person, such person's testator or intestate (i)
is or was a director or officer of the Corporation, or (ii) is
or was serving, at the request of the Corporation, as a
director, officer, or in any other capacity, or any other
Enterprise, against any and all judgments, amounts paid in
settlement, and expenses, including attorney's fees, actually
and reasonably incurred as a result of or in connection with
any Proceeding, except as provided in Subsection (b) below.
(b) No indemnification shall be made to or on
behalf of any such person if a judgment or other final
adjudication adverse to such person establishes that such
person's acts were committed in bad faith or were the
result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or that
such person personally gained in fact a financial profit
or other advantage to which such person was not legally
entitled. In addition, no indemnification shall be made
with respect to any Proceeding initiated by any such
person against the Corporation, or a director or officer
of the Corporation, other than to enforce the terms of
this Article VIII, unless such Proceeding was authorized
by the Board of Directors. Further, no indemnification
shall be made with respect to any settlement or compromise
of any Proceeding unless and until the Corporation has
consented to such settlement or compromise.
(c) Written notice of any Proceeding for which
indemnification may be sought by any person shall be given
to the Corporation as soon as practicable. The Corporation
shall then be permitted to participate in the defense of
any such proceeding or, unless conflicts of interest or
position exist between such person and the Corporation in
the conduct of such defense, to assume such defense. In
the event that the Corporation assumes the defense of any
such Proceeding, legal counsel selected by the Corporation
shall be reasonably acceptable to such person. After such
an assumption, the Corporation shall not be liable to such
person for any legal or other expenses subsequently
incurred unless such expenses have been expressly
authorized by the Corporation. In the event that the
Corporation participates in the defense of any such
Proceeding, such person may select counsel to represent
him in regard to such a Proceeding; however, such person
shall cooperate in good faith with any request that common
counsel be utilized by the parties to any Proceeding who
are similarly situated, unless to do so would be
inappropriate due to actual or potential differing
interests between or among such parties.
(d) In making any determination regarding any
person's entitlement to indemnification hereunder, it
shall be presumed that such person is entitled to
indemnification, and the Corporation shall have the burden
of proving the contrary.
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
Company of New York 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.
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-2; VA-2L;
VA-2NL; VA-2NLNY; VA-5; and VA-5NLNY; Transamerica
Life Insurance and Annuity Company's Separate
Accounts VL and VA-1. 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
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 100 Manhattanville Road, Purchase,
New York 10577.
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 premiums under the
policies 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
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>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Transamerica Life Insurance Company of New York certifies it meets the
requirements of Securities Act Rule 485(b) and that it has caused this N-4
Registration Statement to be signed on its behalf in the City of Los Angeles,
State of California, on the day ofApril, 1999.
SEPARATE ACCOUNT VA-6NY OF
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(REGISTRANT)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(DEPOSITOR)
----------------------------
William M. Hurst Assistant Secretary
As required by the Securities Act of 1933, this Registration Statement has been
signed below on April ___, 1999April __, 1999 by the following persons or by
their duly appointed attorney-in-fact in the capacities specified:
Signatures Titles Date
______________________* Director April ___, 1999
Nooruddin S. Veerjee, and Chairman
______________________* Director April ___, 1999
Marc C. Abrahms
______________________* Director April ___, 1999
James T. Byrne, Jr.
______________________* Director April ___, 1999
Alan T. Cunningham
______________________* Director April ___, 1999
John A. Fibiger
_____________________* Director April ___, 1999
Daniel E. Jund
______________________* Director April ___, 1999
Thomas O'Neill
______________________* Director April ___, 1999
James B. Roszak
______________________* Director April ___, 1999
Robert Rubinstein
*By:William M. Hurst On April ___, 1999 as Attorney-in-Fact pursuant to
powers of attorney filed herewith.
<PAGE>
Exhibit (10) (b) Consent of Independent Auditors.
<PAGE>
Consent of Independent Auditors
We consent to the use of our report dated January 21, 1999 with respect to the
financial statements of Transamerica Life Insurance Company of New York in
Post-Effective Amendment No. 1 under the Securities Act of 1933 and
Post-Effective Amendment No. 2 under the Investment Company Act of 1940 to the
Registration Statement (Form N-4 No. 333-47219) and related Prospectus and
Statement of Additional Information of Separate Account VA-6NY of Transamerica
Life Insurance Company of New York
/s/Ernst & Young LLP
Los Angeles, California
April 26, 1999
