As filed with the Securities and Exchange Commission on October 12, 2000.
Registration No. 333-39246
811-09977
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 2 [X]
Post Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940
Amendment No. 6 [X]
------------------------
FIRST AMERITAS VARIABLE ANNUITY SEPARATE ACCOUNT
(REGISTRANT)
FIRST AMERITAS LIFE INSURANCE CORP. of NEW YORK
(DEPOSITOR)
400 Rella Blvd., Suite 304
Suffern, New York 10901-4253
1-800-215-1096
------------------------
DONALD R. STADING
Secretary and General Counsel
First Ameritas Life Insurance Corp. of New York
5900 "O" Street
Lincoln, Nebraska 68510
(402) 467-7465
Approximate Date of Proposed Public Offering: As soon as practicable after
effective date.
TITLE OF SECURITIES BEING REGISTERED: SECURITIES OF UNIT INVESTMENT TRUST.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a) may determine.
<PAGE>
<TABLE>
<CAPTION>
OVERTURE ANNUITY III-PLUS
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
PART A
FORM N-4 ITEM HEADING IN PROSPECTUS
<S> <C> <C>
Item 1. Cover Page Cover Page
Item 2. Definitions DEFINED TERMS
Item 3. Synopsis or Highlights POLICY OVERVIEW; FEE TABLES; Advertising
Item 4. Condensed Financial Information Financial Information
Item 5. General Description of Registrant,
Depositor and Portfolio Companies
a) Depositor MISCELLANEOUS - About Our Company
b) Registrant INVESTMENT OPTIONS - Separate Account Variable
Investment Options
c) Portfolio Company INVESTMENT OPTIONS - Separate Account Variable
Investment Options
d) Prospectus Cover Page; INVESTMENT OPTIONS
e) Voting MISCELLANEOUS - Voting Rights
f) Administrator N/A
Item 6. Deductions and Expenses
a) Deductions FEE TABLES; FEES
b) Sales Load FEE TABLES; FEES - Withdrawal Charge
c) Special purchase plans FEES - Waiver of Certain Fees
d) Commissions FEES - Distribution Expenses
e) Portfolio company deductions
and expenses FEE TABLES
f) Registrant's expenses N/A
Item 7. General Description of Variable
Annuity Contracts
a) Rights IMPORTANT POLICY PROVISIONS;
MISCELLANEOUS - Voting Rights
b) Allocations, Transfers INVESTMENT OPTIONS - Transfers
c) Changes in contracts or
operations INVESTMENT OPTIONS - Separate Account Variable
Investment Options - Adding, Deleting, or Substituting
Variable Investment Options
d) Contract owner inquiries Cover Page; Table of Contents Page; Last Page
Item 8. Annuity Period
a) Level of benefits POLICY DISTRIBUTIONS - Annuity Income Phase
b) Annuity commencement date POLICY DISTRIBUTIONS - Annuity Income Phase
c) Annuity payments POLICY DISTRIBUTIONS - Annuity Income Phase
d) Assumed investment return N/A
e) Minimums POLICY DISTRIBUTIONS - Annuity Income Phase
f) Rights to change options or
transfer investment base POLICY DISTRIBUTIONS - Annuity Income Phase
Item 9. Death Benefit
a) Death benefit calculation POLICY DISTRIBUTIONS - Death Benefits
b) Forms of benefits POLICY DISTRIBUTIONS - Annuity Income Phase
Item 10. Purchases and Contract Values
a) Procedures for purchases Cover Page; IMPORTANT POLICY
PROVISIONS - Policy
Application and Issuance;
IMPORTANT POLICY PROVISIONS -
Your Policy Value
b) Accumulation unit value IMPORTANT POLICY PROVISIONS - Your Policy Value
<PAGE>
c) Calculation of accumulation unit
value IMPORTANT POLICY PROVISIONS - Your Policy Value
d) Principal underwriter MISCELLANEOUS - Distributor of the Policies
Item 11. Redemptions
a) Redemption procedures POLICY DISTRIBUTIONS - Withdrawals
b) Texas Optional Retirement
Program N/A
c) Delay IMPORTANT POLICY PROVISIONS - Delay of Payments
d) Lapse N/A
e) Revocation of rights IMPORTANT POLICY PROVISIONS - Policy Application
and Issuance
Item 12. Taxes
a) Tax consequences FEDERAL TAX MATTERS
b) Qualified plans FEDERAL TAX MATTERS
c) Impact of taxes FEDERAL TAX MATTERS
Item 13. Legal Proceedings MISCELLANEOUS - Legal Proceedings
Item 14. Table of Contents for Statement of
Additional Information Statement of Additional Information Table of Contents
PART B
FORM N-4 ITEM HEADING IN STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page.......................Cover Page
Item 16. Table of Contents................Table of Contents
Item 17. General Information and History
a) Name change/Suspended Sales...N/A
b) Attribution of Assets.........N/A
c) Control of Depositor..........General Information and History
Item 18. Services
a) Fees, expenses and costs......N/A
b) Management-related services...N/A
c) Custodian and independent public
accountant.......................Services
d) Other custodianship...........N/A
e) Administrative servicing agentN/A
f) Depositor as principal
underwriter......................N/A
Item 19. Purchase of Securities Being Offered
a) Manner of Offering............N/A
b) Sales load....................N/A
Item 20. Underwriters
a) Depositor or affiliate as principal
underwriter......................Underwriters
b)continuous offering............Underwriters
c) Underwriting commissions......Underwriters
d) Payments of underwriter.......N/A
Item 21. Calculation of Performance Data..Calculation of Performance
Item 22. Annuity Payments.................N/A
Item 23. Financial Statements
a) Registrant....................Financial Statements
b) Depositor.....................Financial Statements
</TABLE>
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK LOGO
First Ameritas Variable Annuity Separate Account
--------------------------------------------------------------------------------
PROSPECTUS: __________, 2000
OVERTURE ANNUITY III-Plus(sm)
Flexible Premium
Deferred Variable Annuity Policy
--------------------------------------------------------------------------------
This prospectus describes the Policy, especially its Separate Account. The
Policy is designed to help you, the Policy Owner, invest on a tax-deferred basis
and meet long-term financial goals. As an annuity, it also provides you with
several ways to receive regular income from your investment. An initial minimum
payment is required. Further investment is optional.
You may allocate all or part of your investment among variable investment
options (where you have the investment risk, including possible loss of
principal) with allocated indirect interests in non-publicly traded portfolios
from these series funds:
<TABLE>
<CAPTION>
Series Fund issuing the Subaccount
variable investment option
Referred to as: underlying portfolios: Portfolio Fund Advisor - Subadvisors
ALGER The Alger American Fund Fred Alger Management, Inc.
------------------- ------------------------------------ --------------------------------------
<S> <C> <C>
AMERITAS Calvert Variable Series, Inc. Ameritas Investment Corp.
PORTFOLIOS Ameritas Portfolios -Fred Alger Management, Inc. (Fred Alger)
-Calvert Asset Management Company,
Inc.(Calvert)
-Massachusetts Financial Services
Company (MFS Co.)
-State Street Global Advisors (State Street)
------------------- ------------------------------------ --------------------------------------
CALVERT SOCIAL Calvert Variable Series, Inc. Calvert Asset Managment Company, Inc.
Calvert Social Portfolios
------------------- ------------------------------------ --------------------------------------
FIDELITY Variable Insurance Products: Fidelity Management & Research
Service Class 2 Company
------------------- ------------------------------------ --------------------------------------
MFS MFS Variable Insurance Trust Massachusetts Financial Services
Company
------------------- ------------------------------------ --------------------------------------
MORGAN STANLEY Universal Institutional Funds, Inc. Morgan Stanley Asset Management
------------------- ------------------------------------ --------------------------------------
</TABLE>
or you may allocate all or part of your investment to a Fixed Account fixed
interest rate option (where we have the investment risk and guarantee a certain
return on your investment).
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. It
provides information you should consider before investing in a Policy.
Prospectuses for the portfolios underlying the Subaccount variable investment
option are available without charge from your sales representative or from our
Service Center.
A Statement of Additional Information and other information about us and the
Policy, with the same date as this prospectus, is on file with the Securities
and Exchange Commission ("SEC") and is incorporated into this prospectus by
reference. For a free copy, access it on the SEC's Web site
(WWW.SEC.GOV/EDAUX/PROSPECT.HTM, and type in "First Ameritas"), or write or call
us. The Table of Contents for the Statement of Additional Information is on the
last page of this prospectus.
THE SEC DOES NOT PASS UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND HAS
NOT APPROVED OR DISAPPROVED THE POLICY. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NOT FDIC INSURED o MAY LOSE VALUE o NO BANK GUARANTEE
--------------------------------------------------------------------------------
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK (WE, US, OUR)
DIRECT APPLICATION & RELATED QUESTIONS TO US AT: 400 RELLA BLVD, #304,
SUFFERN, NY 10901. 1-877-380-1586 DIRECT ALL ELSE TO US AT: SERVICE CENTER,
P.O. BOX 82550, LINCOLN, NEBRASKA 68501. 1-800-745-1112.
www.newyork.ameritas.com
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS BEGIN ON PAGE
----------------------------------------------------------------------------------------------------------
CONTACTING US. To answer your DEFINED TERMS 3
questions or to send additional POLICY OVERVIEW 4
premium, contact your sales FEE TABLES 6
representative or write or call us at: FINANCIAL INFORMATION 9
IMPORTANT POLICY PROVISIONS 9
POLICY APPLICATION AND ISSUANCE
First Ameritas Life YOUR POLICY VALUE
Insurance Corp. of New York TELEPHONE TRANSACTIONS
Service Center DELAY OF PAYMENTS
P.O. Box 82550 BENEFICIARY
Lincoln, Nebraska 68501 MINOR OWNER OR BENEFICIARY
or POLICY CHANGES
Policy Termination
5900 "O" Street Optional Features
Lincoln, Nebraska 68510 INVESTMENT OPTIONS 14
Telephone: 1-800-745-1112 Separate Account Variable Investment Options
Fax: 1-800-745-6153 Fixed Account Fixed Interest Rate Option
www.first.ameritas.com Transfers
Third-Party Services
Express mail packages should be sent to Systematic Transfer Programs: Dollar Cost Averaging,
our street address, not our P.O. Box Portfolio Rebalancing, Earnings Sweep
address. FEES 18
WITHDRAWAL CHARGE
INITIAL APPLICATION and questions regarding MORTALITY AND EXPENSE RISK CHARGE
it should be directed to us at: ADMINISTRATIVE FEES
ADMINISTRATIVE EXPENSE FEE, ANNUAL POLICY FEE
400 Rella Blvd, # 304 TRANSFER FEE
Suffern, NY 10901 TAX CHARGES
Telephone: 1-877-380-1586 FEES CHARGED BY THE PORTFOLIOS
Fax: OPTIONAL FEATURES' FEES
POLICY DISTRIBUTIONS 20
SENDING FORMS, WRITTEN NOTICE WITHDRAWALS
AND WRITTEN REQUESTS IN "GOOD LOANS (403B PLANS ONLY)
ORDER." If you are writing to change DEATH BENEFITS
your beneficiary, request a withdrawal ANNUITY INCOME PHASE
or for any other purpose, contact us or FEDERAL TAX MATTERS 25
your sales representative to learn what TAXATION OF NONQUALIFIED POLICIES
information is required for the request TAXATION OF QUALIFIED POLICIES
to be in "good order." We can only act POSSIBLE TAX LAW CHANGES
upon requests that are received in good MISCELLANEOUS 28
order. ABOUT OUR COMPANY
DISTRIBUTION OF THE POLICIES
REMEMBER, THE CORRECT FORM is important VOTING RIGHTS
for us to accurately process your Policy DISTRIBUTION OF MATERIALS
elections and changes. Many can be found ADVERTISING
on our website "on-line services" site. LEGAL PROCEEDINGS
Or, call us at our toll-free number and APPENDIX A: VARIABLE INVESTMENT OPTION PORTFOLIOS A:1
we'll send you the form you need. APPENDIX B: TAX-QUALIFIED PLAN DISCLOSURES B:1
THANK YOU. IF YOU HAVE QUESTIONS, ... Last Page
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
</TABLE>
FALIC Overture Annuity III-Plus
- 2 -
<PAGE>
DEFINED TERMS
--------------------------------------------------------------------------------
ACCUMULATION UNITS are an accounting unit of measure used to calculate the
Policy value allocated to Subaccounts of the Separate Account. It is similar to
a share of a mutual fund. The Policy describes how Accumulation Units are
calculated.
ANNUITANT is the person on whose life annuity payments involving life
contingencies are based and who receives Policy annuity payments.
ANNUITY DATE is the date annuity income payouts are scheduled to begin. This
date is identified on the Policy Schedule page of your Policy. You may change
this date, as permitted by the Policy and described in this prospectus.
BENEFICIARY(IES)
OWNER'S BENEFICIARY(IES) is the person(s) or legal entity who becomes the
Policy Owner upon the Owner's death and who receives the death benefit payable
upon the Owner's death prior to the Annuity Date. If none is named, those
benefits are paid to the Owner's estate.
ANNUITANT'S BENEFICIARY(IES) is the person(s) or legal entity who receives
the death benefit payable upon the Annuitant's death.
If either an Owner or Annuitant's Beneficiary is named in the application,
but not both, we presume you intend that person(s) or entity to serve both
roles.
BUSINESS DAY is each day that the New York Stock Exchange is open for trading.
CASH SURRENDER VALUE is the Policy value less applicable withdrawal charge,
Policy fee, outstanding loans, and any premium tax charge not previously
deducted.
OWNER, YOU, YOUR is you -- the person(s) or legal entity who may exercise all
rights and privileges under the Policy. If there are joint Owners, the
signatures of both Owners are needed to exercise rights under the Policy.
POLICY YEAR/MONTH/ANNIVERSARY are measured from respective anniversary dates of
the date of issue of this Policy.
SUBACCOUNT is a division within the Separate Account for which Accumulation
Units are separately maintained. Each Subaccount corresponds to a single
underlying non-publicly traded portfolio issued through a series fund.
WE, US, OUR, FIRST AMERITAS, FALIC - First Ameritas Life Insurance Corp. of New
York.
WRITTEN NOTICE OR REQUEST -- Written notice, signed by you, on a form approved
by or acceptable to us, that gives us the information we require and is received
at FALIC, Service Center, P.O. Box 82550, Lincoln, NE 68501 (or 5900 "O" Street,
Lincoln, NE 68510), fax 1-800-745-6153. Call us if you have questions about what
form or information is required.
--------------------------------------------------------------------------------
THIS PROSPECTUS MAY ONLY BE USED TO OFFER THE POLICY WHERE THE POLICY MAY
LAWFULLY BE SOLD. THE POLICY, AND CERTAIN FEATURES DESCRIBED IN THIS
PROSPECTUS, MAY NOT BE AVAILABLE IN ALL STATES.
IF YOUR POLICY IS ISSUED AS PART OF A QUALIFIED PLAN UNDER THE INTERNAL REVENUE
CODE, REFER TO ANY PLAN DOCUMENTS AND DISCLOSURES FOR INFORMATION ABOUT HOW SOME
OF THE BENEFITS AND RIGHTS OF THE POLICY MAY BE AFFECTED.
NO ONE IS AUTHORIZED
TO GIVE INFORMATION OR MAKE ANY REPRESENTATION ABOUT THE POLICY
THAT IS NOT IN THIS PROSPECTUS.
IF ANYONE DOES SO, YOU SHOULD NOT RELY UPON IT AS BEING ACCURATE OR ADEQUATE.
FALIC Overture Annuity III-Plus
- 3 -
<PAGE>
POLICY OVERVIEW
--------------------------------------------------------------------------------
THE FOLLOWING IS INTENDED AS A SUMMARY. PLEASE READ EACH SECTION OF THIS
PROSPECTUS FOR ADDITIONAL DETAIL.
The OVERTURE ANNUITY III-PLUS POLICY is a variable annuity savings
vehicle offering a variety of investment options to help meet long-term
financial goals. It is available from us in New York only. Associated charges
are discussed in this prospectus' FEE TABLES and FEES sections. You can allocate
your premiums among a wide spectrum of Separate Account variable investment
options or to a Fixed Account fixed interest rate option. On the Separate
Account variable investment options you may gain or lose money on your
investment. On the Fixed Account option, we guarantee you will earn a fixed rate
of interest. The investment options are described on this prospectus' cover and
the INVESTMENT OPTIONS section.
A significant advantage of the Policy is that it provides the ability to
accumulate capital on a tax- deferred basis. The purchase of a Policy to fund a
tax- qualified retirement account does not provide any additional tax deferred
treatment beyond the treatment provided by the tax-qualified retirement plan
itself. However, the Policy does provide benefits such as lifetime income
payments, family protection through death benefits and guaranteed fees.
|_| COMPARISON TO OTHER POLICIES AND
INVESTMENTS
COMPARED TO FIXED ANNUITIES. The Policy is like a fixed annuity in most
ways except for its variable investment features. The Policy is different from
fixed- interest annuities in that, to the extent you select Separate Account
variable investment options, your Policy value will reflect the investment
experience of the selected variable investment options, so you have both the
investment risk (including possible loss of principal) and opportunity, not us.
COMPARED TO MUTUAL FUNDS. Although the Separate Account variable
investment options' underlying portfolios operate like publicly traded mutual
funds and have the same investment risks, in many ways the Policy differs from
publicly traded mutual fund investments. Unlike publicly traded mutual funds,
the Policy has these features:
o Accumulates capital on a tax-deferred basis.
o A guaranteed minimum return on your investment (if you choose a Fixed
Account option).
o Can provide annuity payments for the rest of your life or for some other
period.
o Provides a death benefit that could be higher than the value of the Policy.
o Federal income tax liability on any earnings generally is deferred until
you receive a distribution from the Policy.
o You can transfer money from one underlying investment portfolio to another
without tax liability.
o Dividends and capital gains distributed by the variable investment options'
underlying portfolios are automatically reinvested and are reflected in the
portfolio's value.
o Insurance-related charges not associated with direct mutual fund
investments are deducted from the value of the Policy.
o Withdrawals before age 59 1/2generally are subject to a 10% federal tax
penalty. Also, Policy earnings that would be treated as capital gains in a
mutual fund are treated as ordinary income when distributed, although
taxation of them is deferred until such earnings are distributed. Taxable
earnings are considered to be paid out first followed by the return of your
premiums.
o Withdrawals can result in a withdrawal charge.
o You have a short time period to review your Policy and cancel it for a
return of premium paid. The terms of this "right to examine" period vary by
state (see the cover of your Policy).
o We, not you, own the shares of the variable investment option's underlying
portfolios. You have interests in the Separate Account Subaccounts that
invest in the underlying portfolios that you select.
|_| TAX-QUALIFIED PLANS
The Policy can be used to fund a tax-qualified plan such as an IRA or
Roth IRA (including for rollovers from tax-sheltered annuities), SEP, or SIMPLE
IRA, etc. This Prospectus generally addresses the terms that affect a non-tax-
qualified annuity. If your Policy funds a tax-qualified plan, read the Qualified
Plan Disclosures in this prospectus' APPENDIX B to see how they might change
your Policy rights and requirements. Contact us if you have questions about the
use of the Policy in these or other tax-qualified plans.
FALIC Overture Annuity III-Plus
- 4 -
<PAGE>
|_| POLICY OPERATION & FEATURES
PREMIUMS.
o Minimum initial premium: $2,000.
o Minimum additional premium is $500, or $50 per month if by monthly electronic
funds transfer.
o No additional premiums will be accepted after the earlier of the Annuity Date
or the Annuitant's 85th birthday without our approval.
INVESTMENT OPTIONS.
o Variable investment option allocations are invested in Subaccounts of the
Separate Account, which in turn invest in corresponding underlying
portfolios. Fixed Account allocations are invested in our general account and
we guarantee a fixed rate of interest.
o You may transfer between investments, subject to limits. Dollar cost
averaging, portfolio rebalancing and earnings sweep systematic investment
programs are available.
DEDUCTIONS FROM ASSETS.
(SEE FEE TABLES ON NEXT PAGES.)
Deductions from entire Policy value:
o Generally, premium taxes, if any. (Some states levy this tax when premium is
paid.)
o Policy fee, if any.
o Withdrawal charge, if any.
o Charges for selected optional features.
Deductions from Separate Account assets only:
o Mortality and expense risk charge.
o Administrative expense charge.
o Underlying portfolio investment advisory fees and operating expenses.
WITHDRAWALS.
o Withdrawal charges may apply to withdrawals under the base Policy in excess
of the "free" withdrawal limits. After a premium is made, withdrawal charges
apply for 7 years.
o Each withdrawal must be at least $250.
ANNUITY INCOME.
o Several fixed annuity income options are available.
--------------------------
Premiums to
Your Policy
--------------------------
---------------------------------------------------
First Ameritas Life Insurance Corp. of New York
---------------------------------------------------
---------------------------------------------------
Investment Options
---------------------------------------------------
Fixed First Ameritas Variable Annuity
Separate Account
Account
POLICY VALUE Variable Investment Options
RECEIVES A POLICY VALUE MAY VARY DAILY DEPENDING UPON
GUARANTEED THE INVESTMENT PERFORMANCE OF THE UNDERLYING
FIXED INTEREST PORTFOLIOS.
RATE.
------------
The Subaccounts
-----------------------------------
A B Etc.
----------- ----------- -----------
Underlying Underlying Etc.
Portfolio A Portfolio B
----------- ----------- -----------
--------------------------------
Fees (DEDUCTIONS FROM ASSETS)
--------------------------------
-------------- ------------- --------------
Withdrawals Death Annuity
Benefit Income
Options
-------------- ------------- --------------
DEATH BENEFIT.
o A standard death benefit is paid upon the death of the Annuitant. For an
additional charge, an optional feature guaranteed minimum death benefit is
available.
OPTIONAL FEATURES.
o Optional features available are listed in this prospectus' IMPORTANT POLICY
PROVISIONS section. Most can only be elected at Policy issue and only if you
and the Annuitant are then not older than age 70.
FALIC Overture Annuity III-Plus
- 5 -
<PAGE>
|_| POLICY PHASES
The Policy is a deferred annuity: it has an accumulation (or deferral)
phase and an annuity income phase.
ACCUMULATION PHASE. During the accumulation phase, any earnings that you
leave in the Policy are not taxed. During this phase you can invest additional
money into the Policy, transfer amounts among the investment options, and
withdraw some or all of the value of your Policy. Some restrictions may apply to
transfers (especially to transfers out of the Fixed Account). Withdrawals may be
subject to a withdrawal charge, income tax and a penalty tax.
ANNUITY INCOME PHASE. The accumulation phase ends and the annuity income
phase begins on a date you select or the later of the fifth Policy Anniversary
or Anniversary nearest the annuitant's 85th birthday. During the annuity income
phase, we will make periodic payments to the Annuitant, unless you specify
otherwise. You can select payments that are guaranteed to last for the
Annuitant's entire life or for some other period. Some or all of each payment
will be taxable.
FEE TABLES (> = Base Policy Fee; x = Optional Feature Fee)
--------------------------------------------------------------------------------
The following charts show the fees that may affect your Policy value. The
fees shown do not reflect any premium tax that may apply.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
> = Base Policy Fees. Fee
<S> <C>
---------------------------------------------------------------------------------------------
TRANSACTION FEES
---------------------------------------------------------------------------------------------
> WITHDRAWAL CHARGE
(as a % of each premium withdrawn) Years since receipt of premium
---------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8+
------------------------------------------------------------------------------------
> Base Policy 7-Year Withdrawal 6% 6% 6% 5% 4% 3% 2% 0%
Charge
---------------------------------------------------------------------------------------------
> TRANSFER FEE (per > first 15 transfers per year $0
transfer) > over 15 transfers in one Policy Year, $10
we may charge ...
---------------------------------------------------------------------------------------------
ANNUAL POLICY FEE (Waived if Policy value is at least $50,000. Guaranteed maximum fee is
$40)
----------------------------------------------------------------------------------------------
> Current Base Policy Fee $36
----------------------------------------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES
(deducted daily from assets allocated to the Separate Account Subaccounts to equal
the annual % shown )
----------------------------------------------------------------------------------------------
> MORTALITY & EXPENSE RISK CHARGE 1.25%
----------------------------------------------------------------------------------------------
> ADMINISTRATIVE EXPENSE FEE 0.15%
----------------------------------------------------------------------------------------------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES (deducted daily from assets allocated to the Separate
Account Subaccounts to equal the annual % shown )
----------------------------------------------------------------------------------------------
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 1.40%
----------------------------------------------------------------------------------------------
------------------------------------------------------------------------------- --------------
x = Optional Feature Fees. Fee
------------------------------------------------------------------------------- --------------
OPTIONAL FEATURE FEE
(deducted monthly from Policy value to equal the annual % shown )
----------------------------------------------------------------------------------------------
x OPTIONAL "PERIODIC STEP-UP" GUARANTEED MINIMUM DEATH BENEFIT
x Period is one year. 0.25%
</TABLE>
--------------------------------------------------------------------------------
SUBACCOUNT UNDERLYING PORTFOLIO ANNUAL EXPENSES
--------------------------------------------------------------------------------
The following chart shows the expenses charged in the year 1999 by each
Subaccount underlying portfolio before each fund provided us with the daily net
asset value. We then deduct applicable Separate Account charges from the net
asset value in calculating the unit value of the corresponding Subaccount. The
management fees and other expenses are more fully described in the prospectus
for each underlying portfolio. Information relating to the underlying portfolios
was provided by the underlying portfolios and was not independently verified by
us.
FALIC Overture Annuity III-Plus
- 6 -
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Waivers Total
Management 12b-1 Other Total and after
Fees Fees Fees Fund Reductions waivers and
o Subaccount's underlying Fees reductions,
Portfolio Name if any
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALGER
o Alger American Balanced 0.75% - 0.18% 0.93% - 0.93%
o Alger American Leveraged AllCap 0.85% - 0.08% 0.93% - 0.93%
AMERITAS PORTFOLIOS (SUBADVISOR)
o Ameritas Growth (FRED ALGER) 0.80% - 0.10% 0.90% 0.09% 0.81%
o Ameritas Income & Growth
(FRED ALGER) 0.68% - 0.12% 0.79% 0.09% 0.70%
o Ameritas MidCap Growth
(FRED ALGER) 0.85% - 0.12% 0.97% 0.11% 0.86%
o Ameritas Small Capitalization
(FRED ALGER) 0.90% - 0.10% 1.00% 0.08% 0.92%
o Ameritas Money Market (CALVERT) 0.25% - 0.08% 0.33% 0.05% 0.28%
o Ameritas Emerging Growth (MFS CO.)0.80% - 0.18% 0.98% 0.11% 0.87%
o Ameritas Growth With Income
(MFS CO.) 0.80% - 0.46% 1.26% 0.36% 0.90%
o Ameritas Research (MFS CO.) 0.80% - 0.62% 1.42% 0.54% 0.88%
o Ameritas Index 500 (STATE STREET) 0.29% - 0.11% 0.40% 0.10% 0.30%
CALVERT SOCIAL
o CVS Social Balanced 0.70% - 0.19%(1) 0.89% - 0.89%
o CVS Social International Equity 1.10% - 0.50%(1) 1.60%(2) - 1.60%
o CVS Social Mid Cap Growth 0.90% - 0.21%(1) 1.11% - 1.11%
o CVS Social Small Cap Growth 1.00% - 0.58%(1) 1.58% - 1.58%
FIDELITY (SERVICE CLASS 2)
o VIP Asset Manager 0.53% 0.25% 0.11% 0.89% - 0.89%(3)
o VIP Asset Manager: Growth 0.58% 0.25% 0.15% 0.98% - 0.98%(3)
o VIP Contrafund 0.58% 0.25% 0.12% 0.95% - 0.95%(3)
o VIP Equity-Income 0.48% 0.25% 0.10% 0.83% - 0.83%(3)
o VIP Growth 0.58% 0.25% 0.10% 0.93% - 0.93%(3)
o VIP High Income 0.58% 0.25% 0.12% 0.95% - 0.95%
o VIP Investment Grade Bond 0.43% 0.25% 0.14% 0.82% - 0.82%
o VIP Overseas 0.73% 0.25% 0.18% 1.16% - 1.16%(3)
MFS
o Global Governments 0.75% - 0.30%(5) 1.05% 0.14% 0.91%(6)
o New Discovery 0.90% - 1.59%(5) 2.49% 1.42% 1.07%(6)
o Utilities 0.75% - 0.16%(5) 0.91% - 0.91%
MORGAN STANLEY
o Emerging Markets Equity 1.25% - 2.62% 2.62% 0.83% 1.79%(7)
o Global Equity 0.80% - 1.48% 1.48% 0.33% 1.15%(7)
o International Magnum 0.80% - 1.67% 1.67% 0.51% 1.16%(7)
o U.S. Real Estate 0.80% - 1.90% 1.90% 0.80% 1.10%(7)
</TABLE>
(1) "Other Fees" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly would be as follows:
CVS Social Balanced 0.86%
CVS Social International Equity 1.50%
CVS Social Mid Cap Growth 1.02%
CVS Social Small Cap Growth 1.15%
(2) Total expenses reflect expenses expected to be incurred in 2000, resulting
from a change in 1999 to the administrative services agreement, as approved
by the shareholders.
(3) A portion of the brokerage commissions that certain Funds pay was used to
reduce Fund expenses. Also, through arrangements with certain Fund
custodians, credits realized as a result of uninvested cash balances were
used to reduce a portion of each applicable Fund's expenses. After
reductions, total operating expenses would have been:
VIP Asset Manager: Service Class 2 0.88%
VIP Asset Manager: Growth: Service Class 20.97%
VIP Contrafund: Service Class 2 0.92%
VIP Equity-Income: Service Class 2 0.82%
VIP Growth: Service Class 2 0.91%
VIP Overseas: Service Class2 1.13%
(4) Fred Alger Management, Inc. agreed to reimburse the portfolios to the
extent that the aggregate annual expenses (excluding interest, taxes, fees
for brokerage services and extraordinary expenses) exceed, respectively:
Alger American Balanced, 1.25%, and Alger American Leveraged AllCap, 1.50%.
Included in "Other Fees" of Leveraged AllCap is 0.01% of interest expense.
(5) Each MFS portfolio has an expense offset arrangement which reduces the
portfolio's custodian fee based upon the amount of cash maintained by the
portfolio with its custodian and dividend disbursing agent. Each portfolio
may enter into other such arrangements and directed brokerage arrangements
(which would also have the effect of reducing the portfolio's expenses).
"Other Fees" do not take into account these expense reductions and are
therefore higher than the actual expenses of the portfolio. Had these
reductions been taken into account, "Total (reflecting waivers and/or
reimbursements, if any)" would be lower: 0.90% for MFS Utilities and MFS
Global Governments funds and 1.05% for MFS New Discovery fund.
(6) MFS contractually agreed, subject to reimbursement, to bear expenses for the
MFS Global Governments and MFS New Discovery funds such that the each
portfolio's "Other Fees" (after taking into account the expense offset
arrangement described at (4), above) do not exceed 0.15% of the average
daily net assets of the portfolio during the current fiscal year. MFS
Utilities portfolio has no such limitation. These contracted fee
arrangements will continue until at least May 1, 2001, unless changed with
the consent of the board of trustees which oversees the portfolio.
FALIC Overture Annuity III-Plus
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<PAGE>
(7) The portfolio's investment adviser has voluntarily agreed to reduce its
management fee and/or reimburse each portfolio so that total annual
operating expenses for each portfolio will not exceed:
Emerging Markets Equity 1.75%
Global Equity 1.15%
International Magnum fund 1.15%
U.S. Real Estate fund 1.10%
The investment adviser reserves the right to terminate any waiver and/or
reimbursement at any time and without notice.
In determining the actual amount of voluntary management fee waiver and/or
expense reimbursement for a portfolio, if any, certain investment related
expenses, such as foreign country tax expense and interest expense on
borrowing are excluded from annual operating expenses. If these expenses
were incurred, the portfolio's total expenses after voluntary fee waivers
and/or expense reimbursements could exceed the expense ratios shown above.
For the year ended December 31, 1999, after giving effect to the above
voluntary management fee waiver and/or expense reimbursement, the total
expenses for each portfolio, including certain investment related expenses,
were as stated in the table.
Expense reimbursement agreements are expected to continue in future years but
may be terminated at any time. As long as the expense limitations continue for a
portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return.
We may receive administrative fees from the investment advisers of certain
portfolios. We currently do not assess a separate charge against our Separate
Account or Fixed Account for any income taxes. We may, however, make such a
charge in the future if income or gains within the Separate Account will incur
any income tax liability, or if tax treatment of us changes.
EXAMPLES. The following chart shows the overall expenses you would pay under
an average Policy with a Policy value of $30,000 under certain assumptions if
you elected every optional feature to the Policy (the optional guaranteed
minimum death benefit feature) and we charged our guaranteed maximum fee for
each feature (instead of any lower current fees being charged). In total, these
examples assume maximum charges of 1.40% Separate Account annual expenses, 0.25%
of other Policy value annual expenses for optional features, a $40 Policy fee,
plus the underlying portfolio 1999 expenses. If you select no optional features,
your expenses could be less than shown. If our current fees are less than the
guaranteed maximum fees, your expenses could also be less than shown. If your
Policy size is less than $30,000 or the underlying portfolio expenses are
greater, your expenses could be greater than shown. The examples assume that the
fee waiver and expense reimbursement limits set forth in the chart above will be
received, but do not reflect any premium tax charge since New York does
currently levy one on Policy premium. The example amounts are illustrative only,
and should not be considered a representation of past or future expenses. Your
actual expenses may be greater or less than those shown in the chart.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
An Owner would pay the
following expenses on a 1. 2. 3.
$1,000 investment, assuming Surrender Policy at Annuitize Policy at Policy is not
a 5% annual return on assets end of the time the end of the time surrendered and is
if: period. ($) period. ($) not annuitized. ($)
----------------------------------------------------------------------------------------------
Variable Investment Option 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALGER
Alger American Balanced $85 $136 $169 $275 $85 $76 $129 $275 $25 $76 $129 $275
Alger American Leveraged
AllCap $85 $136 $169 $275 $85 $76 $129 $275 $25 $76 $129 $275
AMERITAS PORTFOLIOS
(subadvisor)
Ameritas Growth (Fred Alger) $83 $132 $163 $263 $83 $72 $123 $263 $23 $72 $123 $263
Ameritas Income & Growth
(Fred Alger) $82 $129 $158 $252 $82 $69 $118 $252 $22 $69 $118 $252
Ameritas MidCap Growth (Fred
Alger) $84 $134 $166 $268 $84 $74 $126 $268 $24 $74 $126 $268
Ameritas Small
Capitalization (Fred Alger) $85 $135 $169 $274 $85 $75 $129 $274 $25 $75 $129 $274
Ameritas Money Market
(Calvert) $78 $116 $136 $208 $78 $56 $96 $208 $18 $56 $96 $208
Ameritas Emerging Growth
(MFS Co.) $84 $134 $166 $269 $84 $74 $126 $269 $24 $74 $126 $269
Ameritas Growth With Income
(MFS Co.) $84 $135 $168 $272 $84 $75 $128 $272 $24 $75 $128 $272
Ameritas Research (MFS Co.) $84 $134 $167 $270 $84 $74 $127 $270 $24 $74 $127 $270
Ameritas Index 500 (State
Street) $78 $117 $137 $210 $78 $57 $97 $210 $18 $57 $97 $210
CALVERT SOCIAL
CVS Social Balanced $84 $134 $167 $271 $84 $74 $127 $271 $24 $74 $127 $271
CVS Social International
Equity $91 $156 $202 $340 $91 $96 $162 $340 $31 $96 $162 $340
CVS Social Mid Cap Growth $86 $141 $178 $293 $86 $81 $138 $293 $26 $81 $138 $293
CVS Social Small Cap Growth $91 $155 $201 $338 $91 $95 $161 $338 $31 $95 $161 $338
FALIC Overture Annuity III-Plus
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<PAGE>
----------------------------------------------------------------------------------------------
An Owner would pay the
following expenses on a 1. 2. 3.
$1,000 investment, assuming Surrender Policy at Annuitize Policy at Policy is not
a 5% annual return on assets end of the time the end of the time surrendered and is
if: period. ($) period. ($) not annuitized. ($)
----------------------------------------------------------------------------------------------
Variable Investment Option 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr 1 Yr 3 Yr 5 Yr 10 Yr
----------------------------------------------------------------------------------------------
FIDELITY (Service Class 2)
VIP Asset Manager $84 $134 $167 $271 $84 $74 $127 $271 $24 $74 $127 $271
VIP Asset Manager: Growth $85 $137 $172 $280 $85 $77 $132 $280 $25 $77 $132 $280
VIP Contrafund $85 $136 $170 $277 $85 $76 $130 $277 $25 $76 $130 $277
VIP Equity-Income $84 $133 $164 $265 $84 $73 $124 $265 $24 $73 $124 $265
VIP Growth $85 $136 $169 $275 $85 $76 $129 $275 $25 $76 $129 $275
VIP High Income $85 $136 $170 $277 $85 $76 $130 $277 $25 $76 $130 $277
VIP Investment Grade Bond $84 $132 $164 $264 $84 $72 $124 $264 $24 $72 $124 $264
VIP Overseas $87 $143 $181 $298 $87 $83 $141 $298 $27 $83 $141 $298
MFS
Global Governments $84 $135 $168 $273 $84 $75 $128 $273 $24 $75 $128 $273
New Discovery $86 $140 $176 $289 $86 $80 $136 $289 $26 $80 $136 $289
Utilities $84 $135 $168 $273 $84 $75 $128 $273 $24 $75 $128 $273
MORGAN STANLEY
Emerging Markets Equity $93 $161 $212 $358 $93 $101 $172 $358 $33 $101 $172 $358
Global Equity $87 $142 $180 $297 $87 $82 $140 $297 $27 $82 $140 $297
International Magnum $87 $143 $181 $298 $87 $83 $141 $298 $27 $83 $141 $298
U.S. Real Estate $86 $141 $178 $292 $86 $81 $138 $292 $26 $81 $138 $292
----------------------------------------------------------------------------------------------
</TABLE>
THESE EXAMPLES REFLECT SEPARATE ACCOUNT AND 1999 UNDERLYING PORTFOLIO
EXPENSES. THE $40 GUARANTEED MAXIMUM ANNUAL POLICY FEE IS REFLECTED AS A DAILY
0.13% CHARGE IN THESE EXAMPLES, BASED ON AN AVERAGE POLICY VALUE OF $30,000.
The Fee Tables are designed to help you understand the various costs and
expenses that a Policy Owner will bear directly or indirectly. For more
information, read this prospectus' FEES section and the prospectus for each
Subaccount's underlying portfolio.
FINANCIAL INFORMATION
--------------------------------------------------------------------------------
We provide Accumulation Unit value history for each of the Separate
Account variable investment options. However, since this Policy's Separate
Account variable investment options just commenced operation on the effective
date of this prospectus, there is no history to report. Future updated Policy
prospectuses will disclose this information. Financial statements of our company
are included in the Statement of Additional Information; to learn how to get a
copy, see the front or back page of this prospectus.
IMPORTANT POLICY PROVISIONS (X = OPTIONAL FEATURE)
--------------------------------------------------------------------------------
The OVERTURE ANNUITY III-PLUS Policy is a flexible premium deferred
variable annuity policy. The Policy allows you to save and invest your assets on
a tax-deferred basis. A feature of the Policy distinguishing it from non-annuity
investments is its ability to guarantee annuity payments to you for as long as
the Annuitant lives or for some other period you select. In addition, if the
Annuitant dies before those payments begin, the Policy will pay a death benefit
to the Annuitant's Beneficiary. Many key rights and benefits under the Policy
are summarized in this prospectus; however, you must refer to the Policy itself
for the actual terms of the Policy. You may obtain a copy of the Policy from us.
The Policy can be purchased as a tax-qualified or nonqualified annuity. The
Policy remains in force until surrendered for its Cash Surrender Value, or all
proceeds have been paid under an annuity income option or as a death benefit.
FALIC Overture Annuity III-Plus
- 9 -
<PAGE>
|_| POLICY APPLICATION AND ISSUANCE
REPLACING AN EXISTING ANNUITY
POLICY IS NOT ALWAYS YOUR BEST
CHOICE. EVALUATE ANY
REPLACEMENT CAREFULLY.
To purchase a Policy, you must submit an application and a minimum
initial premium. A Policy usually will be issued only if you and the Annuitant
are age 0 through 85, nearest birthday. We reserve the right to reject any
application or premium for any reason.
If your application is in good order upon receipt, we will credit your
initial net premium to the Policy value in accordance with the "right to
examine" rules in your state within two Business Days after the later of the
date we receive your application or your premium. If the application is
incomplete or otherwise not in good order, we will contact you within five
Business Days to explain the delay; at that time we will refund your initial
premium unless you consent to our retaining it to apply it to your Policy once
all Policy issuance requirements are met.
The Policy Date is the date two days after we receive your application
and initial premium. It is the date used to determine Policy Anniversaries and
Policy Years. No Policy will be dated on or after the 29th day of a month.
You can purchase a tax-qualified Policy in connection with a in
connection with a number of arrangements, including Section 401(a) pension or
profit-sharing plans, or an IRA, Roth IRA, SIMPLE IRA, SEP, 403(b) (TSAs), and
457 deferred compensation plans, subject to certain limitations. See this
prospectus' FEDERAL TAX MATTERS section for details. Call us if to see if the
Policy may be issued as part of other kinds of plans or arrangements.
o APPLICATION IN GOOD ORDER
All application questions must be answered, but particularly note these
requirements:
o The Owner's and the Annuitant's full name, Social Security
number, and date of birth must be included.
o Be certain you identify both an Owner's Beneficiary and an
Annuitant's Beneficiary, as they have different rights under the
Policy, and failure to name an Owner's Beneficiary will cause any
death benefit payable upon the Owner's death to be paid to the
Owner's estate.
o Your premium allocations must be completed, be in whole
percentages, and total 100%.
o Initial premium must meet minimum premium requirements.
o Your signature and your agent's signature must be on the
application.
o Identify the type of plan, whether it is nonqualified or, if
qualified, the type of qualified plan.
o City, state and date application was signed must be completed.
o If you have one, give us your e-mail address to facilitate
receiving updated Policy information by internet delivery.
o There may be forms in addition to the application required by law
or regulation, especially when a qualified plan or replacement is
involved.
o Your agent must be both properly licensed and appointed with us.
o PREMIUM REQUIREMENTS
Your premium checks should be made payable to "First Ameritas Life
Insurance Corp. of New York." We may postpone crediting any payment made by
check to your Policy value until the check has been honored by your bank.
Payment by certified check, banker's draft, or cashier's check will be promptly
applied. Under our electronic fund transfer program, you may select a monthly
payment schedule for us to automatically deduct premiums from your bank account
or other sources. Total premiums for all annuities held with us for the same
Annuitant may not exceed $1 million without our consent.
INITIAL PREMIUM
o The only premium required. All others are optional.
o Must be at least $2,000. We have the right to change these premium
requirements, and to accept a smaller initial premium if payments are
established as part of a regularly billed program (electronic funds
transfer, payroll deduction, etc.) or as part of a tax-qualified plan.
ADDITIONAL PREMIUMS
o Must be at least $500; $50 if payments are established as part of a
regularly billed program (electronic funds transfer, payroll deduction,
etc.) or a tax-qualified plan. We have the right to change these
premium requirements.
o Will not be accepted, without our approval, on or after the later of
(i) the Policy Anniversary following your or the Annuitant's 85th
birthday or (ii) the Annuity Date.
FALIC Overture Annuity III-Plus
- 10 -
<PAGE>
o ALLOCATING YOUR PREMIUMS
You must allocate your premiums among the variable investment options or
the Fixed Account fixed interest rate option. Initial allocations in your Policy
application will be used for additional premiums until you change your
allocation. If you do not specify any allocation, we will not accept your
premium.
o Allocations must be in whole percentages, and total 100%.
o You may change your allocation by sending us Written Notice or through
an authorized telephone transaction. The change will apply to premiums
received on or after the date we receive your Written Notice or
authorized telephone transaction.
o All premiums will be allocated pursuant to your instructions on record
with us, except your initial premium and any additional premiums
received during your Policy's "right to examine" period may be subject
to special requirements.
"RIGHT TO EXAMINE" PERIOD ALLOCATIONS
RETURN OF VALUE STATE. Because New York permits us to refund your Policy
value upon your cancellation of the Policy during the "right to examine" period,
we will allocate your initial premium to your selected variable investment
options on the date of issue of the Policy.
|_| YOUR POLICY VALUE
On your Policy's date of issue, the Policy value equals the initial
premium less any charge for applicable premium taxes. On any Business Day
thereafter, the Policy value equals the sum of the values in the Separate
Account variable investment options and the Fixed Account. The Policy value is
expected to change from day to day, reflecting the expenses and investment
experience of the selected variable investment options (and interest earned in
the Fixed Account options) as well as the deductions for fees under the Policy.
o SEPARATE ACCOUNT VALUE
Premiums or transfers allocated to Subaccounts are accounted for in
Accumulation Units. The Policy value held in the Separate Account Subaccounts on
any Business Day is determined by multiplying each Subaccount's Accumulation
Unit value by the number of Subaccount units allocated to the Policy. Each
Subaccount's Accumulation Unit value is calculated at the end of each Business
Day as follows:
(a) the net asset value of the Subaccount's underlying portfolio as of the
end of the current Business Day plus any dividend or capital gain
distribution declared and unpaid by the underlying portfolio during
that Business Day, times the number of shares held by the Subaccount,
before the purchase or redemption of any shares on that date; minus
(b) the daily administrative expense fee; minus
(c) the daily mortality and expense risk charge; and this result divided
by
(d) the total number of Accumulation Units held in the Subaccount on the
Business Day before the purchase or redemption of any Accumulation
Units on that day.
When transactions are made to or from a Subaccount, the actual dollar
amounts are converted to Accumulation Units. The number of Accumulation Units
for a transaction is found by dividing the dollar amount of the transaction by
the Accumulation Unit value on the Business Day the transaction is made.
o FIXED ACCOUNT VALUE
The Policy value of the Fixed Account (the fixed interest rate
investment option) on any Business Day equals:
(a) the Policy value of the Fixed Account at the end of the preceding
Policy month; plus
(b) any net premiums credited since the end of the previous Policy month;
plus
(c) any transfers from the Subaccounts credited to the Fixed Account since
the end of the previous Policy month; minus
(d) any transfers and transfer fee from the Fixed Account to the
Subaccounts since the end of the previous Policy month; minus
(e) any partial withdrawal and withdrawal charge taken from the Fixed
Account since the end of the previous Policy month; minus
(f) the Fixed Account's share of the annual Policy fee on the Policy
Anniversary, plus
(g) interest credited on the Fixed Account balance.
FALIC Overture Annuity III-Plus
- 11 -
<PAGE>
|_| TELEPHONE TRANSACTIONS
TELEPHONE TRANSACTIONS PERMITTED
o Transfers.
o Establish systematic transfer programs.
o Change of premium allocations.
HOW TO AUTHORIZE TELEPHONE TRANSACTIONS
o Upon your authorization on the Policy application
or in Written Notice to us, you, your registered representative or a third
person named by you may do telephone transactions on your behalf. You bear
the risk of the accuracy of any designated person's instructions to us.
TELEPHONE TRANSACTION RULES:
o Must be received by close of the New York Stock Exchange ("NYSE") (usually 3
p.m. Central Time); if later, the transaction will be processed the next day
the NYSE is open.
o will be recorded for your protection.
o For security, you or your authorized designee must
provide your Social Security number and/or other
identification information.
o May be discontinued at any time as to some or all Owners.
We are not liable for following telephone transaction instruction we reasonably
believe to be genuine.
|_| DELAY OF PAYMENTS
We will usually pay any amounts from the Separate Account requested as a
partial withdrawal or cash surrender within 7 days after we receive your Written
Notice. We can postpone such payments or any transfers out of a Subaccount if:
(i) the NYSE is closed for other than customary weekend and holiday closings;
(ii) trading on the NYSE is restricted; (iii) an emergency exists as determined
by the SEC, as a result of which it is not reasonably practical to dispose of
securities, or not reasonably practical to determine the value of the net assets
of the Separate Account; or (iv) the SEC permits delay for the protection of
security holders. The applicable rules of the SEC will govern as to whether the
conditions in (iii) or (iv) exist.
We may defer payments of partial withdrawals or a cash surrender from
the Fixed Account for up to 6 months from the date we receive your Written
Notice.
|_| BENEFICIARY
You may change Policy beneficiary(ies) (Owner's Beneficiary and
Annuitant's Beneficiary) by sending Written Notice to us, unless the named
beneficiary is irrevocable. Once we record and acknowledge the change, it is
effective as of the date you signed the Written Notice. The change will not
apply to any payments made or other action taken by us before recording. If the
named beneficiary is irrevocable you may change the named beneficiary only by
Written Notice signed by both you and the beneficiary. If more than one named
beneficiary is designated, and you fail to specify their interest, they will
share equally.
If there are joint Owners, the surviving joint Owner will be deemed the
Owner's Beneficiary, and the Owner's Beneficiary named in the Policy application
or subsequently changed will be deemed the contingent Owner's Beneficiary. If
both joint Owners die simultaneously and, any death benefit payable because of
an Owner's death will be paid to the contingent Owner's Beneficiary.
If the Owner's Beneficiary is your surviving spouse, the spouse may
elect either to receive the death benefit payable upon your death, in which case
the Policy will terminate, or to continue the Policy in force with the spouse as
Owner.
If there is no named Owner's Beneficiary or Annuitant's Beneficiary, an
either dies before you, then you or your estate is the Beneficiary until you
name a new Beneficiary. If you have either a named Annuitant's Beneficiary or
Owner's Beneficiary, but not both, we will presume you intend the named
person(s) or legal entity to serve both beneficiary roles.
The Owner's Beneficiary assumes ownership of the Policy upon the Owner's
death, and also then receives distribution of Policy assets pursuant to federal
tax requirements. The Annuitant's Beneficiary receives the death benefit payable
upon the Annuitant's death.
FALIC Overture Annuity III-Plus
- 12 -
<PAGE>
|_| MINOR OWNER OR BENEFICIARY
A minor may not own the Policy solely in the minor's name and cannot
receive payments directly as a Policy beneficiary. Contrary to common belief, in
most states parental status does NOT automatically give parents the power to
provide an adequate release to us to make beneficiary payments to the parent for
the minor's benefit. A minor can "own" a Policy through the trustee of a trust
established for the minor's benefit, or through the minor's named and court
appointed guardian, who owns the Policy in his or her capacity as trustee or
guardian. Where a minor is a named beneficiary, we are able to pay the minor's
beneficiary payments to the minor's trustee or guardian. Some states allow us to
make such payments up to a limited amount directly to parents. Parents seeking
to have a minor's interest made payable to them for the minor's benefit are
encouraged to check with their local court to determine the process to be
appointed as the minor's guardian; it is often a very simple process that can be
accomplished without the assistance of an attorney. If there is no adult
representative able to give us an adequate release for payment of the minor's
beneficiary interest, we will retain the minor's interest on deposit until the
minor attains the age of majority.
|_| POLICY CHANGES
Any change to your Policy is only effective if on a form acceptable to
us, and then only once it is received at our Service Office and recorded on our
records. Information on how to contact us to determine what information is
needed and where you can get various forms for Policy changes is shown on this
Prospectus' first two pages and last page.
|_| POLICY TERMINATION
We may treat any partial withdrawal that leaves a Policy value of less
than $1,000 as a complete surrender of the Policy. See this prospectus' POLICY
DISTRIBUTIONS: WITHDRAWALS section for more information.
If you have paid no premiums during the previous 36-month period, we
have the right to pay you the total value of your Policy in a lump sum and
cancel the Policy if (i) the Policy value is less than $1,000 (does not apply to
IRAs), or (ii) the paid-up life-time income annuity benefit at maturity, based
on an accumulation of the Policy value to maturity, would be less than $20 per
month. We will not impose a withdrawal charge on involuntary terminations.
|_| X OPTIONAL FEATURES
This Policy allows you the opportunity to select, and pay for an
optional feature. This optional feature is currently only available at Policy
issue, and is only available if you and the Annuitant are then not older than
age 70. The optional feature is principally described in the prospectus section
noted below:
OPTIONAL FEATURE PROSPECTUS SECTION WHERE IT IS COVERED
X Optional Guaranteed Minimum
Death Benefit features POLICY DISTRIBUTIONS: Death Benefits
Charges for the optional feature are shown in this prospectus' FEE TABLES
section.
FALIC Overture Annuity III-Plus
- 13 -
<PAGE>
INVESTMENT OPTIONS
--------------------------------------------------------------------------------
THE VALUE OF YOUR POLICY WILL GO UP OR DOWN BASED ON THE INVESTMENT PERFORMANCE
OF THE VARIABLE INVESTMENT OPTIONS YOU CHOOSE. The investment results of each
variable investment option are likely to differ significantly, and vary over
time. They do not earn a fixed interest rate. Please consider carefully, and on
a continuing basis, which investment options best suit your long-term investment
objectives and risk tolerance.
We recognize you have very personal goals and investment strategies. The
Policy allows you to choose from a wide array of investment options - each
chosen for its potential to meet specific investment objectives.
You may allocate all or a part of your premiums among 30 Separate Account
variable investment options or the Fixed Account fixed interest rate option.
Allocations must be in whole percentages and total 100%. The variable
investment options, which invest in underlying portfolios, are listed and
described in APPENDIX A to this prospectus.
|_| SEPARATE ACCOUNT VARIABLE INVESTMENT OPTIONS (ALSO SEE APPENDIX A)
THE UNDERLYING PORTFOLIOS IN THE SEPARATE ACCOUNT ARE NOT PUBLICLY TRADED
MUTUAL FUNDS, AND ARE NOT THE SAME AS OTHER PUBLICLY TRADED MUTUAL FUNDS WITH
VERY SIMILAR OR NEARLY IDENTICAL NAMES. They are only available as separate
account subaccount investment options in life insurance policies or variable
annuity policies issued by insurance companies, or in some cases, through
participation in certain qualified pension or retirement plans.
Even if the investment objectives and policies of some underlying portfolios
available under the Policy may be very similar to the investment objectives and
policies of publicly traded mutual funds that are or may be managed by the same
investment adviser or manager, the investment performance and results of the
portfolios available under the Policy may vary significantly from the investment
results of such other publicly traded mutual funds.
You should read the prospectuses for the underlying portfolios together with
this Policy prospectus for more information.
The Separate Account provides you with variable investment options in the
form of underlying portfolio investments. Each underlying portfolio is an
open-end investment management company. When you allocate investments to an
underlying portfolio, those investments are placed in a Subaccount of the
Separate Account corresponding to that portfolio, and the Subaccount in turn
invests in the portfolio. The Policy value of your Policy depends directly on
the investment performance of the portfolios that you select.
The Separate Account is registered with the SEC as a unit investment trust.
However, the SEC does not supervise the management or the investment practices
or policies of the Separate Account or First Ameritas. The Separate Account was
established as a separate investment account of First Ameritas under New York
law on March 21, 2000. Under New York law, we own the Separate Account assets,
but they are held separately from our other assets and are not charged with any
liability or credited with any gain of business unrelated to the Separate
Account. Any and all distributions made by the underlying portfolios, with
respect to the shares held by the Separate Account, will be reinvested in
additional shares at net asset value. We are responsible to you for meeting the
obligations of the Policy, but we do not guarantee the investment performance of
any of the variable investment options' underlying portfolios. We do not make
any representations about their future performance.
YOU BEAR THE RISK THAT THE VARIABLE INVESTMENT OPTIONS YOU SELECT MAY
FAIL TO MEET THEIR OBJECTIVES, THAT THEY COULD GO DOWN IN VALUE,
AND THAT YOU COULD LOSE PRINCIPAL.
Each Subaccount underlying portfolio operates as a separate investment fund,
and the income or losses of one generally has no effect on the investment
performance of any other. Complete descriptions of each variable investment
option's investment objectives and restrictions and other material information
related to an investment in the variable investment option are contained in the
prospectuses for each of the series funds which accompany this prospectus.
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o ADDING, DELETING, OR SUBSTITUTING VARIABLE INVESTMENT OPTIONS
We do not control the Subaccounts' underlying portfolios, so we cannot
guarantee that any of the portfolios will always be available. We retain the
right to change the investments of the Separate Account, and to eliminate the
shares of any Subaccount underlying portfolio and substitute shares of another
series fund portfolio. If the shares of the underlying portfolio are no longer
available for investment or if, in our judgment, investment in the portfolio
would be inappropriate in view of the purposes of the Separate Account, we will
first notify you and receive any necessary SEC and state approval before making
such a change.
New Separate Account underlying portfolios may be added, or existing
funds eliminated, when, in our sole discretion, conditions warrant a change. If
a portfolio is eliminated, we will ask you to reallocate any amount in the
eliminated portfolio. If you do not reallocate these amounts, we will
automatically reinvest them in the Ameritas Money Market portfolio.
If we make a portfolio substitution or change, we may change the Policy
to reflect the substitution or change. Our Separate Account may be (i) operated
as an investment management company or any other form permitted by law, (ii)
deregistered with the SEC if registration is no longer required, or (iii)
combined with one or more other separate accounts. To the extent permitted by
law, we also may transfer assets of the Separate Account to other accounts.
|_| FIXED ACCOUNT FIXED INTEREST RATE OPTION
ALL AMOUNTS ALLOCATED TO THE FIXED ACCOUNT BECOME ASSETS OF OUR GENERAL ACCOUNT.
INTEREST IN THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED WITHE THE SEC AND IS NOT
SUBJECT TO SEC REGULATION, NOR IS THE GENERAL ACCOUNT REGISTERED AS AN
INVESTMENT COMPANY WITH THE SEC. THEREFOR, SEC STAFF HAVE NOT REVIEWED THE FIXED
ACCOUNT DISCLOSURES IN THIS PROSPECTUS.
There is one fixed interest rate option ("Fixed Account"), where we bear
the investment risk. We guarantee that you will earn a minimum interest rate
that will yield at least 3% per year, compounded annually. We may declare a
higher current interest rate. Whatever interest rate we declare will be
guaranteed for the Policy Year. However, you bear the risk that we will not
credit more interest than will yield the minimum guaranteed rate per year for
the life of the Policy. We have sole discretion over how assets allocated to the
Fixed Account are invested, and we bear the risk that those assets will perform
better or worse than the amount of interest we have declared. The focus of this
prospectus is to disclose the Separate Account aspects of the Policy. For
additional details regarding the Fixed Account, read the Policy.
|_| TRANSFERS
The Policy is designed for long-term investment, not for use with
professional "market timing" services or use with programmed, large or frequent
transfers. Excessive transfers could harm other Policy Owners by having a
detrimental effect on investment portfolio management. We reserve the right to
reject any specific premium allocation or transfer request, if in the judgment
of a Subaccount portfolio fund advisor, a Subaccount portfolio would be unable
to invest effectively in accordance with its investment objectives and policies,
or if Policy owners would otherwise potentially be adversely affected.
Subject to restrictions during the "right to examine period" and prior
to the Annuity Date, you may transfer Policy value from one Subaccount to
another, from the Separate Account to the Fixed Account, or from the Fixed
Account to any Subaccount, subject to these rules:
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TRANSFER RULES:
o A transfer is considered any single request to move assets from one or
more Subaccounts or the Fixed Account to one or more of the other
Subaccounts or the Fixed Account.
o We must receive notice of the transfer- either Written Notice, an
authorized telephone transaction, or by internet when available.
o The transferred amount must be at least $250, or the entire Subaccount
or Fixed Account value if it is less. (If the value remaining after a
transfer will be less the $250 in a Subaccount or $100 in the Fixed
Account, we will include that amount as part of the transfer.)
- If the Dollar Cost Averaging systematic transfer program is used,
then the minimum transfer amount out of a Subaccount or the Fixed
Account is the lesser of $100 or the balance in the Subaccount or
Fixed Account. Under this program, the maximum amount that may be
transferred from the Fixed Account each month is 1/36th of the
value of the Fixed Account at the time the Dollar Cost Averaging
program is established. While a Dollar Cost Averaging program is
in effect, elective transfers out of the Fixed Account are
prohibited.
- The Portfolio Rebalancing and Earnings Sweep systematic transfer
programs have no minimum transfer limits.
o The first 15 transfers each Policy Year from one investment option to
another are free. Thereafter, transfers may result in a $10 charge for
each transfer. This fee is deducted on a pro-rata basis from balances
in all Subaccounts and the Fixed Account, so is not subtracted from the
amount of the transfer. Transfers under any systematic transfer program
DO count toward the 15 free transfer limit.
o A transfer from the Fixed Account (except made pursuant to a
systematic transfer program):
- may be made only once each Policy Year;
- may be delayed up to six months;
- is limited during any Policy Year to the greater of:
- 25% of the Fixed account value on the date of the initial
transfer during that year;
- the greatest amount of any similar transfer out of the Fixed
Account during the previous 13 months; or
- $1,000.
o We reserve the right to limit transfers, or to modify transfer
privileges, and we reserve the right to change the transfer rules at
any time.
o If the Policy value in any Subaccount falls below $250, we may
transfer the remaining balance, without charge, to the Ameritas Money
Market portfolio.
|_| THIRD-PARTY SERVICES
Where permitted and subject to our rules, we may accept your
authorization to have a third party (such as your sales representative or
someone else you name) exercise transfers or investment allocations on your
behalf. Third-party transfers and allocations are subject to the same rules as
all other transfers and allocations. You can make this election on the
application or by sending us Written Notice. Please note that any person or
entity you authorize to make transfers or allocations on your behalf, including
any investment advisory, asset allocation, money management or timing service,
does so independently from any agency relationship they may have with us for the
sale of the Policies. They are accountable to you alone for such transfers or
allocations. We are not responsible for such transfers or allocations on your
behalf, or recommendations to you, by such third-party services. You should be
aware that fees charged by such third-party services for their service are
separate from and in addition to fees paid under the Policy.
|_| SYSTEMATIC TRANSFER PROGRAMS
Systematic Transfer Programs are intended to result in the purchase of more
Accumulation Units when a portfolio's value is low, and fewer units when its
value is high. However, there is no guarantee that such a program will result in
a higher Policy value, protect against a loss, or otherwise be successful.
O DOLLAR COST AVERAGING PROGRAM
Dollar Cost Averaging allows you to automatically transfer, on a periodic
basis, a set dollar amount or percentage from the Ameritas Money Market
Subaccount or the Fixed Account to any other Subaccount(s) or the Fixed Account.
Requested percentages are converted to a dollar amount. You can begin Dollar
Cost Averaging when you purchase the Policy or later. You can increase or
decrease the amount or percentage of transfers or discontinue the program at any
time.
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DOLLAR COST AVERAGING RULES:
o There is no additional charge for the Dollar Cost Averaging program.
o We must receive notice of your election and any changed instruction -
either Written Notice, by telephone transaction instruction, or by
internet when available.
o Automatic transfers can only occur monthly.
o The minimum transfer amount out of the Ameritas Money Market portfolio
or the Fixed Account is the lesser of $250 or the balance in the
Subaccount or Fixed Account. Under this program, the maximum amount
that may be transferred from the Fixed Account each month is 1/36th of
the Fixed Account value at the time Dollar Cost Averaging is
established. While a Dollar Cost Averaging program is in effect,
elective transfers out of the Fixed Account are prohibited. There is no
maximum transfer amount limitation applicable to any of the
Subaccounts.
o Dollar Cost Averaging program transfers cannot begin before the end of
a Policy's "right to examine" period.
o You may specify that transfers be made on the 1st through the 28th day
of the month. Transfers will be made on the date you specify (or if
that is not a Business Day, then on the next Business Day). If you do
not select a date, the program will begin on the next Policy month
anniversary following the date the Policy's "right to examine" period
ends.
o You can limit the number of transfers to be made, in which case the
program will end when that number has been made. Otherwise, the program
will terminate when the amount remaining in the Ameritas Money Market
portfolio or the Fixed Account is less than $100.
The Dollar Cost Averaging program does not protect against a loss and
may not achieve your investment goal.
O PORTFOLIO REBALANCING PROGRAM
The Portfolio Rebalancing program allows you to rebalance your Policy
value among designated Subaccounts only as you instruct. You may change your
rebalancing allocation instructions at any time. Any change will be effective
when the next rebalancing occurs.
PORTFOLIO REBALANCING PROGRAM RULES:
o There is no additional charge for the Portfolio Rebalancing program.
o The Fixed Account is excluded from this program.
o You must request the rebalancing program, give us your rebalancing
instructions, or request to end this program either by Written Notice,
by telephone transaction instruction, or by internet when available.
o You may have rebalancing occur quarterly, semi-annually or annually.
The Portfolio Rebalancing program does not protect against a loss and
may not achieve your investment goal.
O EARNINGS SWEEP PROGRAM
The Earnings Sweep program allows you to rebalance earnings from your
Subaccounts among designated investment options (Subaccounts or the Fixed
Account), either based on your original Policy allocation of premiums or
pursuant to new allocation instructions. You may change your Earnings Sweep
program rebalancing allocation instructions at any time. Any change will be
effective when the next rebalancing occurs.
EARNINGS SWEEP PROGRAM RULES:
o There is no additional charge for the Earnings Sweep program.
o The Fixed Account is included in this program.
o You must request the Earnings Sweep program, give us your rebalancing
instructions, or request to end this program either by Written Notice,
by telephone transaction instruction, or by internet when available.
o You may have your earnings rebalanced quarterly, semi-annually or
annually.
The Earnings Sweep program does not protect against a loss and may not
achieve your investment goal.
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FEES (> = BASE POLICY FEE; X = OPTIONAL FEATURE FEE)
--------------------------------------------------------------------------------
The following repeats and adds to information provided in the FEE TABLES
section. Please review both prospectus sections for information on fees.
|_| WITHDRAWAL CHARGE
YEARS SINCE RECEIPT OF PREMIUM
(% OF EACH PREMIUM WITHDRAWN) 1 2 3 4 5 6 7 8+
> Base Policy 7-Year Withdrawal Charge 6% 6% 6% 5% 4% 3% 2% 0%
We will deduct a withdrawal charge from Policy value upon a full
surrender or partial withdrawal that exceeds the "free" withdrawal amount, and
also from any Policy value paid out due to the Owner's death while withdrawal
charges apply. (The "free" withdrawal feature and amount is described in this
prospectus' POLICY DISTRIBUTIONS section.) A withdrawal charge will not be
deducted on the date annuity income payments begin from amounts applied to
provide annuity payments. This charge partially covers our distribution costs,
including commissions and other promotional costs. Any deficiency is met from
our general account, including amounts derived from the mortality and expense
risk charge.
The amount of a partial withdrawal you request plus any withdrawal
charge is deducted from the Policy value on the date we receive your withdrawal
request. Partial withdrawals (including any charge) are deducted from the
Subaccounts and the Fixed Account on a pro rata basis, unless you instruct us
otherwise. Policy value is withdrawn by considering earnings to be withdrawn
before any premium is withdrawn; this means that there may be no withdrawal
charge if the amount of the withdrawal is less than or equal to earnings plus
premiums received at least "x" years prior to the withdrawal and not considered
having been previously withdrawn, where "x" is the number of years in the
withdrawal charge period. When premium is withdrawn, the oldest premium is
considered to be withdrawn first, the next oldest premium is considered to be
withdrawn next, and so on (a "first-in, first-out" basis).
|_| MORTALITY AND EXPENSE RISK CHARGE
-> We impose a daily fee to compensate us for the mortality and expense
risks we have under the Policy. This fee is equal to an annual rate of 1.25% of
the value of the net assets in the Separate Account. This fee is reflected in
the Accumulation Unit values for each Subaccount.
Our MORTALITY RISK arises from our obligation to make annuity payments
and to pay death benefits prior to the Annuity Date. The mortality risk we
assume is that annuitants will live longer than we project, so our cost in
making annuity payments will be higher than projected. However, an Annuitant's
own longevity, or improvement in general life expectancy, will not affect the
periodic annuity payments we pay under your Policy. Another mortality risk we
assume is that at your death the death benefit we pay will greater than the
Policy value.
Our EXPENSE RISK is that our costs to administer your Policy will exceed
the amount we collect through administrative charges.
If the mortality and expense risk charge does not cover our costs, we
bear the loss, not you. If the charge exceeds our costs, the excess is our
profit. If the withdrawal charge does not cover our Policy distribution costs,
the deficiency is met from our general account assets, which may include
amounts, if any, derived from this mortality and expense risk charge.
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|_| ADMINISTRATIVE FEES
Administrative fees help us cover our cost to administer your Policy.
ADMINISTRATIVE EXPENSE FEE
> This fee is equal to an annual rate of 0.15% of the value of the net
assets in the Separate Account. This fee is reflected in the Accumulation Unit
values for each Subaccount.
ANNUAL POLICY FEE
> Currently $36. We reserve the right to charge an annual Policy fee
not to exceed $40.
Any Policy Fee is deducted from your Policy value on the last Business
Day of each Policy Year and upon a complete surrender. This fee is levied by
canceling Accumulation Units. It is deducted from each Subaccount in the same
proportion that the value in each Subaccount bears to the total Policy value in
the Separate Account. We currently waive any Policy Fee if the Policy value is
at least $50,000.
|_| TRANSFER FEE
> The first 15 transfers per Policy Year from Subaccounts or the Fixed
Account are free. A transfer fee of $10 may be imposed for any transfer in
excess of 15 per Policy Year. The transfer fee is deducted pro rata from each
Subaccount (and, if applicable, the Fixed Account) in which the Owner is
invested.
|_| TAX CHARGES
New York currently does not level any premium tax on annuity policies.
No charges are currently made for taxes other than premium taxes. We reserve the
right to levy charges in the future for taxes or other costs resulting from
taxes that we determine are properly attributable to the Separate Account.
|_| FEES CHARGED BY THE PORTFOLIOS
> Each Subaccount's underlying portfolio has investment advisory fees
and expenses. They are set forth in this prospectus' FEE TABLE section and
described in more detail in each fund's prospectus. A portfolio's fees and
expenses are not deducted from your Policy value. Instead, they are reflected in
the daily value of portfolio shares which, in turn, will affect the daily
Accumulation Unit value of the Subaccounts. These fees and expenses help to pay
the portfolio's investment adviser and operating expenses.
|_| OPTIONAL FEATURE'S FEES
X The optional feature is principally described in the prospectus
section noted below:
OPTIONAL FEATURE PROSPECTUS SECTION WHERE IT IS COVERED
X Optional Guaranteed Minimum
Death Benefit features POLICY DISTRIBUTIONS: Death Benefits Charges for the
optional feature are shown in this prospectus' FEE TABLES section.
------------------------
WAIVER OF CERTAIN FEES
When the Policy is sold in a manner that results in savings of sales or
administrative expenses, we reserve the right to waive all or part of any fee we
charge (excluding fees charged by the portfolios) under the Policy. Factors we
consider include one or more of the following: size and type of group to whom
the Policy is issued; amount of expected premiums; relationship with us
(employee of us or an affiliated company, receiving distributions or making
transfers from other policies we or one of our affiliates issue or transferring
amounts held under qualified retirement plans we or one of our affiliates
sponsor); type and frequency of administrative and sales services provided; or
level of annual maintenance fee and withdrawal charges. In an exchange of
another policy we or an affiliated company issued and where the withdrawal
charge has been waived, the withdrawal charge for this Policy may be determined
based on the dates premiums were received in the prior policy.
Any fee waiver will not be discriminatory and will be done according to
our rules in effect at the time the Policy is issued. We reserve the right to
change these rules. The right to waive any fees may be subject to state
approval.
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POLICY DISTRIBUTIONS ( X = OPTIONAL FEATURE)
--------------------------------------------------------------------------------
There are several ways to take all or part of your investment out of
your Policy, both before and after the Annuity Date. Tax penalties and
withdrawal charges may apply to amounts taken out of your Policy before the
Annuity Date. Your Policy also provides a death benefit (including, for an
additional charge, an optional feature guaranteed minimum death benefit) that
may be paid upon your death prior to the Annuity Date. All or part of a death
benefit may be taxable.
|_| WITHDRAWALS
Withdrawals may be subject to:
- Income Tax
- Penalty Tax
- Withdrawal Charge Even so called "free" withdrawals may be subject to
the tax charges.
You may withdraw, by Written Notice, all or part of your Policy's Cash
Surrender Value prior to the Annuity Date. Amounts withdrawn (except for"free"
partial withdrawals, described below) are subject to a withdrawal charge.
Following a full surrender of the Policy, or at any time the Policy value is
zero, all your rights in the Policy end. Total surrender requires you to return
your Policy to us.
Earnings are deemed to be withdrawn before any premium; this means that
there may be no withdrawal charge if the amount of
the withdrawal is less than or equal to earnings plus premiums received at least
"x" years prior to the withdrawal and not considered having been previously
withdrawn, where "x" is the number of years in the withdrawal charge period.
There also may be no withdrawal charge if the amount withdrawn is less than the
"free" withdrawal amount permitted under the Policy. Of premium considered
withdrawn, the oldest premium is considered withdrawn first, the next oldest
premium is considered withdrawn next, and so on (a "first-in, first-out"
procedure).
WITHDRAWAL RULES
o Withdrawals must be by Written Notice. A request for a systematic
withdrawal plan must be on our form and must specify a date for the
first payment, which must be at least 30 days after we receive the
form.
o Minimum withdrawal is $250 from any investment option.
o We may treat any partial withdrawal that leaves a Policy value of less
than $1,000 as a complete surrender of the Policy.
o Withdrawal results in cancellation of Accumulation Units from each
applicable Subaccount and deduction of Policy value from any Fixed
Account option in the ratio that the value of each such investment
option bears to the Policy value (i.e., pro rata from each applicable
investment option). If you do not specify which investment option(s) to
take the withdrawal from, it will be taken from each investment option
in the proportion that the Policy value in each investment option bears
to the total Policy value.
o The total amount paid to you upon total surrender of the Policy
(taking any prior partial withdrawals into account) may be less than
the total premiums made, because a withdrawal charge or premium tax
charge may apply to withdrawals, and because you bear the investment
risk for all amounts you allocate to the Separate Account.
o Unless you give us Written Notice not to withhold taxes from a
withdrawal, we must withhold 10% of the taxable amount withdrawn to be
paid as a federal tax, as well as any amounts required by state laws to
be withheld for state income taxes.
o SYSTEMATIC WITHDRAWAL PLAN
The systematic withdrawal plan allows you to automatically withdraw
payments of a pre-determined dollar amount or fixed percentage of Policy value
from a specified investment option monthly, quarterly, semi-annually or
annually. We can support and encourage your use of electronic fund transfer of
systematic withdrawal plan payments to an account of yours that you specify to
us. The fixed dollar amount of systematic withdrawals may be calculated in
support of Internal Revenue Service minimum distribution requirements over the
lifetime of the Annuitant. No systematic withdrawal may be established after the
28th of each month. Although this plan mimics annuity payments, each
distribution is a withdrawal that may be taxable and subject to the charges and
expenses described above; you may wish to consult a tax advisor before
requesting this plan.
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o "FREE" WITHDRAWAL FEATURE
Each Policy Year, you may withdraw up to the greater of Policy earnings
or 10% of your Policy value without deduction of a withdrawal charge. The 10%
amount is determined when the first withdrawal is made that Policy Year.
Additional premiums contributed later in that Policy year are not included in
determining the 10% amount. If you do not withdraw the 10% amount in a Policy
Year, you may NOT carry forward the unused "free" withdrawal amount into the
next Policy Year.
|_| LOANS (403B PLANS ONLY)
Loans are only available if your Policy is a Tax Sheltered Annuity
(sometimes called a "TSA" or "403(b) plan") under federal tax law and your
Policy value is at least $5,000. We do not charge any loan fee. These Owners can
take loans from the Policy value beginning one year after the Policy is issued
up to the Annuity Date, and cannot take out more than one loan each Policy year.
Loans are subject to the terms of the Policy, the plan, and federal tax law. We
reserve the right to modify the terms of a loan to comply with changes in
applicable law, or to reject any loan request if we believe it may violate the
terms of the plan or applicable law. (We are not responsible for compliance of a
loan request with plan requirements.)
MINIMUM AND MAXIMUM LOAN AMOUNTS
MINIMUM - $2,500. Each loan must individually satisfy this minimum
amount.
MAXIMUM - We will calculate the maximum nontaxable loan amount based
upon information provided by the plan participant or the employer. Loans may be
taxable if a participant has additional loans from other plans. The total of all
your outstanding TSA loans must not exceed the lesser of (i) $50,000 reduced by
the highest outstanding balance owned during the previous 12 months, or (ii) 50%
of your Policy value.
HOW LOANS ARE PROCESSED
All loans are made from our general account. We transfer Policy value to
our general account as security for the loan. The transfer is made in proportion
to assets in and among the Subaccounts and in the Fixed Account, unless you give
us different allocation instructions. No withdrawal charge is levied upon Policy
value transfers related to loan processing. We are usually able to process a
loan request within 7 Business Days.
LOAN INTEREST
INTEREST RATE CHARGED ON LOAN BALANCE: currently 4.5% effective annual
rate; guaranteed maximum rate is 5%.
INTEREST RATE CREDITED TO LOAN BALANCE: 3%.
Specific loan terms are disclosed at the time of loan application or issuance.
LOAN REPAYMENT
Loans must be repaid within 5 years, or 20 years if the loan is used to
purchase your principal residence. Loan repayments must be identified as such;
if they aren't, we'll treat them as additional premium payments and they will
not reduce the outstanding loan. Loan repayments must be substantially level and
made at least quarterly. Loan repayments will consist of principal and interest
in amounts set forth in the loan agreement. Repayments are allocated to the
Subaccounts and Fixed Account pursuant to your then current investment option
allocation instructions. Any repayment due under the loan that is unpaid for 90
days will cause the loan balance to become immediately due without notice. The
loan will then be treated as a deemed Policy distribution and reported as income
to be taxed to the Owner.
POLICY DISTRIBUTIONS, INCLUDING ANNUITY INCOME PAYMENTS
While a loan is outstanding, any Policy distributions made, including
annuity income payments, will be reduced by the amount of the outstanding loan
plus accrued interest.
TRANSFERRING THE POLICY
We reserve the right to restrict any transfer of the Policy while a loan
is outstanding.
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|_| DEATH BENEFITS
An Annuitant's death benefit is payable upon:
- your Policy being in force;
- receipt of Due Proof of Death of the
Annuitant's death;
- election of an annuity income option; and
- proof that the Annuitant died before any
annuity payments begin.
"DUE PROOF OF DEATH" is a certified copy of a death certificate, a certified
copy of a decree of a court of competent jurisdiction as to the finding of
death, a written statement by the attending physician, or any other proof
satisfactory to us.
o ANNUITANT'S DEATH BENEFIT
We will pay the Annuitant's death benefit after we receive Due Proof of Death
of the last Annuitant's death or as soon thereafter as we have sufficient
information about the Annuitant's Beneficiary to make the payment. Death
benefits may be paid pursuant to an annuity income option to the extent allowed
by applicable law and any settlement agreement in effect at your death. If the
Annuitant's Beneficiary does not make an annuity income option election within
60 days of our receipt of Due Proof of Death, we will issue a lump-sum payment
to the Annuitant's Beneficiary.
We will deduct any applicable premium tax not previously deducted from the
death benefit payable.
STANDARD ANNUITANT'S DEATH BENEFIT
Upon the last surviving Annuitant's death before the Annuity Date, the Policy
will end, and we will pay a death benefit to the named Annuitant's Beneficiary.
The death benefit equals the largest of:
- your Policy value (without deduction of the withdrawal charge) on the
later of the date we receive Due Proof of Death or an annuity payout
option election less any charge for applicable premium taxes; or
- the sum of net premiums, less partial withdrawals.
If you, a joint Owner, or the last surviving Annuitant dies on or after
the Annuity Date and before all proceeds have been paid, no death benefit is
payable, but any remaining proceeds will be paid to the designated annuity
benefit payee based on the annuity income option in effect at the time of death.
X OPTIONAL GUARANTEED MINIMUM DEATH BENEFIT FEATURE
You may elect an optional Guaranteed Minimum Death Benefit feature, for
a charge deducted monthly from Policy value equal to an annual charge of 0.25%
of Policy value. Your election must be made when the Policy is issued, and only
if you and the Annuitant are then not older than age 70. Your election cannot be
changed or revoked. This feature ends at the Annuitant's age 85. This optional
feature provides the opportunity to enhance the Policy's death benefit if
Subaccount underlying portfolios should sharply decrease in value. See this
prospectus' FEES and FEE TABLES sections for more information on the charge for
this optional feature.
X OPTIONAL "PERIODIC STEP-UP" GUARANTEED MINIMUM DEATH BENEFIT
At Policy issue, the guaranteed minimum death benefit amount is the
amount of the initial premium. Thereafter, the guaranteed minimum death benefit
amount for a given Policy Year is equal to the greater of:
(a) the Policy value at the time Due Proof of Death for the last
surviving Annuitant is received,
(b) the sum of premiums paid less withdrawals, or
(c) the Annuitant's death benefit on the Policy Anniversary when the
most recent death benefit "step-up" occurred.
The "step-up" interval is stated in your Policy's schedule page for this
feature. For the Annuitant's attained ages 80-85, the guaranteed minimum death
benefit amount is the guaranteed minimum death benefit on the Annuitant's 80th
birthday adjusted by adding subsequent premiums paid and subtracting withdrawals
made. After the Annuitant's 85th birthday, the guaranteed minimum death benefit
is $0, so that the Annuitant's death benefit is just the standard death benefit
available under the Policy. A monthly charge from Policy value equal to an
annual charge of 0.25% is deducted for this feature.
X IRS REQUIRED DISTRIBUTION UPON DEATH OF OWNER
Upon the Owner's death, the Owner's Beneficiary becomes the new Policy
Owner and can determine how to distribute Policy value pursuant to IRS
requirements. Until a distribution election is made, the Owner's Beneficiary
controls Policy value (right to make transfers, etc.). Federal law requires that
if your Policy is tax non-qualified and you, the Owner, die before the Annuity
Date, then the entire value of your Policy must be distributed within 5 years of
your death. The 5-year rule does not apply to that portion of the proceeds which
(a) is for the benefit of an individual Owner's Beneficiary; and (b) will be
paid over the lifetime or the life expectancy of that Owner's Beneficiary as
long as payments begin not later than one year after the date of your death.
Special rules may apply to your surviving spouse. The Statement of Additional
Information has a more detailed description of these rules. Other required
distribution rules apply to tax-qualified Policies and are described in this
prospectus' APPENDIX B.
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If an Owner of the Policy is a corporation, trust or other
non-individual, we treat the primary Annuitant as an Owner for purposes of the
IRS required distribution. The "primary Annuitant" is that individual whose life
affects the timing or the amount of any death benefit paid under the Policy. A
change in the primary Annuitant will be treated as the death an Owner.
Any IRS required distributions made upon the Owner's death while
withdrawal charges apply will incur a withdrawal charge. The withdrawal charge
will be deducted from the amount of each payment made.
|_| ANNUITY INCOME PHASE
Annuity payments:
- require investments to be allocated to our
general account, so are not variable.
- may be subject to a withdrawal charge.
- may be taxable and, if premature, subject
to a tax penalty
A primary function of an annuity contract, like this Policy, is to provide
annuity payments to the Annuitant. The level of annuity payments is determined
by your Policy value, the Annuitant's sex (except where prohibited by law) and
age, and the annuity income option selected. All or part of your Policy Cash
Surrender Value may be placed under one or more annuity income option.
Annuity payments may be subject to a
withdrawal charge. A withdrawal charge is not applied on the Annuity Date.
However, the withdrawal charge does apply to Policy value placed under an
annuity income options before the first Policy anniversary.
Annuity payments must be made to individuals receiving payments on their own
behalf, unless otherwise agreed to by us. Any annuity income option is only
effective once we acknowledge it. We may require initial and ongoing proof of
the Owner's or Annuitant's age or survival. Unless you specify otherwise, the
payee is the Annuitant.
Payments under the annuity income options are FIXED ANNUITY PAYMENTS based
on a fixed rate of interest at or higher than the minimum effective annual rate
which is guaranteed to yield 3% on an annual basis. We have sole discretion
whether or not to pay a higher interest rate for annuity income options 1, 2, or
3 (see below). Current immediate annuity rates for options 4 or 5 for the same
class of annuities are used if higher than the guaranteed amounts (guaranteed
amounts are based upon the tables contained in the Policy). The guaranteed
amounts are based on the 1983 Table "a" Individual Annuity Table projected 17
years, and an interest rate which is guaranteed to yield 3% on an annual basis.
Current interest rates, and further information, may be obtained from us. The
amount of each fixed annuity payment is set and begins on the Annuity Date, and
does not change.
o WHEN ANNUITY INCOME PAYMENTS BEGIN
You select the Annuity Date by completing an election form that you can
request from us at any time. This date may not be any earlier than the fifth
Policy anniversary. If you do not specify a date, the Annuity Date will be the
later of the Policy Anniversary nearest the Annuitant's 85th birthday or the
fifth Policy Anniversary. Tax-qualified Policies may require an earlier Annuity
Date. You may change this date by sending Written Notice for our receipt at
least 30 days before the then current Annuity Date.
The longer the guaranteed or projected annuity income option period, the lower
the amount of each annuity payment.
o SELECTING AN ANNUITY INCOME OPTION
You choose the annuity income option by completing an election form that you
can request from us at any time. You may change your selection during your life
by sending Written Notice for our receipt at least 30 days before the date
annuity payments are scheduled to begin. If no selection is made by then, we
will apply the Policy Cash Surrender Value to make annuity payments under
annuity income option 4 providing lifetime income payments.
If you die before the Annuity Date (and the Policy is in force), your
beneficiary may elect to receive the death benefit under one of the annuity
income options (unless applicable law or a settlement agreement dictate
otherwise).
FALIC Overture Annuity III-Plus
- 23 -
<PAGE>
o ANNUITY INCOME OPTIONS
Once fixed annuity payments under an annuity income option begin, they
cannot be changed. (We may allow the beneficiary to transfer amounts applied
under options 1, 2 or 3 to option 4, 5 or 6 after the Annuity Date. However, we
reserve the right to discontinue this practice.) When the Annuitant or Owner
dies, we will pay any unpaid guaranteed payments to the payee's beneficiary.
Upon the last payee's death, we will pay any unpaid guaranteed payments to that
payee's estate.
NOTE: UNLESS YOU ELECT AN ANNUITY INCOME OPTION WITH A GUARANTEED PERIOD OR
OPTION 1, IT IS POSSIBLE THAT ONLY ONE ANNUITY PAYMENT WOULD BE MADE UNDER THE
ANNUITY PAYOUT OPTION IF THE ANNUITANT DIES BEFORE THE DUE DATE OF THE SECOND
ANNUITY PAYMENT, ONLY TWO ANNUITY PAYMENTS WOULD BE MADE IF THE ANNUITANT DIED
BEFORE THE DUE DATE OF THE THIRD ANNUITY PAYMENT, ETC.
Part or all of any annuity payment may be taxable as ordinary income. If, at
the time annuity payments begin, you have not given us Written Notice to not
withhold federal income taxes, we must by law withhold such taxes from the
taxable portion of each annuity payment and remit it to the Internal Revenue
Service. (Withholding is mandatory for certain tax-qualified Policies.)
We may pay your Policy proceeds to you in one sum if they are less than
$1,000, or when the annuity income option chosen would result in periodic
payments of less than $20. If any annuity payment would be or becomes less than
$20, we also have the right to change the frequency of payments to an interval
that will result in payments of at least $20. In no event will we make payments
under an annuity option less frequently than annually.
The annuity income options are:
(1) INTEREST PAYMENT. While proceeds remain on deposit, we annually credit
interest to the proceeds. The interest may be paid to the payee or added to
the amount on deposit.
(2) DESIGNATED AMOUNT ANNUITY. Proceeds are paid in monthly installments of a
specified amount over at least a 5-year period until proceeds, with
interest, have been fully paid.
(3) DESIGNATED PERIOD ANNUITY. Proceeds are paid in monthly installments for
the specified period chosen. Monthly incomes for each $1,000 of proceeds,
which include interest, are illustrated by a table in the Policy.
(4) LIFETIME INCOME ANNUITY. Proceeds are paid as monthly income during the
Annuitant's life. Variations provide for guaranteed payments for a period
of time.
(5) JOINT AND LAST SURVIVOR LIFETIME INCOME ANNUITY. Proceeds are paid as
monthly income during the joint Annuitants' lives and until the last of
them dies.
(6) LUMP SUM. Proceeds are paid in one sum.
FALIC Overture Annuity III-Plus
- 24 -
<PAGE>
FEDERAL TAX MATTERS
--------------------------------------------------------------------------------
The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax advisor. No attempt
is made to consider any applicable state tax or other tax laws, or to address
any federal estate, or state and local estate, inheritance and other tax
consequences of ownership or receipt of distributions under a Policy. This
discussion of federal income tax consideration relating to the Policy is based
upon our understanding of laws as they now exist and are currently interpreted
by the Internal Revenue Service ("IRS").
When you invest in an annuity contract, you usually do not pay taxes on
your investment gains until you withdraw the money - generally for retirement
purposes. If you invest money (generally on a pre-tax basis) in an annuity as
part of a pension or retirement plan that is subject to requirements and may
have additional benefits under the Internal Revenue Code beyond those generally
applicable to annuities (e.g., "qualified plan" such as IRAs, TSAs, and the
like), your contract is called a "Qualified Policy." Other annuities, in which
already taxed money is invested (other than as part of a qualified plan which
can accept after-tax deposits), are referred to as a "Nonqualified Policy." The
tax rules applicable to Qualified Policies vary according to the type of
retirement plan and the terms and conditions of the plan.
|_| TAXATION OF NONQUALIFIED POLICIES
If a non-natural person (e.g., a corporation or a trust) owns a
Nonqualified Policy, the taxpayer generally must include in income any increase
in the excess of the Policy value over the investment in the Policy (generally,
the premiums paid for 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 tax adviser.
THE FOLLOWING DISCUSSION GENERALLY APPLIES TO POLICIES OWNED BY NATURAL
PERSONS.
O WITHDRAWALS. When a withdrawal from a Nonqualified Policy occurs, the amount
received will be treated as ordinary income subject to tax up to an amount
equal to the excess (if any) of the Policy value immediately before the
distribution over the Owner's investment in the Policy (generally, the
premiums paid for the Policy, reduced by any amount previously distributed
from the Policy that was not subject to tax) at that time. In the case of a
surrender under a Nonqualified Policy, the amount received generally will be
taxable only to the extent it exceeds the Owner's investment in the Policy.
o PENALTY TAX ON CERTAIN WITHDRAWALS. In the case of a distribution from a
Nonqualified Policy, there may be imposed a federal tax penalty equal to 10%
of the amount treated as income. In general, however, there is no penalty on
distributions:
- made on or after the taxpayer reaches age 59 1/2;
- made on or after an Owner's death;
- attributable to the taxpayer's becoming disabled; or
- made as part of a series of substantially equal periodic payments for
the life (or life expectancy) of the taxpayer.
Other exceptions may be applicable under certain circumstances and special
rules may be applicable in connection with the exceptions enumerated above.
You should consult a tax adviser with regard to exceptions from the penalty
tax.
o ANNUITY PAYMENTS. Although tax consequences may vary depending on the payout
option elected under an annuity contract, a portion of each annuity payment is
generally not taxed and the remainder is taxed as ordinary income. The
non-taxable portion of an annuity payment is generally determined in a manner
that is designed to allow you to recover your investment in the Policy ratably
on a tax-free basis over the expected stream of annuity payments, as
determined when annuity payments start. Once your investment in the Policy has
been fully recovered, however, the full amount of each annuity payment is
subject to tax as ordinary income.
o TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from the Policy
because of your death or the death of the Annuitant. Generally, such amounts
are includible in the income of the recipient as follows: (i) if distributed
in a lump sum, they are taxed in the same manner as a surrender of the Policy,
or (ii) if distributed under an annuity income option, they are taxed in the
same way as annuity payments.
FALIC Overture Annuity III-Plus
- 25 -
<PAGE>
o TRANSFERS, ASSIGNMENT OR EXCHANGES OF A POLICY. A transfer or assignment of
ownership of the Policy, the designation of an Annuitant, the selection of
certain dates for annuity payments to begin, or the exchange of the Policy may
result in certain tax consequences to you that are not discussed here. An
Owner contemplating any such transfer, assignment, or exchange, should consult
a tax advisor as to the tax consequences.
o WITHHOLDING. Annuity distributions are generally subject to withholding for
the recipient's federal income tax liability. Recipients can generally elect,
however, not to have tax withheld from distributions.
o WITHHOLDING FOR NONRESIDENT ALIEN OWNERS. Generally, the amount of any payment
of interest to a non-resident alien of the United States shall be subject to
withholding of a tax equal to 30% of such amount or, if applicable, a lower
treaty rate. A payment may not be subject to withholding where the recipient
sufficiently establishes that such payment is effectively connected to the
recipient's conduct of a trade or business in the United States and such
payment is included in the recipient's gross income.
o MULTIPLE POLICIES. All Non-Qualified deferred annuity contracts that are
issued by us (or our affiliates) to the same Owner during any calendar year
are treated as one annuity contract for purposes of determining the amount of
gain includable in such Owner's income when a taxable distribution occurs.
o FURTHER INFORMATION. We believe that the Policy qualifies as an annuity
contract for Federal income tax purposes and the above discussion is based on
that assumption. Further details can be found in the Statement of Additional
Information under the heading "Tax Status of the Policy."
|_| TAXATION OF QUALIFIED POLICIES
The tax rules applicable to Qualified Policies vary according to the
type of retirement plan and the terms and conditions of the plan. Your rights
under a Qualified Policy may be subject to the terms of the retirement plan
itself, regardless of the terms of the Policy. Adverse tax consequences may
result if you do not ensure that contributions, distributions and other
transactions with respect to the Policy comply with the law. Also, you may wish
to consult a tax and/or financial adviser regarding the use of the Policy within
a qualified or other retirement plan, since the purchase of a Policy to fund a
tax-qualified retirement account does not provide any additional tax deferred
treatment of earning beyond the treatment provided by the tax-qualified
retirement plan itself. However, the Policy does provide benefits such as
lifetime income payments, family protection through death benefits, guaranteed
fees and asset allocation models that many retirement plans do not provide.
o INDIVIDUAL RETIREMENT ACCOUNTS (IRAs), as defined in Section 408 of the
Internal Revenue Code (Code), permit individuals to make annual contributions
of up to the lesser of $2,000 or 100% of adjusted gross income. The
contributions may be deductible in whole or in part, depending on the
individual's income. Distributions from certain pension plans may be "rolled
over" into an IRA on a tax-deferred basis without regard to these limits.
Amounts in the IRA (other than nondeductible contributions) are taxed when
distributed from the IRA. A 10% penalty tax generally applies to distributions
made before age 59 1/2, unless certain exceptions apply. The Internal Revenue
Service has not addressed in a ruling of general applicability whether a death
benefit provision such as the optional guaranteed minimum death benefit
provision(s) in the Policy comports with IRA qualification requirements.
o ROTH IRAS, as described in Code section 408A, permit certain eligible
individuals to make non-deductible contributions to a Roth IRA in cash or as a
rollover or transfer from another Roth IRA or other IRA. A rollover from or
conversion of an IRA to a Roth IRA is generally subject to tax and other
special rules apply. The Owner may wish to consult a tax adviser before
combining any converted amount with any other Roth IRA contributions,
including any other conversion amounts from other tax years. Distributions
from a Roth IRA generally are not taxed, except that, once aggregate
distributions exceed contributions to the Roth IRA income tax and a 10%
penalty tax may apply to distributions made (1) before age 59 1/2 (subject to
certain exception) or (2) during the five taxable years starting with the year
in which the first contribution is made to any Roth IRA. A 10% penalty tax may
apply to amounts attributable to a conversion from an IRA if they are
distributed during the five taxable years beginning with the year in which the
conversion was made.
FALIC Overture Annuity III-Plus
- 26 -
<PAGE>
o CORPORATE PENSION AND PROFIT-SHARING PLANS under Section 401(a) of the Code
allow corporate employers to establish various types of retirement plans for
employees, and self-employed individuals to establish qualified plans for
themselves and their employees. Adverse tax consequences to the retirement
plan, the participant, or both may result if the Policy is transferred to any
individual as a means to provide benefit payments, unless the plan complies
with all the requirements applicable to such benefits prior to transferring
the Policy. The Policy includes guaranteed minimum death benefit options that
in some cases may exceed the greater of the premiums or the Policy value. The
standard death benefit or optional guaranteed minimum death benefit could be
characterized as an incidental benefit, the amount of which is limited in any
pension or profit-sharing plan. Because the death benefit may exceed this
limitation, employers using the Policy in connection with such plans should
consult their tax adviser.
o OTHER TAX ISSUES. Qualified Policies have minimum distribution rules that
govern the timing and amount of distributions. You should refer to your
retirement plan, adoption agreement, or consult a tax advisor for more
information about these distribution rules.
Distributions from Qualified Policies generally are subject to withholding for
the Owner's Federal Income Tax liability. The withholding rate varies
according to the type of distribution and the Owner's tax status. The Owner
will be provided the opportunity to elect not to have tax withheld from
distributions.
"Eligible rollover distributions" from section 401(a) plans are subject to a
mandatory federal income tax withholding of 20%. An eligible rollover
distribution is the taxable portion of any distribution from such a plan,
except certain distributions such as distributions required by the Code or
distributions in a specified annuity form. The 20% withholding does not apply,
however, if the Owner chooses a "direct rollover" from the plan to another
tax-qualified plan or IRA.
|_| POSSIBLE TAX LAW CHANGES
Although the likelihood of legislative change is uncertain, there is
always the possibility that the tax treatment of the Policy could change by
legislation or otherwise. Consult a tax adviser with respect to legislative
developments and their effect on the Policy.
We have the right to modify the Policy in response to legislative
changes that could otherwise diminish the favorable tax treatment that annuity
contract Owners currently receive. We make no guarantee regarding the tax status
of any Policy and do not intend the above discussion as tax advice.
FALIC Overture Annuity III-Plus
- 27 -
<PAGE>
MISCELLANEOUS
--------------------------------------------------------------------------------
|_| ABOUT OUR COMPANY
RATINGS: A.M. BEST - A+G (SUPERIOR), 2nd highest rating of 15 categories.
STANDARD & POOR'S - AA (VERY STRONG), 3rd highest rating of 21
categories for insurer financial strength. (FIRST AMERITAS LIFE
INSURANCE CORP. OF NEW YORK HAS NOT BEEN SEPARATELY RATED BY THESE
FIRMS. RATHER, THESE RATINGS REFLECT A GROUP RATING BASED UPON THE
RATING OF FIRST AMERITAS' PARENT COMPANY, AMERITAS LIFE INSURANCE
CORP. THESE RATINGS DO NOT BEAR ON THE INVESTMENT PERFORMANCE OF
ASSETS HELD IN THE SEPARATE ACCOUNT OR ON THE DEGREE OF RISK IN
INVESTMENTS IN THE SEPARATE ACCOUNT.)
First Ameritas Life Insurance Corp. of New York issues the Policy
described in this prospectus and is responsible for providing each Policy's
insurance and annuity benefits. We are a stock life insurance company organized
under the insurance laws of the State of New York in 1993. We are a wholly owned
subsidiary of Ameritas Life Insurance Corp., Nebraska's oldest insurance company
- in business since 1887. Our home office address is 400 Rella Blvd, Suite 304,
Suffern, New York, 10901 and our Service Office is at 5900 "O" Street, Lincoln,
Nebraska, 68510. (See page 2 of this prospectus, or the cover page or last page
for information on how to contact us.)
We are engaged in the business of issuing life insurance, annuities and
health insurance in the State of New York.
|_| DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. ("AIC"), 5900 "O" Street, Lincoln, Nebraska
68510, an affiliate of ours, is the principal underwriter of the Policies.
Ameritas Life Insurance Corp. and AmerUs Life Insurance Company entered into a
joint venture to form AMAL Corporation, a holding company that owns the common
stock of our distributor, Ameritas Investment Corp. AIC enters into contracts
with various broker-dealers ("Distributors") to distribute Policies. All persons
selling the Policy will be registered representatives of the Distributors, and
will also be licensed as insurance agents to sell variable insurance products.
AIC is registered with the Securities and Exchange Commission as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc.
Commissions paid to all distributors may be up to a total of 5.35% of premiums.
We may also pay other distribution expenses such as production incentive
bonuses. These distribution expenses do not result in any additional charges
under the Policy other than those described in this prospectus' FEES section.
|_| VOTING RIGHTS
As required by law, we will vote the Subaccount shares in the underlying
portfolios at regular and special shareholder meetings of the series funds
pursuant to instructions received from persons having voting interests in the
underlying portfolios. The underlying portfolios may not hold routine annual
shareholder meetings.
As a Policy Owner, you may have a voting rights in the portfolios whose
shares underlie the Subaccounts you are invested in. You will receive proxy
material, reports, and other materials relating to each underlying portfolio in
which you have voting rights.
FALIC Overture Annuity III-Plus
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<PAGE>
|_| DISTRIBUTION OF MATERIALS
We will distribute proxy statements, updated prospectuses and other
materials to you from time to time. In order to achieve cost savings, we may
send consolidated mailings to several owners with the same last name who share a
common address or post office box.
|_| ADVERTISING
From time to time, we may advertise several types of performance for the
Subaccount variable investment options. We may also advertise ratings, rankings
or other information related to us, the Subaccounts or the underlying
portfolios. Following is a description of types of performance reporting:
TOTAL RETURN is the overall change in the value of an investment in a
Subaccount variable investment option over a given period of time.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN is calculated in accordance
with SEC guidelines. This shows the percentage return on $1,000 invested in the
Subaccounts over the most recent 1, 5 and 10 year periods. If the variable
investment option was not available for the full period, we give a history from
the date money was first received in that option. This return reflects deduction
of all recurring Policy charges during each period (i.e. mortality and expense
risk charges, annual Policy fees, administrative expenses, and any applicable
withdrawal charges) as well as charges for the most expensive of each of the
optional features. Our guaranteed maximum charges are used in standardized
returns, rather than any current lower or waived fees.
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN may be for periods other
than those required or may otherwise differ from standardized average annual
total return. For example, if a Subaccount's underlying portfolio has been in
existence longer than the Subaccount, we may show non-standardized performance
for periods that begin on the inception date of the underlying portfolio, rather
than the inception date of the Subaccount. Otherwise, non-standardized average
annual total return is calculated in a similar manner as that stated above,
except we do not include the deduction of any applicable withdrawal charge
(e.g., we assume the Policy continues beyond the period shown), and some non-
standardized returns may be based on Policy sizes where the Policy fee would be
waived. Non-standardized returns may also assume none or only some of the
optional features are elected, and may reflect our use of lower current fees or
waiver of certain fees, rather than use our guaranteed maximum fees.
|_| LEGAL PROCEEDINGS
As of the date of this Prospectus, there are no proceedings affecting
the Separate Account, or that are material in relation to our total assets.
FALIC Overture Annuity III-Plus
- 29 -
<PAGE>
APPENDIX A: VARIABLE INVESTMENT OPTION PORTFOLIOS
--------------------------------------------------------------------------------
The Separate Account Subaccount underlying portfolioss listed below are
designed primarily as investments for variable annuity and variable life
insurance policies issued by insurance companies. They are NOT publicly traded
mutual funds available for direct purchase by you. THERE IS NO ASSURANCE THE
INVESTMENT OBJECTIVES WILL BE MET.
This information is just a summary for each underlying portfolio. You
should read the series fund prospectus for an underlying portfolio for more
information about that portfolio.
<TABLE>
<CAPTION>
----------------------------------------------------------- -----------------------------------
Separate Account Variable Investment Options: Investment Objective:
Investment Strategy
<S> <C>
----------------------------------------------------------- -----------------------------------
ALGER: offered through The Alger American Fund series fund, advised by Fred Alger Management,
Inc.
-----------------------------------------------------------------------------------------------
o ALGER AMERICAN BALANCED PORTFOLIO Current Income and long-term
Common stock of companies with growth capital growth
potential and fixed-income securities.
----------------------------------------------------------- -----------------------------------
o ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO Long-term capital growth
Common stocks of companies with growth
potential.
----------------------------------------------------------- -----------------------------------
AMERITAS PORTFOLIOS: offered through Calvert Variable Series, Inc. Ameritas Portfolios series
fund; advised by Ameritas Investment Corp. (SUBADVISOR. See cover for Subadvisor's full name.)
-----------------------------------------------------------------------------------------------
o AMERITAS GROWTH PORTFOLIO (FRED ALGER) Long-term capital growth.
Common stocks of large U.S. companies with
broad product lines, markets, financial
resources and depth of management.
----------------------------------------------------------- -----------------------------------
o AMERITAS INCOME & GROWTH PORTFOLIO High level of dividend income,
(FRED ALGER) with capital growth as a
Dividend paying equity securities, prefereably secondary goal.
with growth potential.
----------------------------------------------------------- -----------------------------------
o AMERITAS MIDCAP GROWTH PORTFOLIO Long-term capital growth.
(FRED ALGER)
Common stocks of midsize U.S. companies with
promising growth potential.
----------------------------------------------------------- -----------------------------------
o AMERITAS SMALL CAPITALIZATION PORTFOLIO Long-term capital growth.
(FRED ALGER)
Common stocks of small, fast-growing U.S.
companies that offer innovative products,
services or technologies to a rapidly expanding
marketplace.
----------------------------------------------------------- -----------------------------------
o AMERITAS MONEY MARKET PORTFOLIO (CALVERT) Current income.
Money market securities of domestic and foreign
issuers.
----------------------------------------------------------- -----------------------------------
o AMERITAS EMERGING GROWTH PORTFOLIO (MFS Co.) Long-term capital growth.
Common stocks of emerging growth companies or
related securities, including foreign
securities.
----------------------------------------------------------- -----------------------------------
o AMERITAS GROWTH WITH INCOME PORTFOLIO (MFS Co.) Current income, long-term growth
Common stocks of companies or related of capital and income.
securities, including foreign securities, to
seek to provide income equal to 90% of the S&P
500 Composite Index dividend yield.
----------------------------------------------------------- -----------------------------------
o AMERITAS RESEARCH PORTFOLIO (MFS Co.) Long-term capital growth and
Common stocks and related securities of future income.
companies with favorable prospects for
long-term growth, attractive valuations,
dominant or growing market share, and superior
management.
----------------------------------------------------------- -----------------------------------
o AMERITAS INDEX 500 PORTFOLIO (STATE STREET) Results that correspond to the
Common stocks of U.S. companies on the S&P 500 S&P 500 Index company common
Index. stocks.
FALIC Overture Annuity III-Plus Appendix
- A: 1 -
<PAGE>
----------------------------------------------------------- -----------------------------------
CALVERT SOCIAL: offered through Calvert Variable Series, Inc. Calvert Social Portfolios
series fund; advised by Calvert Asset Management Company, an affiliate of ours.
-----------------------------------------------------------------------------------------------
o CVS SOCIAL BALANCED PORTFOLIO Income and capital growth through
Mostly large-cap growth oriented common stock social criteria screened
of U.S. companies, with some bonds and money investments.
market instruments.
----------------------------------------------------------- -----------------------------------
o CVS SOCIAL INTERNATIONAL EQUITY PORTFOLIO High total return through social
Common stocks of mid to large cap companies. criteria screened investments.
----------------------------------------------------------- -----------------------------------
o CVS SOCIAL MID CAP GROWTH PORTFOLIO Long-term capital growth through
Common stocks of mid size companies. social criteria screened
investments.
----------------------------------------------------------- -----------------------------------
o CVS SOCIAL SMALL CAP GROWTH PORTFOLIO Long-term capital growth through
Common stocks of small cap companies. social criteria screened
investments.
----------------------------------------------------------- -----------------------------------
FIDELITY: offered through Variable Insurance Products: Service Class 2 series fund;
advised by Fidelity Management and Research Company.
-----------------------------------------------------------------------------------------------
o VIP ASSET MANAGER PORTFOLIO High total return with reduced
Allocated investments among stocks, bonds and risk over the long-term.
short-term/money market investments.
----------------------------------------------------------- -----------------------------------
o VIP ASSET MANAGER: GROWTH PORTFOLIO High total return.
Allocated investments among stocks, bonds and
short-term/money market investments.
----------------------------------------------------------- -----------------------------------
o VIP CONTRAFUND PORTFOLIO Long-term capital growth.
Common stocks of companies whose value is not
fully recognized.
----------------------------------------------------------- -----------------------------------
o VIP EQUITY INCOME PORTFOLIO Reasonable income.
Income producing equity securities.
----------------------------------------------------------- -----------------------------------
o VIP GROWTH PORTFOLIO Capital growth.
Common stocks of companies with above average
growth potential.
----------------------------------------------------------- -----------------------------------
o VIP HIGH INCOME PORTFOLIO High level of current income.
High yielding fixed-income securities, while
also considering growth of capital.
----------------------------------------------------------- -----------------------------------
o VIP INVESTMENT GRADE BOND PORTFOLIO High level of current income as
U.S. Dollar-denominated investment-grade bonds is consistent with preservation
(medium and high quality). of capital.
----------------------------------------------------------- -----------------------------------
o VIP OVERSEAS PORTFOLIO Long-term capital growth.
Securities of foreign companies, diversified
across countries and regions.
FALIC Overture Annuity III-Plus Appendix
- A: 2 -
<PAGE>
----------------------------------------------------------- -----------------------------------
MFS: offered through MFS Variable Insurance Trust series fund; advised by Massachusetts
Financial Services Company
-----------------------------------------------------------------------------------------------
o GLOBAL GOVERNMENTS SERIES Income and capital growth.
U.S. and foreign government securities,
corporate bonds, and mortgage-backed and
asset-backed securities.
----------------------------------------------------------- -----------------------------------
o NEW DISCOVERIES SERIES Capital growth.
Common stocks of smaller cap emerging growth
companies that are early in their life cycle.
----------------------------------------------------------- -----------------------------------
o UTILITIES SERIES Capital growth and current income.
Equity and debt securities of U.S. and foreign
companies (including emerging markets) in the
utility industry.
----------------------------------------------------------- -----------------------------------
MORGAN STANLEY: offered through Universal Institutional Funds, Inc. series fund;
advised by Morgan Stanley Asset Management
-----------------------------------------------------------------------------------------------
o EMERGING MARKETS EQUITY PORTFOLIO Long-term capital growth.
Growth oriented equity securities of issuers in
emerging market countries.
----------------------------------------------------------- -----------------------------------
o GLOBAL EQUITY PORTFOLIO Long-term capital growth.
Equity securities of issuers throughout the
world, including U.S. issuers.
----------------------------------------------------------- -----------------------------------
o INTERNATIONAL MAGNUM PORTFOLIO Long-term capital growth.
Equity securities of non-U.S. issuers domiciled
in "EAFE" countries.
----------------------------------------------------------- -----------------------------------
o U.S. REAL ESTATE PORTFOLIO Above average current income and
Equity securities of companies in the U.S. real long-term capital growth.
estate industry, including real estate
investment trusts.
----------------------------------------------------------- -----------------------------------
</TABLE>
FALIC Overture Annuity III-Plus Appendix
- A: 3 -
<PAGE>
APPENDIX B: TAX-QUALIFIED PLAN DISCLOSURES
--------------------------------------------------------------------------------
QUALIFIED DISCLOSURES
* Information Statement For:
408(b) IRA Plans
408(k) SEP IRA Plans
408(p) SIMPLE IRA Plans
408A Roth IRA Plans
* Information Statement For:
401(a) Pension/Profit Sharing Plans
403(b) ERISA Plans
403(b) Tax Sheltered Annuity (TSA) Plans-Withdrawal
Restrictions
If this annuity is being purchased as a qualified plan as defined under
specified sections of the Internal Revenue Code, as purchaser (owner) or
fiduciary of an Employee Benefit Plan purchasing the annuity, you should
carefully review the Information Statement for your specific type of plan.
Depending on the type of plan, we are required to provide this disclosure to you
to meet the requirements of the Internal Revenue Code ("Code") and/or the
Employee Retirement Income Security Act of 1974 (ERISA).
Acknowledgment of your receipt of the required disclosure is included within the
application language above your signature.
TABLE OF CONTENTS
Information Statement
408(b) Individual Retirement Annuity (IRA) Plans
408(k) Simplified Employee Pension (SEP IRA) Plans
408(p) Savings Incentive Match (SIMPLE IRA) Plans
408A Roth IRA Plans.............................................B:2
Information Statement
401(a) Pension/Profit Sharing Plans.............................B:14
403(b) ERISA Plans
403(b) Tax Sheltered Annuity (TSA) Plans-Withdrawal
Restrictions
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FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK LOGO
INFORMATION STATEMENT
408(B) INDIVIDUAL RETIREMENT ANNUITY (IRA) PLANS
408(K) SIMPLIFIED EMPLOYEE PENSION (SEP IRA) PLANS
408(P) SAVINGS INCENTIVE MATCH (SIMPLE IRA)
408A ROTH IRA
For purchasers of a 408(b) Individual Retirement Annuity (IRA) Plan, 408(k)
Simplified Employee Pension (SEP IRA) Plan, 408(p) Savings Incentive Match
(SIMPLE IRA) Plan or a 408A Roth IRA, please review the following:
PART 1. PROCEDURE FOR REVOKING THE IRA PLAN:
After you establish an IRA Plan with First Ameritas Life Insurance Corp. of New
York (the Company), you are able to revoke your IRA within a limited time and
receive a full refund of the initial premium paid, if any. The period for
revocation will not be less than the legal minimum of seven (7) days following
the date your IRA is established with the Company.
To revoke your IRA, you should send a signed and dated written notice to: First
Ameritas Life Insurance Corp. of New York, Policyholder Service Department, P.O.
Box 82550, Lincoln, NE 68501.
If your IRA contract was delivered to you, the contract should accompany your
notice of revocation. Your notice of revocation will be considered mailed on the
date of the postmark (or certification or registration, if applicable), if sent
by United States mail, properly addressed and by first class postage prepaid.
To obtain further information about the revocation procedure, contact your
Company Representative or call 1-800-745-1112.
PART II. PROVISIONS OF THE IRA LAW:
The Company's OVERTURE ANNUITY III-Plus! Variable Annuity (Plan 5186), can be
used for a Regular IRA, a Rollover IRA, a Spousal IRA Arrangement, a Simplified
Employee Pension Plan (SEP IRA), or a salary reduction Simplified Employee
Pension Plan (SARSEP), a SIMPLE IRA, or a Roth IRA. A separate policy must be
purchased for each individual under each plan. State income tax treatment of
IRAs varies, so this disclosure only discusses the federal tax treatment of
IRAs. Please discuss state income tax treatment of an IRA with your tax advisor.
While provisions of the IRA law are similar for all such plans, the major
differences are set forth under the appropriate topics below.
A. ELIGIBILITY:
REGULAR IRA PLAN: Any individual under age 70 1/2 and earning income
from personal services, is eligible to establish an IRA Plan, although
deductibility of the contributions is determined by adjusted gross
income ("AGI") and whether the individual (or the individual's spouse)
is an "active participant" in an employer sponsored retirement plan.
ROLLOVER IRA: This is an IRA plan purchased with your distributions from
another IRA (including a SEP IRA, SARSEP or SIMPLE IRA), a Section
401(a) Qualified Retirement Plan, or a Section 403(b) Tax Sheltered
Annuity (TSA).
Amounts transferred as Rollover Contributions are not taxable in the
year of distribution (provided the rules for Rollover treatment are
satisfied) and may or may not be subject to withholding. Rollover
Contributions are not deductible.
Spousal IRA Arrangement: A Spousal IRA, consisting of a separate
contract for each spouse, may be set up provided a joint return is
filed, the "nonworking spouse" has less taxable compensation, if any,
for the tax year than the working spouse, and is under age 70 1/2 at the
end of the tax year.
Divorced spouses can continue a Spousal IRA or start a Regular IRA based
on the standard IRA eligibility rules. All taxable alimony received by
the divorced spouse under a decree of divorce or separate maintenance is
treated as compensation for purposes of the IRA deduction limit.
Roth IRAs: A Roth IRA must be designated as such when it is established.
Eligibility to contribute or convert to a Roth IRA is subject to income
and other limits. Unlike Regular IRAs, if eligible, you may contribute
to a Roth IRA even after age 70 1/2.
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1. A REGULAR ROTH IRA is a Roth IRA established to receive annual
contributions and/or qualified rollover contributions (including
IRA conversion contributions) from other Roth IRAs or from other
IRAs if permitted by the policy and endorsement.
Roth IRAs are available beginning in 1998. Unlike Regular IRAs,
contributions to a Roth IRA are not deductible for tax purposes.
However, any gain accumulated in a Roth IRA may be nontaxable,
depending upon how and when withdrawals are made.
2. A ROTH CONVERSION IRA is a Roth IRA established to receive only
rollovers or conversions from non-Roth IRAs made in the same tax
year and is limited to such contributions.
3. SPOUSAL ROTH IRA ARRANGEMENT: Beginning in 1998, a Spousal Roth
IRA may be set up for a "non-working" spouse who has less taxable
compensation, if any, for the tax year than the "working" spouse,
regardless of age, provided the spouses file a joint tax return
and subject to the adjusted gross income ("AGI") limits described
in PART II, MAXIMUM CONTRIBUTIONS--SPOUSAL ROTH IRA ARRANGEMENT.
Divorced spouses can continue a Spousal Roth IRA or start a
regular Roth IRA based on standard Roth IRA eligibility rules.
Taxable alimony received by the divorced spouse under a decree of
divorce or separate maintenance is treated as compensation for
purposes of Roth IRA eligibility limits.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEP IRA): An employee is
eligible to participate in a SEP IRA Plan based on eligibility
requirements set forth in form 5305-SEP or other plan document
provided by the employer.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN (SARSEP): An
employee is eligible to participate in a SARSEP plan based on
eligibility requirements set forth in form 5305A-SEP or the plan
document provided by the employer. New SARSEP plans may not be
established after December 31, 1996. SARSEPs established prior to
January 1, 1997, may continue to receive contributions after
1996, and new employees hired after 1996 are also permitted to
participate in such plans.
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS
(SIMPLE IRA):An employee is eligible to participate in a SIMPLE
IRA Plan based on eligibility requirements set forth in Form
5304-SIMPLE or other plan document provided by the employer. A
SIMPLE IRA must be established as such, thus some policies may
not be available for use with a SIMPLE IRA Plan.
B. NONTRANSFERABILITY: You may not transfer, assign or sell your IRA Plan
(including a SIMPLE IRA, SEP IRA, SARSEP or Roth IRA) to anyone (except
in the case of transfer incident to divorce).
C. NONFORFEITABILITY: The value of your IRA Plan (all types included)
belongs to you at all times, without risk of forfeiture.
D. PREMIUM: The annual premium (if applicable) of your IRA Plan or Roth IRA
may not exceed the lesser of $2,000, or 100% of compensation for the
year (or for Spousal IRAs, or Spousal Roth IRAs, the combined
compensation of the spouses reduced by any Roth IRA or deductible IRA
contribution made by the "working" spouse). Any premium in excess of or
in addition to $2,000 will be permitted only as a "Rollover
Contribution" (or "Conversion" contribution to a Roth IRA). Your
contribution must be made in cash. For IRAs established under SEP Plans
(SEP IRAs), premiums are limited to the lesser of $30,000 or 15% of the
first $150,000 of compensation (adjusted for cost of living increases).
In addition, if the IRA is under a SARSEP Plan established prior to
January 1, 1997, annual premiums made by salary reduction are limited to
$7,000 (adjusted for cost of living increases). Premiums under a SIMPLE
IRA are limited to permissible levels of annual employee elective
contributions (up to $6,000 adjusted for cost of living increases) plus
the applicable percentage of employer matching contributions (up to 3%
of compensation but not in excess of $6,000, as adjusted) or of employer
non-elective contributions (2% of compensation (subject to the cap under
Code Section 401(a)(17) as indexed) for each eligible employee).
E. MAXIMUM CONTRIBUTIONS:
REGULAR IRA PLAN: In any year that your annuity is maintained under the
rules for a Regular IRA Plan, your maximum contribution is limited to
100% of your compensation or $2,000, whichever is less. Further, this is
the maximum amount you may contribute to ALL IRAs in a year (including
Roth IRAs, but not Education IRAs or employer contributions or salary
deferrals made to SEP or SIMPLE IRAs). The amount of permissible
contributions to your Regular IRA may or may not be deductible. Whether
IRA contributions (other than Rollovers) are deductible depends on
whether you (or your spouse, if married) are an active participant in an
employer-sponsored retirement plan and whether your adjusted gross
income ("AGI") is above the "phase-out level." Beginning for tax years
after 1997, you will only be deemed to be an active participant and your
deductions for contributions subject to phase-out because of your
spouse's participation in an employer- sponsored retirement plan, if
your combined adjusted gross income exceeds $150,000. SEE PART III. C.,
DEDUCTIBLE IRA CONTRIBUTIONS.
ROLLOVER IRA: A Plan to Plan Rollover is a method for accomplishing
continued tax deferral on otherwise taxable distributions from certain
plans. Rollover contributions are not subject to the contribution limits
on Regular IRA contributions, but also are not tax deductible.
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There are two ways to make a rollover to an IRA:
(1) PARTICIPANT ROLLOVERS are available to participants, surviving
spouses or former spouses who receive eligible rollover
distributions from 401(a) Qualified Retirement Plans, TSAs or
IRAs (including SEPs, SARSEPs, and SIMPLE IRAs). Participant
Rollovers are accomplished by contributing part or all of the
eligible amounts (which includes amounts withheld for federal
income tax purposes) to your new IRA within 60 days following
receipt of the distribution. IRA to IRA Rollovers are limited to
one per distributing plan per 12 month period, while direct IRA
to IRA transfers (where you do not directly receive a
distribution) are not subject to this limitation. Distributions
from a SIMPLE IRA may not be rolled over or transferred to an IRA
(which isn't a SIMPLE IRA) during the 2 year period following the
date you first participate in any SIMPLE Plan maintained by your
employer.
(2) DIRECT ROLLOVERS are available to participants, surviving spouses
and former spouses who receive eligible rollover distributions
from 401(a) Qualified Retirement Plans or TSAs. Direct Rollovers
are made by instructing the plan trustee, custodian or issuer to
pay the eligible portion of your distribution directly to the
trustee, custodian or issuer of the receiving IRA. Direct
Rollover amounts are not subject to mandatory federal income tax
withholding.
FOR RULES APPLICABLE TO ROLLOVERS OR TRANSFERS TO ROTH IRAS, SEE THE
PARAGRAPHS ON ROTH AND ROTH CONVERSION IRAS, THAT FOLLOW.
Certain distributions are NOT considered to be eligible for Rollover and
include: (1) distributions which are part of a series of substantially equal
periodic payments (made at least annually) for 10 years or more; (2)
distributions attributable to after-tax employee contributions to a 401(a)
Qualified Retirement Plan or TSA; (3) required minimum distributions made during
or after the year you reach age 70 1/2 or, if later and applicable, the year in
which you retire; and (4) amounts in excess of the cash (except for certain loan
offset amounts) or in excess of the proceeds from the sale of property
distributed. Also, under the Internal Revenue Service Restructuring and Reform
Act of 1998 (IRSRRA"98), hardship distributions made from 401(k) or 403(b) plans
on or after January 1, 1999, are no longer considered eligible rollover
distributions except as otherwise permitted by the Internal Revenue Service. The
Internal Revenue Service announced transition relief from this rule for 1999.
At the time of a Rollover, you must irrevocably designate in writing that the
transfer is to be treated as a Rollover Contribution. Eligible amounts which are
not rolled over are normally taxed as ordinary income in the year of
distribution. If a Rollover Contribution is made to an IRA from a Qualified
Retirement Plan, you may later be able to roll the value of the IRA into a new
employer's plan PROVIDED YOU MAKE NO CONTRIBUTIONS TO THE IRA OTHER THAN FROM
THE FIRST EMPLOYER'S PLAN. THIS IS KNOWN AS "CONDUIT IRA," AND YOU SHOULD
DESIGNATE YOUR ANNUITY AS SUCH WHEN YOU COMPLETE YOUR APPLICATION.
SPOUSAL IRA ARRANGEMENT: In any year that your annuity is maintained under the
rules for a Spousal IRA, the maximum combined contribution to the Spousal IRA
and the "working" spouse's IRA for tax years after 1996, is the lesser of 100%
of the combined compensation of both spouses which is includable in gross income
(reduced by the amount of any contributions to a Roth IRA or the amount allowed
as a deduction to the "working" spouse for contribution to his or her own IRA)
or $4,000. No more than $2,000 may be contributed to either spouse's IRA.
Whether the contribution is deductible or non-deductible depends on whether
either spouse is an "active participant" in an employer-sponsored retirement
plan for the year, and whether the adjusted gross income of the couple is above
the applicable phase-out level. (SEE PART III. C., DEDUCTIBLE IRA
CONTRIBUTIONS).
The contribution limit for divorced spouses is the lesser of $2,000 or the total
of the taxpayer's taxable compensation and alimony received for the year.
(Married individuals who live apart for the entire year and who file separate
tax returns are treated as if they are single when determining the maximum
deductible contribution limits).
ROTH IRA: The maximum total annual contribution an individual can make to all
IRAs (including Roth IRAs, but not Education, SARSEP or SIMPLE IRAs) is the
lesser of $2,000 or 100% of compensation. (This limit does not apply to rollover
contributions, which includes amounts converted from a Regular IRA to a Roth
IRA). If an individual contributes to both a Regular IRA and Roth IRA for the
same tax year, contributions are treated as first made to the Regular IRA. For
Roth IRAs (which are available beginning in the 1998 tax year) this $2,000
limitation is phased out for adjusted gross incomes between $150,000 and
$160,000 for joint filers; between $95,000 and $110,000 for single taxpayers;
and between $0 and $10,000 for married individuals who file separate tax
returns. AGI for this purpose includes any deductible contribution to a Regular
IRA, (i.e., the deduction is disregarded) but does not include any amount
included in income as a result of a rollover or conversion from a non-Roth IRA
to a Roth IRA.
Rollovers and transfers may also be made from one Roth IRA to another. Such
rollovers or transfers are generally subject to the same timing and frequency
rules as apply to Participant Rollovers and transfers from one Regular or
Rollover IRA to another. (SEE PART II, MAXIMUM CONTRIBUTIONS: ROLLOVER IRA,
ABOVE).
Also, beginning in the 1998 tax year, rollovers or conversions may be made from
non-Roth IRAs to a Roth IRA. These contributions can be commingled with regular
Roth contributions if your policy permits. To be eligible to make such a
conversion or rollover from a non-Roth IRA, the taxpayer's adjusted gross income
("AGI") for the taxable year cannot exceed $100,000 (joint or individual) and he
or she must NOT be married filing a separate tax return (unless the taxpayer
lives apart from his of her spouse at all times during the year). A rollover
from a non-Roth IRA to a Roth IRA does not count toward the limit of one
rollover per IRA in any 12-month period under the normal IRA rollover rules.
Also, eligible rollover distributions received by you or your spouse from a
qualified plan other than an IRA, may not be directly rolled over to a Roth IRA.
However, you may be able to roll such a distribution over
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to a non-Roth IRA, then convert that IRA to a Roth IRA. Also if you are eligible
to make a conversion, you may transfer amounts from most non-Roth IRAs (other
than Education IRAs). Conversion of an individual's SIMPLE IRA is only permitted
after expiration of the 2-year period which begins on the date the individual
first participated in any SIMPLE IRA Plan of the employer. Once an amount in a
SIMPLE IRA or SEP has been converted to a Roth IRA, it is treated as a Roth IRA
contribution for all purposes. Future contributions under the SEP or SIMPLE Plan
may not be made to the Roth IRA. AGI for the purpose of determining eligibility
to convert to a Roth IRA does not include any amount included in income as a
result of a rollover or conversion from a non-Roth IRA to a Roth IRA, but does
include the amount of any deductible contribution made to a Regular IRA for the
tax year. In addition, for tax years beginning before January 1, 2005, required
minimum distributions from an IRA are included in AGI for purposes of
determining eligibility for conversion to a Roth IRA. However, for tax years
beginning after December 31, 2004, required minimum distributions from an IRA
will not be included in AGI (solely for purposes of determining the $100,000 AGI
limit on conversions).
ROTH CONVERSION IRA: A Roth Conversion IRA is a Roth IRA that only accepts IRA
conversion contributions made during the same tax year. You should not designate
your policy as a Roth Conversion IRA if you wish to make both regular Roth and
Conversion contributions to the policy.
SPOUSAL ROTH IRA ARRANGEMENT: Beginning in the 1998 tax year, if the
"non-working" spouse's compensation is less than $2,000, the spouses file a
joint tax return, and their combined AGI (unreduced by any deductible IRA
contribution made for the year, but not including any amounts includable in
income as a result of a conversion to a Roth IRA) is $150,000 or below, a
contribution of up to $2,000 may be made to a separate Spousal Roth IRA in the
name of the "non-working" spouse. The $2,000 limit is phased out proportionately
between $150,000 and $160,000 of AGI (modified as described above). Spouses are
not required to make equal contributions to both Roth IRAs; however no more than
$2,000 may be contributed to the "working" or "non-working" spouse's Roth IRA
for any year, and the total amount contributed annually to all IRAs (including
both Roth and Regular IRAs, but not Education, SARSEP, or SIMPLE IRAs) for both
spouses cannot exceed $4,000. If the combined compensation of both spouses
(reduced by any deductible IRA or non-deductible Roth contributions made for the
"working" spouse) is less than $4,000, the total contribution for all IRAs is
limited to the total amount of the spouses' combined compensation. These limits
do not apply to rollover contributions.
For divorced spouses, the contribution limit to a Roth IRA is the lesser of
$2,000 or the total of the taxpayer's compensation and alimony received for the
year, subject to the applicable phase-out limits for eligibility to make
contributions to a Roth IRA. (Married individuals who live apart for the entire
year and who file separate tax returns are treated as if they are single when
determining the maximum contribution they are eligible to make in a Roth IRA).
SEP IRA PLAN: In any year that your annuity is maintained under the rules for a
SEP Plan, the employer's maximum contribution is the lesser of $30,000 or 15% of
your first $150,000 of compensation (adjusted for cost-of-living increases) or
as changed under Section 415 of the Code. You may also be able to make
contributions to your SEP IRA the same as you do to a Regular IRA; however, you
will be considered an "active participant" for purposes of determining your
deduction limit. In addition to the above limits, if your annuity is maintained
under the rules for a SARSEP, the maximum amount of employee pre-tax
contributions which can be made is $7,000 (adjusted for cost of living
increases). After December 31, 1996, new SARSEP plans may not be established.
Employees may, however, continue to make salary reductions to a SARSEP plan
established prior to January 1, 1997. In addition, employees hired after
December 31, 1996 may participate in SARSEP plans established by their employers
prior to 1997.
SIMPLE IRA: Contributions to a SIMPLE IRA may not exceed the permissible amounts
of employee elective contributions and required employer matching contributions
or non-elective contributions. Annual employee elective contributions must be
expressed as a percentage of compensation and may not exceed $6,000 (adjusted
for cost of living increases). If an employer elects a matching contribution
formula, it is generally required to match employee contributions dollar for
dollar up to 3% of the employee's compensation for the year (but not in excess
of $6,000 as adjusted for cost-of-living adjustments). An employer may elect a
lower percentage match (but not below 1%) for a year, provided certain notice
requirements are satisfied and the employer's election will not result in the
matching percentage being lower than 3% in more than 2 of the 5 years in the
5-year period ending with that calendar year. Alternatively, an employer may
elect to make non-elective contributions of 2% of compensation for all employees
eligible to participate in the plan who have at least $5,000 in compensation for
the year. The employer must notify employees of this election within specified
time frames in advance of the plan year or election period. "Compensation" for
purposes of the 2% non-elective contribution option may not exceed the limit on
compensation under Code Section 401(a)(17) ($150,000, adjusted for cost of
living increases).
F. DISTRIBUTIONS:
1. NON-ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS:
Payments to you from your IRA Plan (other than a Roth IRA) must begin no
later than the April 1 following the close of the calendar year in which
you attain age 70 1/2, the Required Beginning Date (RBD). If you have
not already withdrawn your entire balance by this date, you may elect to
receive the entire value of your IRA Plan on or before the RBD in one
lump sum; or arrange for an income to be paid over your lifetime, your
expected lifetime, or over the lifetimes or expected lifetimes of you
and your designated beneficiary. UNDER A ROTH IRA, YOU ARE NOT REQUIRED
TO TAKE DISTRIBUTIONS WHILE YOU ARE LIVING, EVEN AFTER YOU REACH AGE 70
1/2.
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RATE OF DISTRIBUTION: If you arrange for the value of your IRA Plan
(other than a Roth IRA) to be paid to you as retirement income rather
than as one lump sum, then you must abide by IRS rules governing how
quickly the value of your IRA plan must be paid out to you. Generally,
it is acceptable to have an insurance company annuity pay income to you
for as long as you live, or for as long as you and your beneficiary
live.
Once you reach your RBD, you must withdraw at least a minimum amount
each year or be subject to a 50% non-deductible excise tax on the
difference between the minimum required distribution and the amount
distributed. To determine the required minimum distribution for your
first "required distribution year" (assuming an annuity payout has not
been elected) divide your entire interest (subject to certain
adjustments) in your IRA (generally as of December 31 of the calendar
year immediately preceding your age 70 1/2 year) by your life expectancy
or the joint life expectancies of you and your designated beneficiary.
For subsequent required distribution calendar years, the applicable life
expectancy(ies) will be applied to your IRA account balance as of
December 31 of the calendar year immediately preceding the distribution
calendar year (subject to adjustments). Your single or joint life
expectancy is determined by using IRS life expectancy tables. See IRS
Publications 575 and 590.
Your life expectancy (and that of your spousal beneficiary, if
applicable) will be recalculated annually, unless you irrevocably elect
otherwise by the time distributions are required to begin. With the
recalculation method, if a person whose life expectancy is being
recalculated dies, his or her life expectancy will be zero in all
subsequent years. The life expectancy of a non-spouse beneficiary cannot
be recalculated. Where life expectancy is not recalculated, it is
reduced by one year for each year after your 70 1/2 year to determine
the applicable remaining life expectancy. Also, if your benefit is
payable in the form of a joint and survivor annuity, a larger minimum
distribution amount may be required during your lifetime under IRS
regulations, unless your spouse is the designated beneficiary. If your
designated beneficiary is not your spouse, the designated beneficiary's
age will be deemed to be no more than ten (10) years younger than you
when determining life expectancy for required payouts. However, under
current I.R.S. proposed regulations, this rule only applies while you
are living and life expectancy of your beneficiary after your death can
be determined without regard to this rule.
NON-ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS AFTER DEATH. If you die
after the RBD, amounts undistributed at your death must be distributed
at least as rapidly as under the method being used to determine
distributions at the time of your death. If you die before the RBD, your
entire interest must generally be distributed by the end of the calendar
year which contains the fifth anniversary of your death (the "five year
payout rule"). However, if a beneficiary is designated, the beneficiary
may elect to receive distributions over his or her life expectancy if
the beneficiary so elects by December 31 of the year following the year
of your death. If the beneficiary fails to make an election, the entire
benefit will be paid to the beneficiary under the "five year payout
rule". Also, if the designated beneficiary is your spouse, the life
annuity distribution must begin by the later of December 31 of the
calendar year following the calendar year of your death or December 31
of the year in which you would have attained age 70 1/2. If your
designated beneficiary is not your spouse, life annuity distributions
must begin by December 31 of the year following your death. A surviving
spouse may in the alternative elect to treat the policy as his or her
own IRA. This election may be expressly made or will be deemed made if
the spouse makes a regular IRA contribution to the policy, makes a
rollover to or from the IRA, or fails to elect minimum distributions as
described above.
2. ROTH IRA DISTRIBUTION REQUIREMENTS:
ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS WHILE YOU ARE LIVING. As long
as you are alive, you are not required to take distributions from a Roth
IRA, even after you reach age 70 1/2.
ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS AFTER YOUR DEATH. Minimum
distribution requirements apply to Roth IRAs only after you die. If you
die after you have reached your Annuity Date, and have begun to receive
distributions under an annuity option (not including an interest only
option), the remaining portion of your policy interests will continue to
be distributed to your designated beneficiary according to the terms of
the elected options, (provided that method satisfies the requirements of
Code Section 408(b)(3), as modified by Code Section 408A(c)(5)).
If you die before you have elected an annuity option or before
distribution of your entire interest in the policy has been made or
begun, your entire interest in your Roth IRA generally must be
distributed by the end of the calendar year which contains the fifth
anniversary of your death (the "five year payout rule"). However, if
there is a designated beneficiary, he or she may elect to receive
distributions over a period not longer than his or her life expectancy
provided the election is made and distributions commence by December 31
of the calendar year following the calendar year of your death. If the
beneficiary does not make this election, the entire benefit will be paid
to him or her under the "five year payout rule". If your designated
beneficiary is your surviving spouse, he or she may elect to delay
distributions until the later of the end of the calendar year following
the year in which you died or the end of the year in which you would
have reach age 70 1/2. If your sole designated beneficiary is your
surviving spouse, he or she may elect to treat the policy as his or her
own Roth IRA by making an express election to do so, by making a regular
Roth IRA contribution or rollover contribution (as applicable or as
permissible) to the policy, or by failing to elect minimum distributions
under the "five year payout rule"
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or the life annuity options discussed above.
Life expectancies will be determined by using IRS life expectancy
tables. A surviving spouse's life expectancy will be recalculated
annually, unless he or she irrevocably elects otherwise. Non-spousal
beneficiary life expectancies will be determined using the beneficiary's
attained age in the calendar year distributions are required to begin
and reducing life expectancy by one for each year thereafter.
3. TAKING REQUIRED MINIMUM DISTRIBUTIONS FROM ONE IRA:
AGGREGATING MINIMUM DISTRIBUTIONS: If you are required to take minimum
distributions from more than one IRA (either as owner of one or more
Regular IRAs and/or as a beneficiary of one or more decedent's Roth IRAs
or Regular IRAs), you may not have to take a minimum distribution from
each IRA. (Regular and Roth IRAs are treated as different types of IRAs,
so minimum distributions from a Roth IRA will not satisfy the minimum
distributions required from a Regular IRA). Instead, you may be able to
calculate the minimum distribution amount required for each IRA
(considered to be of the same type) separately, add the relevant amounts
and take the total required amount from one IRA or Roth IRA (as
applicable). However, an individual required to receive minimum
distributions as a beneficiary under a Roth IRA can only satisfy the
minimum distributions for one Roth IRA by receiving distributions from
another Roth IRA if the Roth IRAs were inherited from the same decedent.
Because of these requirements, the Company cannot monitor the required
distribution amounts from the Company's IRAs. Please check with your tax
advisor to verify that you are receiving the proper amount from all of
your IRAs.
PART III. RESTRICTIONS AND TAX CONSIDERATIONS:
A. TIMING OF CONTRIBUTIONS: Once you establish an IRA, (including a Roth or
Spousal Roth IRA) contributions must be made by the due date, not including
extensions, for filing your tax return. (Participant Rollovers must be made
within 60 days of your receipt of the distribution.) A CONTRIBUTION MADE
BETWEEN JANUARY 1 AND THE FILING DUE DATE FOR YOUR RETURN, MUST BE
SUBMITTED WITH WRITTEN DIRECTION THAT IT IS BEING MADE FOR THE PRIOR TAX
YEAR OR IT WILL BE TREATED AS MADE FOR THE CURRENT TAX YEAR. SEP IRA
contributions must be made by the due date of the Employer's tax return
(including extensions). SIMPLE IRA contributions, if permitted, must be
made by the tax return due date for the employer (including extensions) for
the year for which the contribution is made. Note, an employer is required
to make SIMPLE plan contributions attributable to employee elective
contributions as soon as it is administratively feasible to segregate these
contributions from the employer's general assets, but in no event later
than the 30th day of the month following the month in which the amounts
would have otherwise been payable to the employee in cash.
B. TIMING OF ROTH IRA CONVERSIONS: Conversions from a non-Roth IRA to a Roth
IRA for a particular tax year, MUST BE INITIATED SO THAT THE DISTRIBUTION
OR TRANSFER FROM THE NON-ROTH IRA IS MADE BY DECEMBER 31 OF THAT YEAR. YOU
DO NOT HAVE UNTIL THE DUE DATE OF YOUR TAX RETURN FOR A YEAR TO CONVERT A
REGULAR IRA TO A ROTH IRA FOR THAT TAX YEAR. For example, if you wish to
convert a Regular IRA to a Roth IRA in 2000, the conversion and transfer
must be made by December 31, 2000, even though your tax return for 2000 may
not be due until April 15, 2001.
C. DEDUCTIBLE IRA CONTRIBUTIONS: The amount of permissible contributions to
your Regular IRA may or may not be deductible. If you or your spouse are
not active participants in an employer sponsored retirement plan, any
permissible contribution you make to your IRA will be deductible. If you or
your spouse are an active participant in an employer-sponsored retirement
plan, the size of your deduction if any, will depend on your combined
adjusted gross income (AGI).
If you are not an active participant in an employer sponsored plan, but
your spouse is an active participant, you may take a full deduction for
your IRA contribution (other than to a Roth IRA) if your AGI is below
$150,000; if you are not an active participant but your spouse is, the
maximum deductible contribution for you is phased out at AGIs between
$150,000 and $160,000.
If you are an active participant in an employer sponsored requirement plan
you may make deductible contributions if your AGI is below a threshold
level of income. For single taxpayers and married taxpayers (who are filing
jointly and are both active participants) the available deduction is
reduced proportionately over a phaseout range. If you are married and an
active participant in an employer retirement plan, but file a separate tax
return from your spouse, your deduction is phased out between $0 and
$10,000 of AGI.
If your AGI is not above the maximum applicable phase out level, a minimum
contribution of $200 is permitted regardless of whether the phase out rules
provide for a lesser amount.
Active participants with income above the phaseout range are not entitled
to an IRA deduction. Due to changes made by the Taxpayer Relief Act of
1997, the phaseout limits are scheduled to increase as follows:
MARRIED FILING JOINTLY SINGLE/HEAD OF HOUSEHOLD
YEAR AGI AGI
----
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1998................$50,000 - $ 60,000...............$30,000 - $40,000
1999................$51,000 - $ 61,000...............$31,000 - $41,000
2000................$52,000 - $ 62,000...............$32,000 - $42,000
2001................$53,000 - $ 63,000...............$33,000 - $43,000
2002................$54,000 - $ 64,000...............$34,000 - $44,000
2003................$60,000 - $ 70,000...............$40,000 - $50,000
2004................$65,000 - $ 75,000...............$45,000 - $55,000
2005................$70,000 - $ 80,000...............$50,000 - $60,000
2006................$75,000 - $ 85,000...............$50,000 - $60,000
2007 and thereafter.$80,000 - $ 100,000...............$50,000 - $60,000
You can elect to treat deductible contributions as non-deductible. SEP IRA,
SARSEP, SIMPLE IRA and Roth IRA contributions are not deductible by you.
Remember, except for rollovers, conversions or transfers, the maximum
amount you may contribute to all IRAs (including Roth and Regular IRAs, but
not Education IRAs) for a calendar year is $2,000 or 100% of compensation,
whichever is less.
D. NON-DEDUCTIBLE REGULAR IRA CONTRIBUTIONS: It is possible for you to make
non-deductible contributions to your Regular IRA (not including SIMPLE
IRAs) even if you are not eligible to make deductible contributions to a
Regular IRA or non-deductible contributions to a Roth IRA for the year. The
amount of non-deductible contributions you can make depends on the amount
of deductible contributions you make. The sum of your non-deductible and
deductible contributions for a year may not exceed the lesser of (1) $2,000
($4,000 combined when a Spousal IRA is also involved), or (2) 100% of your
compensation (or, if a Spousal IRA is involved, 100% of you and your
spouse's combined compensation, reduced by the amount of any deductible IRA
contribution and non-deductible Roth IRA contribution made by the "working"
spouse). For plan years beginning on or after January 1, 1998, the sum of
your annual non-deductible (including Roth IRA) and deductible
contributions, other than when combined with a Spousal IRA or Spousal Roth
IRA, may not exceed $2,000. IF YOU WISH TO MAKE A NON-DEDUCTIBLE
CONTRIBUTION, YOU MUST REPORT THIS ON YOUR TAX RETURN BY FILING FORM 8606
(NON-DEDUCTIBLE IRA). REMEMBER, YOU ARE REQUIRED TO KEEP TRACK OF YOUR
NON-DEDUCTIBLE CONTRIBUTIONS AS THE COMPANY DOES NOT KEEP A RECORD OF THESE
FOR YOU. THIS INFORMATION WILL BE NECESSARY TO DOCUMENT THAT THE
CONTRIBUTIONS WERE MADE ON A NON-DEDUCTIBLE BASIS AND THEREFORE, ARE NOT
TAXABLE UPON DISTRIBUTION.
E. EFFECTS OF CONVERSION OF REGULAR IRA TO ROTH IRA: If you convert all or
part of a non-Roth IRA to a Roth IRA, the amount converted from the
non-Roth IRA will be taxable as if it had been distributed to you in the
year of distribution or transfer from the non-Roth IRA. If you made
non-deductible contributions to any Regular IRA, part of the amount taken
out of a Regular IRA for conversion will be taxable and part will be
non-taxable. (Use IRS Form 8606 to determine how much of the withdrawal
from your Regular IRA is taxable and how much is non-taxable). The taxable
portion of the amount converted is includable in your income for the year
of conversion. However, if the conversion takes place in 1998, or if the
conversion amount is distributed in 1998 and contributed to a Roth IRA
within 60 days of your receipt of the distribution, one quarter of the
taxable amount will be includable in your income in 1998 and in each of the
next three tax years. However, an individual who makes a conversion prior
to January 1, 1999, can elect to include the full taxable conversion amount
in income for 1998. This election is made on IRS Form 8606 by the
individual and cannot be made or changed after the due date (including
extensions) for filing the 1998 Federal income tax return. If a taxpayer
dies before the end of the 4-year spread, the taxable portion of the
conversion amount which has not been included in income will generally be
taxable in the year of the taxpayer's death. However, if the sole
beneficiary of the Roth IRA is the surviving spouse, he or she can elect to
continue the 4-year spread. In addition, if the 4-year spread rule is
utilized for 1998 conversions, any distributions of amounts subject to the
4-year spread occurring before 2001, will require acceleration of income
inclusion as explained in the section which follows on TAXABILITY OF ROTH
IRA DISTRIBUTIONS. (SEE PART III. J.)
Amounts properly converted from a non-Roth IRA to a Roth IRA are generally
not subject to the 10% early withdrawal penalty. However, if you make a
conversion to a Roth IRA, but keep part of the money for any reason, that
amount will be taxable in the year distributed from the non-Roth IRA and
the taxable portion may be subject to the 10% early withdrawal penalty. In
addition, under 1998 technical corrections, if an amount allocable to a
conversion contribution is distributed from the Roth IRA during the 5-year
period (beginning with the first day of the individual's taxable year in
which the conversion contribution was made), it will be subject to a
10-percent premature distribution penalty tax (but only to the extent the
conversion amount distributed was includable in gross income as a result of
the conversion).
You should consult with your tax advisor to ensure that you receive the tax
benefits you desire before you contribute to a Roth IRA, convert to a Roth
IRA or take distributions from a Roth IRA. IT WILL ALSO BE IMPORTANT FOR
YOU TO KEEP TRACK OF AND REPORT ANY REGULAR OR CONVERSION CONTRIBUTIONS YOU
MAKE TO YOUR ROTH IRAS AS REQUIRED BY THE IRS. CONVERSION CONTRIBUTIONS,
RECHARACTERIZATIONS OF CONVERSIONS AND DISTRIBUTIONS FROM A ROTH IRA MUST
BE REPORTED ON IRS FORM 8606.
F. RECHARACTERIZATION OF IRA AND ROTH IRA CONTRIBUTIONS: IRA owners are
permitted, beginning in 1998, to treat a contribution made to one type of
IRA as made to a different type of IRA for a taxable year in a process
known as
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<PAGE>
"recharacterization". A recharacterization is accomplished by an individual
who has made a contribution to an IRA of one type for a taxable year,
electing to treat the contribution as having been made to a second IRA of a
different type for the taxable year. To accomplish the recharacterization,
a trustee-to-trustee transfer from the first IRA to the second IRA must be
made on or before the due date (including extensions) for filing the
individual's Federal income tax return for the taxable year for which the
contribution was made to the first IRA. HOWEVER, IN ANNOUNCEMENT 99-104,
THE IRS HAS INDICATED THAT A CALENDAR YEAR TAXPAYER THAT HAS TIMELY FILED
HIS 1998 FEDERAL INCOME TAX RETURN, CAN ELECT TO RECHARACTERIZE A 1998 IRA
CONTRIBUTION, INCLUDING A ROTH IRA CONVERSION, PROVIDED APPROPRIATE
CORRECTIVE ACTION IS TAKEN BY DECEMBER 31, 1999. FOR THE 1999 TAX YEAR, THE
DEADLINE IS CURRENTLY OCTOBER 16, 2000 (SEE FORM 8606 INSTRUCTIONS).
APPROPRIATE CORRECTIVE ACTION MAY INCLUDE NOTIFYING THE TRUSTEE OR ISSUER;
HAVING THE TRUSTEE OR ISSUER ACTUALLY MAKING THE TRANSFER OR ACCOUNT
REDESIGNATION; AND FILING AN AMENDED 1998 OR 1999, AS APPROPRIATE, FEDERAL
INCOME TAX RETURN TO REFLECT THE RECHARACTERIZATION. FOR 1998, THE
CORRECTED RETURN MUST BE FILED BY APRIL 15, 2000. Any net income
attributable to the recharacterized contribution must also be transferred
to the second IRA. Once the transfer is made, the election is irrevocable.
The effect of recharacterizing a contribution is that it is treated as
having been originally contributed to the second IRA on the same date and
(in the case of a regular contribution) for the same taxable year that the
contribution was made to the first IRA. If you elect to recharacterize a
contribution, you must report the recharacterization and treat the
contribution as having been made to the second IRA, instead of the first,
on your Federal income tax return.
Examples of where a recharacterization election might be useful or desired
include: where an individual discovers he was ineligible to convert a
regular IRA to a Roth IRA because his adjusted gross income exceeded
$100,000; amounts were erroneously rolled over from a traditional IRA to a
SIMPLE IRA; or an individual decides after he has made a contribution to a
regular IRA for a tax year that he is eligible for and prefers to
contribute to a Roth IRA, or vice versa. Recharacterizations are not
permitted where a deduction has been taken for the contribution to the
first IRA; the contribution to the first IRA was the result of a tax-free
transfer or; the original contribution was an employer contribution to a
SIMPLE or SEP IRA.
RECONVERSION RULES:
For taxable years after 1999, if you convert a non-Roth IRA to a Roth IRA
and then recharacterize it back to a non-Roth IRA, you are not permitted by
IRS rules to reconvert the amount from the non-Roth IRA back to a Roth IRA
before the beginning of the taxable year following the taxable year in
which the amount was converted to a Roth IRA or, if later, the end of the
30-day period beginning on the day on which you recharacterized the Roth
IRA to a non-Roth IRA. This rule will apply even if you were not eligible
to make the original conversion because of your AGI or tax filing status.
If you attempt a reconversion prior to the time permitted, it will be
treated as a "failed conversion". The remedy for a failed conversion is
recharacterization to a non-Roth IRA. If the failed conversion is not
corrected, it will be treated as a regular contribution to a Roth IRA and
thus, may be an excess contribution subject to a 6% excise tax for each tax
year it remains in the Roth IRA to the extent it exceeds the maximum
regular Roth IRA contribution permitted for the tax year. (SEE PART III.
G., EXCESS CONTRIBUTIONS, BELOW). Also, the failed conversion will be
subject to the 10% premature distribution penalty tax, unless corrected or
an exception to that tax applies. CONSULT WITH YOUR TAX ADVISOR BEFORE
ATTEMPTING A "RECONVERSION".
G. EXCESS CONTRIBUTIONS: There is a 6% IRS penalty tax on IRA contributions
made in excess of permissible contribution limits. However, excess
contributions made in one year may be applied against the contribution
limits in a later year if the contributions in the later year are less than
the limit. This penalty tax can be avoided if the excess amount, together
with any earnings on it, is returned to you before the due date of your tax
return for the year for which the excess amount was contributed. Any
earnings so distributed will be taxable in the year for which the
contribution was made and may be subject to the 10% premature distribution
penalty tax (SEE PART III, PREMATURE IRA DISTRIBUTIONS). The 6% excess
contribution penalty tax will apply to each year the excess amount remains
in the IRA Plan, until it is removed either by having it returned to you or
by making a reduced contribution in a subsequent year. To the extent an
excess contribution is absorbed in a subsequent year by contributing less
than the maximum deduction allowable for that year, the amount absorbed
will be deductible in the year applied (provided you are eligible to take a
deduction). If a taxpayer transfers amounts contributed for a tax year to a
Regular IRA (and any earnings allocated to such amounts) to a Roth IRA by
the due date for filing the return for such tax year (including
extensions), the amounts are not included in the taxpayer's gross income to
the extent that no deduction was allowed for the contribution (SEE PART
III. F. RECHARACTERIZATION OF IRA AND ROTH IRA CONTRIBUTIONS ABOVE).
EXCESS CONTRIBUTIONS TO A ROTH IRA: If you are ineligible and convert a
Regular IRA to a Roth IRA, all or a part of the amount you convert may be
an excess contribution. (Examples may include conversions made when your
Roth AGI exceeds $100,000 or because you fail to timely make the rollover
contribution from the Regular IRA to the Roth IRA). In tax years after
1999, you may also have an excess contribution if your conversion is a
"failed conversion" that is not timely corrected. You will have an excess
contribution if the ineligible amounts you convert and the contributions
you make to all your IRAs for the tax year exceed your IRA contribution
limits for the year. To avoid the 6% excise tax on excess contributions,
you must withdraw the excess contributions plus earnings before the due
date of your tax return (plus extensions) or recharacterize the
contribution, if permitted (SEE PART III. F. RECHARACTERIZATION OF IRA AND
ROTH IRA CONTRIBUTIONS ABOVE).
H. LOANS AND PROHIBITED TRANSACTIONS: You may not borrow from your IRA Plan
(including Roth IRAs) or pledge it as
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<PAGE>
security for a loan. A loan would disqualify your entire IRA Plan, and its
full value (or taxable portions of your Roth IRA or non-deductible Regular
IRA) would be includable in your taxable income in the year of violation.
This amount would also be subject to the 10% penalty tax on premature
distributions. Your IRA Plan will similarly be disqualified if you or your
beneficiary engage in any transaction prohibited by Section 4975 of the
Internal Revenue Code. A pledge of your IRA as security for a loan will
cause a constructive distribution of the portion pledged and also be
subject to the 10% penalty tax.
I. TAXABILITY OF REGULAR IRA DISTRIBUTIONS: Any cash distribution from your
IRA Plan, other than a Roth IRA, is normally taxable as ordinary income.
All IRAs of an individual are treated as one contract. All distributions
during a taxable year are treated as one distribution; and the value of the
contract, income on the contract, and investment in the contract is
computed as of the close of the calendar year with or within which the
taxable year ends. If an individual withdraws an amount from an IRA during
a taxable year and the individual has previously made both deductible and
non-deductible IRA contributions, the amount excludable from income for the
taxable year is the portion of the amount withdrawn which bears the same
ratio to the amount withdrawn for the taxable year as the individual's
aggregate non-deductible IRA contributions bear to the balance of all IRAs
of the individual.
J. TAXABILITY OF ROTH IRA DISTRIBUTIONS: "Qualified distributions" from a Roth
IRA are not included in the taxpayer's gross income and are not subject to
the additional ten percent (10%) early withdrawal penalty tax. To be a
"qualified distribution," the distribution must satisfy a five-year holding
period and meet one of the following four requirements: (1) be made on or
after the date on which the individual attains age 591/2; (2) be made to a
beneficiary or the individual's estate on or after the individual's death;
(3) be attributable to the individual being disabled; or (4) be a
distribution to pay for a "qualified" first-time home purchase (up to a
lifetime limit of $10,000). The five-year holding period for escaping
inclusion in income begins with the first day of the tax year in which any
contribution (including a conversion from a Regular IRA) is made to a Roth
IRA of the taxpayer. If the Roth IRA owner dies, this 5-taxable-year period
is not redetermined for the Roth IRA while it is held in the name of a
beneficiary or a surviving spouse who treats the decedent's Roth IRA as his
or her own. However, a surviving spouse who treats the Roth IRA as his or
her own, must receive any distributions as coming from the surviving
spouse's own Roth IRA, thus it cannot be treated as being received by a
beneficiary on or after the owner's death for purposes of determining
whether the distribution is a "qualified distribution".
If a distribution from a Roth IRA is not a "qualified distribution" and it
includes amounts allocable to earnings, the earnings distributed are
includable in taxable income and may be subject to the 10% premature
distribution penalty if the taxpayer is under age 59 1/2. Also, the 10%
premature distribution penalty tax may apply to conversion amounts
distributed even though they are not includable in income, if the
distribution is made within the 5-taxable-year period beginning on the
first day of the individual's taxable year in which the conversion
contribution was made. Only the portion of the conversion includable in
income as a result of the conversion would be subject to the penalty tax
under this rule. The 5-taxable-year period for this purpose is determined
separately for each conversion contribution and may not be the same as the
5-taxable-year period used to determine whether a distribution from a Roth
IRA is a "qualified distribution" or not. FOR THIS REASON IT IS IMPORTANT
THAT YOU KEEP TRACK OF WHEN YOUR CONVERSION CONTRIBUTIONS ARE MADE TO YOUR
ROTH IRA. (SEE PART III. L., PREMATURE IRA DISTRIBUTIONS).
Unlike Regular IRAs, distributions from Roth IRAs come first from regular
contributions, then converted amounts on a first-in first-out basis, and
last from earnings. Any distributions made before 2001 which are
attributable to 1998 conversion contributions for which the 4-year
income-tax spread is being utilized, will result in an acceleration of
taxable income in the year of distribution up to the amount of the
distribution allocable to the 1998 conversion. This amount is in addition
to the amount otherwise includable in gross income for that taxable year as
a result of the conversion, but not in excess of the amount required to be
included over the 4-year period. This tax treatment would likewise apply in
the case of distributions made by a surviving spouse who elects to continue
the 4-year spread on death of the original owner of the Roth IRA.
Generally, all Roth IRAs (both regular Roth IRAs and Roth Conversion IRAs)
must be treated as one for purposes of determining the taxation of
distributions. However, if a Roth IRA is held by an individual as
beneficiary of a deceased Roth IRA owner, the 5-taxable-year period used to
determine whether distributions are qualified or not is determined
independently of the 5-year-taxable period for the beneficiary's own Roth
IRAs. However, if a surviving spouse elects to treat the Roth IRA as his or
her own, the 5-year-taxable period for all of the surviving spouse's Roth
IRAs is the earlier of the end of either the 5-taxable-year period for the
decedent or that applicable to the surviving spouse's own Roth IRAs.
THE RULES FOR TAXING NON-QUALIFIED DISTRIBUTIONS AND PREMATURE
DISTRIBUTIONS OF CONVERSION AMOUNTS FROM A ROTH IRA ARE COMPLEX. TO ENSURE
THAT YOU RECEIVE THE TAX RESULT YOU DESIRE, YOU SHOULD CONSULT WITH YOUR
TAX ADVISOR BEFORE TAKING A DISTRIBUTION FROM A ROTH IRA.
K. LUMP SUM DISTRIBUTION: If you decide to receive the entire value of your
IRA Plan in one lump sum, the full amount is taxable when received (except
as to non-deductible contributions to a Regular IRA or to a Roth IRA, or
"qualified distributions" from a Roth IRA), and is not eligible for the
special 5 or 10 year averaging tax rules under Code Section 402 on lump sum
distributions which may be available for other types of Qualified
Retirement Plans.
L. PREMATURE IRA DISTRIBUTIONS: There is a 10% penalty tax on taxable amounts
distributed from your IRA (including the
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<PAGE>
taxable portion of any non-qualified distributions from a Roth IRA, or if
you receive a distribution of conversion amounts within the five-year
period beginning with the year of the conversion, any amounts distributed
that were originally taxable as a result of the conversion) prior to the
attainment of age 59 1/2, except for: (1) distributions made to a
beneficiary on or after the owner's death; (2) distributions attributable
to the owner's being disabled as defined in Code Section 72(m)(7); (3)
distributions that are part of a series of substantially equal periodic
payments (made at least annually) for the life of the annuitant or the
joint lives of the annuitant and his or her beneficiary; (4) distributions
made on or after January 1, 1997 for medical expenses which exceed 7.5% of
the annuitant's adjusted gross income; (5) distributions made on or after
January 1, 1997, to purchase health insurance for the individual and/or his
or her spouse and dependents if he or she: (a) has received unemployment
compensation for 12 consecutive weeks or more; (b) the distributions are
made during the tax year that the unemployment compensation is paid or the
following tax year; and (c) the individual has not been re-employed for 60
days or more; (6) distributions made on or after January 1, 1998 for
certain qualified higher education expenses of the taxpayer, the taxpayer's
spouse, or any child or grandchild of the taxpayer or the taxpayer's
spouse; or (7) qualified first-time home buyer distributions made on or
after January 1, 1998 (up to a lifetime maximum of $10,000) used within 120
days of withdrawal to buy, build or rebuild a first home that is the
principal residence of the individual, his or her spouse, or any child,
grandchild, or ancestor of the individual or spouse. Generally, the part of
a distribution attributable to non-deductible contributions is not
includable in income and is not subject to the 10% penalty. (BUT SEE ROTH
IRA EXCEPTIONS BELOW). Also, beginning January 1, 2000, distributions to
satisfy a levy issued by the IRS will also be exempt from the 10% penalty
tax.
Distributions from a SIMPLE Plan during the two-year period beginning on
the date the employee first participated in the employer's SIMPLE Plan will
be subject to a 25% (rather than 10%) premature distribution penalty tax.
Distributions from a Roth IRA made before the expiration of the applicable
5 year holding period (SEE TAXABILITY OF ROTH IRA DISTRIBUTIONS) are not
treated as qualified distributions and are subject to the 10% penalty tax
to the extent they are includable in taxable income. In addition, any
conversion amounts distributed within the five-year period beginning with
the year in which the conversion occurred, are subject to the 10% penalty
tax even if the distribution is not currently taxable as income, unless one
of the above mentioned exceptions to the penalty tax applies. The penalty
tax will only apply to the amount of the conversion that was includable in
income as a result of the conversion (i.e., it will not apply to
non-deductible contributions that were converted from the Regular IRA).
M. MINIMUM REQUIRED DISTRIBUTIONS: SEE PART II. F.1. AND F.2., NON-ROTH IRA
MINIMUM DISTRIBUTION REQUIREMENTS AND ROTH IRA MINIMUM DISTRIBUTION
REQUIREMENTS. If a minimum distribution is not made from your IRA
(including a Roth IRA) for a tax year in which it is required, the excess,
in any taxable year, of the amount that should have been distributed over
the amount that was actually distributed is subject to an excise tax of
50%.
N. GIFT AND ESTATE TAX CONSEQUENCES: The designation of a beneficiary to
receive funds from a Regular or a Roth IRA is not considered a transfer
subject to federal gift taxes. However, funds remaining in your IRA
(Regular or Roth) at the time of your death are includable in your federal
gross estate for tax purposes. In addition, if the owner of an IRA or Roth
IRA transfers his or her IRA or Roth IRA to another individual by gift, the
gift will be considered an assignment and cause the assets of the IRA or
Roth IRA to be deemed distributed to the owner, and will no longer be
treated as held in the IRA. The IRS has indicated that for gifts of a Roth
IRA made prior to October 1, 1998, if the entire interest in the Roth IRA
is reconveyed to the original Roth IRA owner prior to January 1, 1999, the
IRS will disregard the gift and reconveyance for most tax purposes.
O. MAXIMUM DISTRIBUTIONS: The Taxpayer Relief Act of 1997 repealed both the
15% excess accumulation estate tax and excess distribution excise tax which
previously applied to excess retirement plan accumulations at death and
excess lifetime retirement plan distributions. These rules are repealed for
plan distributions made and decedents who die after December 31, 1996.
P. TAX FILING-REGULAR IRAS: You are not required to file a special IRA tax
form for any taxable year (1) for which no penalty tax is imposed with
respect to the IRA Plan, and (2) in which the only activities engaged in,
with respect to the IRA Plan, are making deductible contributions and
receiving permissible distributions. Information regarding such
contributions or distributions will be included on your regular Form 1040.
In some years, you may be required to file Form 5329 and/or Form 8606 in
connection with your Regular IRA. Form 5329 is filed as an attachment to
Form 1040 or 1040A for any tax year that special penalty taxes apply to
your IRA. If you make non-deductible contributions to a regular IRA, you
must designate those contributions as non-deductible on Form 8606 and
attach it to your Form 1040 or 1040A. There is a $100 penalty each time you
overstate the amount of your non-deductible contributions unless you can
prove the overstatement was due to reasonable cause. Additional information
is required on Form 8606 in years you receive a distribution from a Regular
IRA. There is a $50 penalty for each failure to file a required Form 8606
unless you can prove the failure was due to reasonable cause. For further
information, consult the instructions for Form 5329 (Additional Taxes
Attributable to Qualified Retirement Plans (including IRAs), Annuities, and
Modified Endowment Contracts), Form 8606 and IRS Publication 590.
Q. TAX FILING-ROTH IRA: It is your responsibility to keep records of your
regular and conversion contributions to a Roth IRA and to file any income
tax forms the Internal Revenue Service may require of you as a Roth IRA
owner. You will need this information to calculate your taxable income if
any, when distributions from the Roth IRA begin. For example, conversion
contributions must be reported to the Service on Form 8606. Form 5329 is
required to be filed to the Service by you to report
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<PAGE>
and remit any penalty or excise taxes. Consult the instructions to your tax
return or your tax advisor for additional reporting requirements that may
apply. Additional information is also available in IRS Publication 590.
R. TAX ADVICE: The Company is providing this general information as required
by regulations issued under the Internal Revenue Code and assumes no
responsibility for its application to your particular tax situation. Please
consult with your personal tax advisor regarding specific questions you may
have.
With respect to ROTH IRAS, you should be aware that Congress has recently
enacted legislation that substantially revises the rules relating to
distributions from and conversions to Roth IRAs which applies retroactive
to January 1, 1998. Because of this, and because guidance regarding these
changes has just recently been finalized by the Internal Revenue Service,
you should consult with a tax advisor prior to establishing, making
contributions to, or taking distributions from a Roth IRA, to ensure that
you receive the tax result you anticipate.
S. ADDITIONAL INFORMATION: You may obtain more information about IRA Plans
from any district office of the IRS and IRS Publication 590.
PART IV. STATUS OF THE COMPANY'S IRA PLAN:
INTERNAL REVENUE SERVICE APPROVAL LETTER: The Company has not received approval
from the Internal Revenue Service as to the form of OVERTURE ANNUITY III-Plus
Variable Annuity (Plan 5186), for use in funding Regular IRA plans, nor a SIMPLE
IRA. The Company uses an IRS model Roth IRA endorsement which is "deemed
approved: by the IRS. Such approval, when received, is a determination only as
to the form of the Annuity Contract, and does not represent a determination of
the merits of the annuity.
PART V. FINANCIAL DISCLOSURE:
The following is a general description and required financial disclosure
information for the variable annuity product, OVERTURE ANNUITY III-Plus Variable
Annuity (Plan 5186) offered by First Ameritas, hereafter referred to as the
policy.
In order for you to achieve your retirement objectives, you should be prepared
to make your IRA Plan a long term savings program. An IRA is not suited to
short-term savings, nor was it intended to be by Congress, as indicated by the
general rule that penalties apply to withdrawals before age 59 1/2, subject to
certain exceptions (see PART III; PREMATURE IRA DISTRIBUTIONS). However, you
should be aware of the values in your IRA Plan during the early years as well as
at retirement.
Prior to the annuity date, the policy allows you to accumulate funds based on
the investment experience of the assets underlying the policy in the Separate
Account or the Fixed Account. Currently, the assets which underlie the Separate
Account are invested exclusively in shares of mutual funds, the "Funds", managed
or administered by several fund managers. Each of the Subaccounts of the
Separate Account invest solely in the corresponding portfolio of the Funds. The
assets of each portfolio are held separately from the other portfolios and each
has distinct investment objectives which are described in the accompanying
prospectus for the Funds which you would have received when making the purchase
of your annuity. The accumulation value of your IRA Plan allocated to the
Separate Account will vary in accordance with the investment performance of the
Subaccounts you selected. Therefore, for assets in the Separate Account, you
bear the entire investment risk prior to the annuity date.
Premium payments and subsequent allocations to the Fixed Account are placed in
the general account of the Company which supports insurance and annuity
obligations. Policyowners are paid interest on the amounts placed in the Fixed
Account at guaranteed rates (3.5%) or at higher rates declared by the Company.
ACCUMULATION VALUE: On the effective date, the accumulation value of the policy
is equal to the premium received, reduced by any applicable premium taxes.
Thereafter, the accumulation value of the policy is determined as of the close
of trading on the New York Stock Exchange on each valuation date by multiplying
the number of accumulation units for each Subaccount credited to the policy by
the current value of an accumulation unit for each Subaccount, and by adding the
amount deposited in the Fixed Account, plus interest. The current value of an
accumulation unit reflects the increase or decrease in value due to investment
results of the Subaccount and certain charges, as described below. The number of
accumulation units credited to the policy is decreased by any annual policy fee,
any withdrawals and any charges upon withdrawal and, upon annuitization, any
applicable premium taxes and charges.
A valuation period is the period between successive valuation dates. It begins
at the close of trading on the New York Stock Exchange on each valuation date
and ends at the close of trading on the next succeeding valuation date. A
valuation date is each day that the New York Stock Exchange is open for
business.
The accumulation value is expected to change from valuation period to valuation
period, reflecting the net investment experience of the selected portfolios of
the Funds, interest earned in the Fixed Account, additional premium payments,
partial withdrawals, as well as the deduction of any applicable charges under
the policy. GROWTH IN THE ACCUMULATION VALUE BASED ON INVESTMENTS IN THE
SEPARATE ACCOUNT IS NEITHER GUARANTEED NOR PROJECTED.
FALIC Overture Annuity III-Plus Appendix
- B: 12 -
<PAGE>
VALUE OF ACCUMULATION UNITS: The accumulation units of each Subaccount are
valued separately. The value of an accumulation unit may change each valuation
period according to the net investment performance of the shares purchased by
each Subaccount and the daily charge under the policy for mortality and expense
risks, any daily administrative fee, and if applicable, any federal and state
income tax charges.
CASH SURRENDER VALUE: The amount available for full or partial withdrawal, which
is the accumulation value less any contingent deferred sales charge, any
applicable premium taxes, and, in the case of a full withdrawal, the annual
policy fee.
ANNUAL POLICY FEE: An annual policy fee of $36, is deducted from the
accumulation value on the last valuation date of each policy year and on a full
withdrawal if between policy anniversaries. This charge reimburses the Company
for the administrative costs of maintaining the policy on the Company's system.
This charge is a maximum of $40 and may be reduced or eliminated. First Ameritas
currently waives this charge if the accumulation value of your policy is at
least $50,000.
DAILY ADMINISTRATIVE FEE: A daily charge at an annual rate of 0.15% of the
accumulation value. This charge, which is guaranteed not to be increased, is
designed to reimburse the Company for administrative expenses incurred in
connection with issuing the policy and ongoing administrative expenses incurred
in connection with servicing and maintaining the policies. These expenses
include the cost of processing the application and premium payment, establishing
policy records, processing and servicing owner transactions and policy changes,
recordkeeping, preparing and mailing reports, processing death benefit claims,
and overhead costs.
MORTALITY AND EXPENSE RISK CHARGE: The Company imposes a charge to compensate it
for bearing certain mortality and expense risks under the policies. For assuming
these risks, the Company makes a daily charge equal to an annual rate of 1.25%
of the value of the average daily net assets of the Account. This charge is
subtracted when determining the daily accumulation unit value. The Company
guarantees that this charge will never increase. If this charge is insufficient
to cover assumed risks, the loss will fall on the Company. Conversely, if the
charge proves more than sufficient, any excess will be added to the Company's
surplus. No mortality and expense risk charge is imposed on the Fixed Account.
TAXES: The Company will, where such taxes are imposed by state law upon the
receipt of a premium payment, deduct premium taxes. If premium taxes are imposed
upon annuitization, the Company will deduct applicable premium taxes at that
time. Applicable premium tax rates depend upon such factors as the policyowner's
current state of residency, and the insurance laws and the status of the Company
in states where premium taxes are incurred. Currently, premium taxes will not
exceed 1.25% of the premium paid. Applicable premium tax rates are subject to
change by legislation, administrative interpretations, or judicial acts. The
owner will be notified of any applicable premium taxes.
PARTIAL AND FULL WITHDRAWALS: The owner may make a partial or a full withdrawal
of the policy to receive part or all of the accumulation value (less any
applicable charges), at any time before the annuity date and while the annuitant
is living, by sending a written request to the Company. Partial withdrawals may
be either systematic or elective. Systematic withdrawals provide for an
automatic withdrawal, whereas, each elective withdrawal must be elected by the
owner. Systematic partial withdrawals are available on a monthly, quarterly,
semi annual, or annual mode. If an annuity option is elected, no partial or full
withdrawals may be made after the annuity date except as permitted under the
particular annuity option. Systematic or partial withdrawals may be continued
after the annuity date, for Qualified Policies, with First Ameritas' consent.
The amount available for a full or partial withdrawal (cash surrender value) is
the accumulation value at the end of the valuation period during which the
written request for withdrawal is received, less any contingent deferred sales
charge, any applicable premium taxes, and in the case of a full withdrawal, less
the annual policy fee that would be due on the last valuation date of the policy
year. The cash surrender value may be paid in a lump sum to the owner, or, if
elected, all or any part may be paid out under an annuity income option.
SALES COMMISSIONS: No deductions are made from the premium payments for sales
charges. Commissions paid by the Company to broker-dealers may vary, but are not
expected to exceed 1% of premiums paid. Broker-dealers may also receive asset
based administrative compensation of up to 1% (annualized). From time to time,
additional sales incentives may be provided to broker- dealers.
FALIC Overture Annuity III-Plus Appendix
- B: 13 -
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK LOGO
EMPLOYEE BENEFIT PLAN
INFORMATION STATEMENT
401(A) PENSION/PROFIT SHARING PLANS
403(B) ERISA PLANS
For purchasers of a 401(a) Pension/Profit Sharing Plan, or 403(b) ERISA Plan,
the purpose of this statement is to inform you as an independent Fiduciary of
the Employee Benefit Plan, of the Sales Representative's relationship to and
compensation from First Ameritas Life Insurance Corp. of New York (First
Ameritas), as well as to describe certain fees and charges under the OVERTURE
ANNUITY III-Plus! Variable Annuity Policy being purchased from the Sales
Representative.
The Sales Representative is appointed with First Ameritas as its Sales
Representative and is a Securities Registered Representative. In this position,
the Sales Representative is employed to procure and submit to First Ameritas
applications for contracts, including applications for OVERTURE ANNUITY III-Plus
Variable Annuity.
COMMISSIONS, FEES AND CHARGES
The following commissions, fees and charges apply to OVERTURE ANNUITY III-Plus
Variable Annuity (policy):
SALES COMMISSION: No deductions are made from the premium payments for sales
charges. Commissions paid by the Company to broker-dealers may vary, but are not
expected to exceed 1% of premiums paid. Broker-dealers may also receive asset
based administrative compensation of up to 1% (annualized). From time to time,
additional sales incentives may be provided to broker- dealers.
ANNUAL POLICY FEE: An annual policy fee of up to $40 is deducted from the
accumulation value in the policy on the last valuation date of each policy year
or on a full withdrawal if between policy anniversaries. This charge reimburses
First Ameritas for the administrative costs of maintaining the policy on First
Ameritas's system. This charge is subtracted when determining the daily
accumulation unit value. First Ameritas currently waives this charge if the
accumulation value of your policy is at least $50,000.
DAILY ADMINISTRATIVE FEE: The daily administrative fee is a daily charge at an
annual rate of .15% of the accumulation value. This charge is guaranteed not to
increase and is designed to reimburse First Ameritas for administrative expenses
of issuing, servicing and maintaining the policies. First Ameritas does not
expect to make a profit on this fee.
MORTALITY AND EXPENSE RISK CHARGE: First Ameritas imposes a charge to compensate
it for bearing certain mortality and expense risks under the policies. First
Ameritas makes a daily charge equal to an annual rate of 1.25% of the value of
the average daily net assets of the Account under the policies. This charge is
subtracted when determining the daily accumulation unit value. First Ameritas
guarantees that this charge will never increase. If this charge is insufficient
to cover assumed risks, the loss will fall on First Ameritas. Conversely, if the
charge proves more than sufficient, any excess will be added to First Ameritas's
surplus. No mortality and expense risk charge is imposed on the Fixed Account.
PARTIAL AND FULL WITHDRAWALS: The policyowner may make a partial or a full
withdrawal of the policy to receive part or all of the accumulation value (less
any applicable charges), at any time before the annuity date and while the
annuitant is living by sending a written request to First Ameritas. Partial
withdrawals may be either systematic or elective. Systematic withdrawals provide
for an automatic withdrawal, whereas, each elective withdrawal must be elected
by the owner. Systematic partial withdrawals are available only on an annual
mode. No partial or full withdrawals may be made after the annuity date except
as permitted under the particular annuity option or as may be permitted under
the Plan and the Internal Revenue Code and applicable regulations. The amount
available for partial or full withdrawal (cash surrender value) is the
accumulation value at the end of the valuation period during which the written
request for withdrawal is received, less any contingent deferred sales charge,
any applicable premium taxes, and in the case of a full withdrawal, the annual
policy fee that would be due on the last valuation date of the policy year. The
cash surrender value may be paid in a lump sum to the owner, or if elected, all
or any part may be paid out under an annuity income option.
TAXES: First Ameritas will deduct premium taxes upon receipt of a premium
payment or upon annuitization depending upon the requirements of the law of the
state of the policyowner's residence. Currently, premium taxes will not exceed
1.25% of the premium paid, but are subject to change by legislation,
administrative interpretations, or judicial act.
FUND INVESTMENT ADVISORY FEES AND EXPENSES: At the direction of the policyowner,
the Separate Account purchases shares of Funds which are available for
investment under this policy. The net assets of the Separate Account will
reflect the value of the Fund shares and therefore, investment advisory fees and
other expenses of the Funds. A complete description of these fees and expenses
is contained in the Funds' Prospectuses.
FALIC Overture Annuity III-Plus Appendix
- B: 14 -
<PAGE>
THANK YOU
for reviewing this Prospectus. You should also
review the series fund prospectuses for those
Subaccount variable investment option underlying
portfolios you wish to select.
IF YOU HAVE QUESTIONS,
contact your sales representative, or
write or call us at:
FOR APPLICATION AND RELATED QUESTIONS
First Ameritas Life Insurance Corp. of New York
400 Rella Blvd, #304
Suffern, NY 10901 Telephone:
1-877-380-1586
Fax:
FOR ALL OTHER MATTERS
First Ameritas Life Insurance Corp. of New York
Service Center
P.O. Box 82550
Lincoln, Nebraska 68501
or
5900 "O" Street
Lincoln, Nebraska 68510
Telephone: 1-800-745-1112
Fax: 1-800-745-6153
www.newyork.ameritas.com
REMEMBER, THE CORRECT FORM
is important for us to accurately process your
Policy elections and changes. Many can be found
on our website "on-line services" site. Or, call us
at our toll-free number and we'll send you the
form you need.
|_| STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS
A Statement of Additional Information and other information about us and
the Policy with the same date as this prospectus contains more details
concerning the disclosures in this prospectus.
For a free copy, access it on the SEC's Web site
(WWW.SEC.GOV/EDAUX/PROSPECT.HTM, and type in "First Ameritas"), or write or call
us. Here is the Table of Contents for the Statement of Additional Information:
BEGIN ON
PAGE
General Information and History 2
Services
Purchase of Securities Being Offered
Underwriters
Calculation of Performance 2
Standardized Performance Reporting
Non-Standardized Performance Reporting
Our Performance Reports
Yields
Additional Tax Information 6
General
Withholding Tax on Distributions
Diversification
Owner Control
Multiple Contracts
Partial 1035 Exchanges
Contracts Owned by other than Natural
Persons
Death Benefits
Tax Treatment of Assignments
Qualified Plans
Tax Treatment of Withdrawals
Types of Qualified Plans
Other Information 12
Service Marks & Copyright
Financial Statements
(C) First Ameritas Life Insurance Corp. of New York
FALIC Overture Annuity III-Plus LAST PAGE
<PAGE>
REGISTRATION 333-39246
STATEMENT OF ADDITIONAL INFORMATION
DATED: ___________, 2000
FOR
OVERTURE ANNUITY III-PLUS FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY
ISSUED BY: FIRST AMERITAS VARIABLE ANNUITY SEPARATE ACCOUNT
OF FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the prospectus
and should be read in conjunction with the Policy prospectus dated _______,
2000. The prospectus may be obtained from our Service Center by writing us at
P.O. Box 82550, Lincoln, Nebraska 68501, by e-mailing us through our website at
www.newyork.ameritas.com, or by calling us at 1-800-745-1112. Defined terms used
in the current prospectus for the Policies are incorporated in this Statement.
TABLE OF CONTENTS
PAGE
General Information and History 2
Services
Purchase of Securities Being Offered
Underwriters
Calculation of Performance 2
Standardized Performance Reporting
Non-Standardized Performance Reporting
Our Performance Reports
Yields
Additional Tax Information 6
General
Withholding Tax on Distributions
Diversification
Owner Control
Multiple Contracts
Partial 1035 Exchanges
Contracts Owned by other than Natural Persons
Death Benefits
Tax Treatment of Assignments
Qualified Plans
Tax Treatment of Withdrawals
Types of Qualified Plans
Other Information 12
Service Marks & Copyright
Financial Statements
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 1
<PAGE>
GENERAL INFORMATION AND HISTORY
First Ameritas Variable Annuity Separate Account is a separate investment
account of First Ameritas Life Insurance Corp. of New York ("we, us, our, First
Ameritas"). We are a stock life insurance company organized under the insurance
laws of the State of New York in 1993. We are a wholly owned subsidiary of
Ameritas Life Insurance Corp., Nebraska's oldest insurance company - in business
since 1887. We are subject to New York law and regulated by the New York
Department of Insurance. We currently conduct insurance business only, and only
in the State of New York. We are an affiliate of Ameritas Variable Life
Insurance Company, which conducts similar variable annuity and variable life
business in all states except Maine, New York and Vermont.
SERVICES
We are the custodian of the assets of the Separate Account. The custodian has
custody of all funds of the Separate Account and collects proceeds of shares of
the Subaccount underlying portfolios bought and sold by the Separate Account. We
are also the custodian of Policy assets in the Fixed Account, which are held in
our general account.
The statutory basis financial statements included in this Statement have been
audited by Deloitte & Touche LLP, 1248 "O" Street Suite 1040, Lincoln, Nebraska
68508, independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
All matters of state and federal law pertaining to the Policies have been passed
upon by our internal legal staff.
PURCHASE OF SECURITIES BEING OFFERED
The Policy will be sold by licensed insurance agents in states where the
Policies may be lawfully sold. The agents will be registered representatives of
broker-dealers that are registered under the Securities Exchange Act of 1934 and
members of the National Association of Securities Dealers, Inc. (NASD).
UNDERWRITERS
The Policy is offered continuously and is distributed by Ameritas Investment
Corp ("AIC"), 5900 "0" Street, Lincoln, Nebraska 68510. AIC is a subsidiary of
AMAL Corporation, a holding company that is a joint venture of Ameritas Life
Insurance Corp. and AmerUs Life Insurance Company, both of which guaranty the
performance of AIC. AIC enters into contracts with various broker-dealers
("Distributors") to distribute Policies. Since we just began issuing Policies
under the Separate Account concurrent with the effective date of the Policy
prospectus, we have not previously paid any compensation to AIC for principal
underwriter or distribution services.
CALCULATION OF PERFORMANCE
When we advertise performance for a Subaccount (except any Money Market
Subaccount), we will include quotations of standardized average annual total
return to facilitate comparison with standardized average annual total return
advertised by other variable annuity separate accounts. Standardized average
annual total return for a Subaccount will be shown for periods beginning on the
date the Subaccount first invested in a corresponding series fund portfolio. We
will calculate standardized average annual total return according to the
standard methods prescribed by rules of the Securities and Exchange Commission
("SEC").
We report average annual total return information via internet and periodic
printed reports. Average annual total return quotations on our internet website
will be current as of the previous Business Day. Printed average annual total
return information may be current to the last Business Day of the previous
calendar week, month, or quarter preceding the date on which a report is
submitted for publication. Both standardized average annual total return
quotations and
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 2
<PAGE>
non-standardized total return quotations will cover at least periods of one,
five, and ten years, or a period covering the time the Subaccount has been in
existence, if it has not been in existence for one of the prescribed periods. If
the corresponding series fund portfolio has been in existence for longer than
the Subaccount, the non-standardized total return quotations will show the
investment performance the Subacount would have achieved (reduced by the
applicable charges) had it been invested in the series fund portfolio for the
period quoted; this is referred to as "adjusted historical" performance
reporting. Standardized average annual total return is not available for periods
before the Subaccount was in existence.
Quotations of standardized average annual total return and non-standardized
total return are based on historical earnings and will fluctuate. Any quotation
of performance should not be considered a guarantee of future performance.
Factors affecting the performance of a Subaccount and it's corresponding series
fund portfolio include general market conditions, operating expenses and
investment management. An Owner's withdrawal value upon surrender of a Policy
may be more or less than the premium invested in the Policy.
STANDARDIZED PERFORMANCE REPORTING
Standardized average annual total return for a specific period is calculated by
taking a hypothetical $1,000 investment in a Subaccount at the offering on the
first day of the period ("initial investment"), and computing the ending
redeemable value ("redeemable value") of that investment at the end of the
period. The redeemable value is then divided by the initial investment and
expressed as a percentage, carried to at least the nearest hundredth of a
percent. Standardized average annual total return is annualized and reflects the
deduction of the guaranteed maximum mortality and expense fee and administrative
expense charge, the guaranteed maximum annual Policy Fee, and is presented both
with and without the guaranteed maximum charge for all optional features
(presently only a Periodic Step-Up Guaranteed Minimum Death Benefit). The
redeemable value also reflects the effect of any applicable withdrawal charge
that may be imposed at the end of the period. No deduction is made for premium
taxes which may be assessed by certain states. (New York does not impose a
premium tax on variable annuity policy premium.)
NON-STANDARDIZED PERFORMANCE REPORTING
We may also advertise non-standardized total return. Non-standardized total
return may assume: (1) the Policy is not surrendered, so no withdrawal charges
are levied; (2) the Subaccounts have existed for periods other than those
required to be presented; (3) current charges are incurred if they are less than
the Policy's guaranteed maximum charges; or (4) may differ from standardized
average annual total return in other ways disclosed in the table description.
Non-standardized total return may also assume a larger initial investment which
more closely approximates the size of a typical Policy. For these reasons,
non-standardized total returns for a Subaccount are usually higher than
standardized total returns for a Subaccount.
OUR PERFORMANCE REPORTS
Since the Separate Account just commenced operations on the effective date of
this Prospectus, we do not have any standardized average annual total returns to
report for each investment portfolio (except the Ameritas Money Market
Subaccount). When we do, they will be shown for 1, 5, and 10 year periods and
since inception of each Separate Account Subaccount (more recent returns may be
more or less than the stated returns due to market volatility).
The non-standardized average annual total returns that each Subaccount (except
any Money Market Subaccount) would have achieved if it had been invested in the
corresponding series fund portfolio for the periods indicated, calculated in a
manner similar to standardized average annual total return (more recent returns
may be more or less than the stated returns due to market volatility) are:
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 3
<PAGE>
NON-STANDARDIZED "ADJUSTED HISTORICAL" AVERAGE ANNUAL TOTAL RETURN
FOR PERIOD ENDING ON 12/31/1999
(REFLECTS BASE POLICY CHARGES THAT ARE APPLICABLE TO THE SEPARATE ACCOUNT ONLY;
E.G., NO POLICY FEE, NO WITHDRAWAL CHARGES, AND NO OPTIONAL FEATURE CHARGES.
ALSO REFLECTS EXPERIENCE OF THE SUBACCOUNT UNDERLYING PORTFOLIO FOR PERIODS
BEYOND THE SUBACCOUNT'S OWN INCEPTION DATE.)
(COMPUTED ON THE SAME BASIS AS STANDARDIZED TOTAL RETURN EXCEPT CURRENT CHARGES
ARE USED RATHER THAN GUARANTEED MAXIMUM CHARGES, NO POLICY FEE IS REFLECTED, AND
NO WITHDRAWAL CHARGES ARE REFLECTED SINCE THE POLICY IS INTENDED FOR LONG TERM
INVESTMENT. ASSUMES NO OPTIONAL FEATURES ARE SELECTED.) REFLECTS THESE EXPENSES
DEDUCTED DAILY FROM POLICY SEPARATE ACCOUNT ASSETS TO EQUAL THE ANNUAL % SHOWN:
MORTALITY AND EXPENSE RISK CHARGE OF 1.25% AND ADMINISTRATIVE EXPENSE CURRENT
CHARGE OF 0.15%.
<TABLE>
<CAPTION>
o Subaccount One Year Five Year Ten Year or, if less
Underlying porfolio inception date Since Inception
Continue Policy Continue Policy Continue Policy
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALGER
o Alger American Balanced (9/5/89) 27.44% 21.89% 12.19%
o Alger American Leveraged AllCap (1/25/95) 75.63% NA 44.42%
AMERITAS PORTFOLIOS (subadvisor)
o Ameritas Growth (Fred Alger) (1/9/89) 32.82% 29.27% 21.24%
o Ameritas Income & Growth
(Fred Alger) (11/15/88) 42.73% 31.54% 17.45%
o Ameritas MidCap Growth
(Fred Alger) (5/3/93) 30.02% 24.39% 22.99%
o Ameritas Small Capitalization
(Fred Alger) (9/21/88) 45.81% 21.68% 16.92%
o Ameritas Emerging Growth
(MFS Co.) (7/24/95) 73.93% NA 34.47%
o Ameritas Growth With Income
(MFS Co.) (10/9/95) 4.57% NA 19.26%
o Ameritas Research (MFS Co.) (7/26/95) 21.89% NA 21.05%
o Ameritas Index 500 (State Street) (8/1/95) 18.94% NA 24.50%
CALVERT SOCIAL
o CVS Social Balanced (9/2/86) 11.23% 17.02% 11.05%
o CVS Social International Equity (6/30/92) 31.78% 17.06% 13.72%
o CVS Social Mid Cap Growth (7/16/91) 5.90% 19.80% 13.06%
o CVS Social Small Cap Growth (3/15/95) 18.38% NA 7.60%
FIDELITY (Service Class 2)
o VIP Asset Manager (9/6/89) 9.55% 14.02% 11.57%
o VIP Asset Manager: Growth (1/3/95) 13.66% NA 18.48%
o VIP Contrafund (1/3/95) 22.54% NA 25.96%
o VIP Equity-Income (10/9/86) 4.85% 16.96% 12.89%
o VIP Growth (10/9/86) 35.55% 27.92% 18.25%
o VIP High Income (9/19/85) 6.59% 9.33% 10.86%
o VIP Investment Grade Bond (12/5/88) -2.42% 5.80% 5.69%
o VIP Overseas (1/28/87) 40.26% 15.82% 9.87%
MFS
o Global Governments (6/14/94) -3.85% 2.95% 2.66%
o New Discovery (5/1/98) 72.65% NA 40.11%
o Utilities (1/3/95) 29.01% NA 24.70%
MORGAN STANLEY
o Emerging Markets Equity (10/1/96) 92.04% NA 10.48%
o Global Equity (1/2/97) 2.66% NA 10.65%
o International Magnum (1/2/97) 23.51% NA 11.84%
o U.S. Real Estate (3/3/97) -2.84% NA -0.61%
</TABLE>
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 4
<PAGE>
YIELDS
We may advertise the current annualized yield for a 30-day period for a
Subaccount. The annualized yield of a Subaccount refers to the income generated
by the Ssubaccount over a specified 30-day period. Because this yield is
annualized, the yield generated by a Subaccount 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 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 COMPANY
ATTRIBUTABLE TO SHARES OWNED BY THE SUBACCOUNT, B=EXPENSES ACCRUED FOR THE
PERIOD (NET OF REIMBURSEMENTS), C=THE AVERAGE DAILY NUMBER OF ACCUMULATION UNITS
OUTSTANDING DURING THE PERIOD, AND D=THE MAXIMUM OFFERING PRICE PER ACCUMULATION
UNIT ON THE LAST DAY OF THE PERIOD. THE YIELD REFLECTS THE BASE POLICY MORTALITY
AND EXPENSE RISK FEE, ADMINISTRATIVE EXPENSE CHARGE AND THE ANNUAL POLICY FEE.
NET INVESTMENT INCOME WILL BE DETERMINED ACCORDING TO RULES ESTABLISHED BY THE
SEC. THE YIELD ASSUMES AN AVERAGE POLICY SIZE OF $30,000, SO REFLECTS A POLICY
FEE, AND ALSO ASSUMES THE POLICY WILL CONTINUE (SINCE THE POLICY IS INTENDED FOR
LONG TERM INVESTMENT) SO DOES NOT REFLECT ANY WITHDRAWAL CHARGE. THE YIELD DOES
NOT INCLUDE CHARGES FOR ANY OPTIONAL FEATURE.
Because of the charges and deductions imposed by the Separate Account, the yield
for a Subaccount will be lower than the yield for the corresponding series fund
portfolio. The yield on amounts held in the Subaccount 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. A Subaccount's
actual yield will be affected by the types and quality of portfolio securities
held by the series fund and the series fund's operating expenses.
Any current yield quotations of the Ameritas Money Market Subaccount, subject to
Rule 482 of the Securities Act of 1933, will consist of a seven calendar day
historical yield, carried at least to the nearest hundredth of a percent. We may
advertise yield for the Subaccount based on different time periods, but we will
accompany it with a yield quotation based on a seven day calendar period. The
Ameritas Money Market Subaccount's yield will be calculated by determining the
net change, exclusive of capital changes, in the value of a hypothetical
pre-existing Policy having a balance of one Accumulation Unit at the beginning
of the base period, subtracting a hypothetical charge reflecting those Policy
deductions stated above, and dividing the net change in Policy value by the
value of the Policy at the beginning of the period to obtain a base period
return and multiplying the base period return by (365/7). The Ameritas Money
Market Subaccount's effective yield is computed similarly but includes the
effect of assumed compounding on an annualized basis of the current yield
quotations of the Subaccount.
AS OF 12/31/1999
REFLECTING MAXIMUM GUARANTEED CHARGES YIELD EFFECTIVE YIELD
Ameritas Money Market Subacccount * *
REFLECTING CURRENT CHARGES YIELD EFFECTIVE YIELD
Ameritas Money Market Subacccount * *
* Since the Subaccount just commenced operation on the effective date
of the Policy prospectus, there is no historical yield information to
report.
The Ameritas Money Market Subaccount's yield and effective yield will fluctuate
daily. Actual yields will depend on factors such as the type of instruments in
the series fund's portfolio, portfolio quality and average maturity, changes in
interest rates, and the series fund's expenses. Although we determine the
Subaccount's yield on the basis of a seven calendar day period, we may use a
different time period on occasion. The yield quotes may reflect the expense
limitations described in the series fund's prospectus or Statement of Additional
Information. There is no assurance that the yields quoted on any given occasion
will be maintained for any period of time and there is no guarantee that the net
asset values will remain constant. It should be noted that neither a Policy
owner's investment in the Ameritas Money Market Subaccount nor that Subaccount's
investment in the Ameritas Money Market series fund portfolio is guaranteed or
insured. Yields of other money market funds may not be comparable if a different
base or another method of calculation is used.
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 5
<PAGE>
ADDITIONAL TAX INFORMATION
NOTE: THIS INFORMATION SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF A PERSONAL
TAX ADVISOR. WE DO NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY
OR TRANSACTION INVOLVING THE POLICY. PURCHASERS BEAR THE COMPLETE RISK THAT THE
POLICY MAY NOT BE TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS.
THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND SPECIAL RULES NOT DESCRIBED IN
THE POLICY PROSPECTUS MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code"),
governs taxation of annuities in general. An individual owner is not taxed on
increases in Policy value until distribution occurs, either in the form of a
withdrawal or as annuity payments under the annuity option elected. For a
withdrawal received as a total surrender (total withdrawal or a death benefit),
the recipient is taxed on the portion of the payment that exceeds the cost basis
of the Policy. For a payment received as a partial withdrawal, federal tax
liability is generally determined on a last-in, first-out basis, meaning taxable
income is withdrawn before the Policy's cost basis is withdrawn. For Policies
issued in connection with non-qualified plans, the cost basis is generally the
premiums, while for contracts issued in connection with qualified plans there
may be no cost basis. The taxable portion of a withdrawal is taxed at ordinary
income tax rates. Tax penalties may also apply.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includable in taxable income. The exclusion amount for payments based on a
fixed annuity income option is determined by multiplying the payment by the
ratio that the cost basis of the Policy (adjusted for any period certain or
refund feature) bears to the expected return under the Policy. Payments received
after the investment in the Policy has been recovered (i.e. when the total of
the excludable amounts equals the investment in the Policy) are fully taxable.
The taxable portion is taxed at ordinary income tax rates. For certain types of
qualified plans there may be no cost basis in the Policy within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under a Policy
should seek competent financial advice about the tax consequences of
distributions.
We are taxed as a life insurance company under the Code. For federal income tax
purposes, the Separate Account is not a separate entity from us.
WITHHOLDING TAX ON DISTRIBUTIONS
The Code generally requires us (or, in some cases, a plan administrator) to
withhold tax on the taxable portion of any distribution or withdrawal from a
contract. For "eligible rollover distributions" from Policies issued under
certain types of qualified plans, 20% of the distribution must be withheld,
unless the payee elects to have the distribution "rolled over" to another
eligible plan in a direct transfer. This requirement is mandatory and cannot be
waived by the owner.
An "eligible rollover distribution" is the estimated taxable portion of any
amount received by a covered employee from a plan qualified under Section 401(a)
or 403(a) of the Code, or from a tax sheltered annuity qualified under Section
403(b) of the Code (other than (1) a series of substantially equal annuity
payments for the life (or life expectancy) of the employee, or joint lives (or
joint life expectancies) of the employee, and his or her designated beneficiary,
or for a specified period of ten years or more; (2) minimum distributions
required to be made under the Code; and (3) hardship withdrawals). Failure to
"rollover" the entire amount of an eligible rollover distribution (including an
amount equal to the 20% portion of the distribution that was withheld) could
have adverse tax consequences, including the imposition of a penalty tax on
premature withdrawals, described later in this section.
Withdrawals or distributions from a Policy other than eligible rollover
distributions are also subject to withholding on the estimated taxable portion
of the distribution, but the owner may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming three withholding
exemptions.
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 6
<PAGE>
Generally, the amount of any payment of interest to a non-resident alien of the
United States shall be subject to withholding of a tax equal to thirty (30%)
percent of such amount or, if applicable, a lower treaty rate. A payment may not
be subject to withholding where the recipient sufficiently establishes that such
payment is effectively connected to the recipient's conduct of a trade or
business in the United States and such payment is included in the recipient's
gross income.
DIVERSIFICATION
Section 817(h) of the Code provides that in order for a variable annuity policy
based on a segregated asset account to qualify as an annuity contract under the
Code, the investments made by such policy must be "adequately diversified." The
Treasury regulations issued under Section 817(h) (Treas. Reg. 1.817-5) apply a
diversification requirement to each of the Subaccounts of the Separate Account.
The Separate Account, through the series funds and their portfolios, intends to
comply with those diversification requirements. We and the series funds have
entered into agreements regarding participation in the series funds that
requires the series funds and their portfolios to comply with the Treasury
regulations.
OWNER CONTROL
The Treasury department has indicated that the diversification regulations do
not provide guidance regarding the circumstances in which Policy owner control
of the investments of the Separate Account will cause the Policy owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment of the Policy. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Owner control which may be exercised under the Policy is different
in some respects from the situations addressed in published rulings issued by
the Internal Revenue Service in which it was held that the policy owner was not
the owner of the assets of the separate account. It is unknown whether these
differences, such as the Owner's ability to transfer among investment choices or
the number and type of investment choices available, would cause the Owner to be
considered as the owner of the assets of the Separate Account resulting in the
imposition of federal income tax to the Owner with respect to earnings allocable
to the contract prior to receipt of payments under the Policy.
Due to the uncertainty in this area, we reserve the right to modify the Policy
in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple annuity contracts which are issued within a
calendar year to the same contract owner by one company or its affiliates are
treated as one annuity contract for purposes of determining the tax consequences
of any distribution. Such treatment may result in adverse tax consequences
including more rapid taxation of the distributed amounts from such multiple
contracts. For purposes of this rule, contracts received in a Section 1035
exchange will be considered issued in the year of the exchange. OWNERS SHOULD
CONSULT A TAX ADVISER PRIOR TO PURCHASING MORE THAN ONE ANNUITY CONTRACT IN ANY
CALENDAR YEAR.
PARTIAL 1035 EXCHANGES
Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. The Internal Revenue Service
has stated that it will challenge transactions where taxpayers enter into a
series of partial exchanges and annuitizations as part of a design to avoid
application of the 10% premature distribution penalty or other limitations
imposed on annuity contracts under the Code. In the absence of further guidance
from the Internal Revenue Service it is unclear what specific types of partial
exchange designs and transactions will be challenged by the Internal Revenue
Service. DUE TO THE UNCERTAINTY IN THIS AREA, OWNERS SHOULD CONSULT THEIR OWN
TAX ADVISERS PRIOR TO ENTERING INTO A PARTIAL EXCHANGE OF AN ANNUITY CONTRACT.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on policy premiums will
be taxed currently to the owner if the owner is a non-natural person, e.g., a
corporation or certain other entities. Such policies generally will not be
treated
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 7
<PAGE>
as annuities for federal income tax purposes. However, this treatment is not
applied to policies held by a trust or other entity as an agent for a natural
person nor to policies held by certain qualified plans. PURCHASERS SHOULD
CONSULT THEIR OWN TAX COUNSEL OR OTHER TAX ADVISER BEFORE PURCHASING A POLICY TO
BE OWNED BY A NON-NATURAL PERSON.
DEATH BENEFITS
Any death benefits paid under the Policy are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity policy, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
TAX TREATMENT OF ASSIGNMENTS
AN ASSIGNMENT OR PLEDGE OF A POLICY MAY HAVE TAX CONSEQUENCES, AND MAY ALSO BE
PROHIBITED BY ERISA IN SOME CIRCUMSTANCES. OWNERS SHOULD, THEREFORE, CONSULT
COMPETENT LEGAL ADVISERS SHOULD THEY WISH TO ASSIGN OR PLEDGE THEIR POLICY.
QUALIFIED PLANS
The Policy offered by the Prospectus is designed to be suitable for use under
various types of qualified plans. Taxation of owners in each qualified plan
varies with the type of plan and terms and conditions of each specific plan.
Owners, Annuitants and Beneficiaries are cautioned that benefits under a
qualified plan may be subject to the terms and conditions of the plan,
regardless of the terms and conditions of the Policies issued to fund the plan.
TAX TREATMENT OF WITHDRAWALS
NON-QUALIFIED PLANS
Section 72 of the Code governs treatment of distributions from annuity policies.
It provides that if the policy value exceeds the aggregate premiums made, any
amount withdrawn not in the form of an annuity payment will be treated as coming
first from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are included in a taxpayer's gross
income. Section 72 further provides that a 10% penalty will apply to the income
portion of any distribution. The penalty is not imposed on amounts received: (1)
after the taxpayer reaches 59 1/2; (2) upon the death of the owner; (3) if the
taxpayer is totally disabled as defined in Section 72(m)(7) of the Code; (4) in
a series of substantially equal periodic payments made at least annually for the
life (or life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his beneficiary; (5) under an immediate
annuity; or (6) which are allocable to premium payments made prior to August 14,
1982.
With respect to (4) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
QUALIFIED PLANS
In the case of a withdrawal under a qualified Policy, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a qualified
Policy. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Policies
issued and qualified under Code Sections 401 (Pension and Profit Sharing plans),
403(b) (tax-sheltered annuities) and 408 and 408A (IRAs). To the extent amounts
are not included in gross income because they have been rolled over to an IRA or
to another eligible qualified plan, no tax penalty will be imposed.
The tax penalty will not apply to the following distributions: (1) if
distribution is made on or after the date on which the owner or annuitant (as
applicable) reaches age 59 1/2; (2) distributions following the death or
disability of the owner or annuitant (as applicable) (for this purpose
"disability" is defined in Section 72(m)(7) of the Code); (3) after separation
from service, distributions that are part of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the owner or annuitant (as applicable) or the joint lives (or
joint life expectancies) of such owner or annuitant (as applicable) and his or
her designated beneficiary; (4) distributions to an
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 8
<PAGE>
owner or annuitant (as applicable) who has separated from service after he has
attained age 55; (5) distributions made to the owner or annuitant (as
applicable) to the extent such distributions do not exceed the amount allowable
as a deduction under Code Section 213 to the owner or annuitant (as applicable)
for amounts paid during the taxable year for medical care; (6) distributions
made to an alternate payee pursuant to a qualified domestic relations order; (7)
distributions made on account of an IRS levy upon the qualified Policy; (8)
distributions from an IRA for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the policy owner or annuitant (as
applicable) and his or her spouse and dependents if the policy owner or
annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception will no longer apply after the policy owner or annuitant
(as applicable) has been re-employed for at least 60 days); (9) distributions
from an Individual Retirement Annuity made to the owner or annuitant (as
applicable) to the extent such distributions do not exceed the qualified higher
education expenses (as defined in Section 72(t)(7) of the Code) of the owner or
annuitant (as applicable) for the taxable year; and (10) distributions from an
Individual Retirement Annuity made to the owner or annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exception stated in items (4) and (6) above do not
apply in the case of an IRA. The exception stated in (3) above applies to an IRA
without the requirement that there be a separation from service.
With respect to (3) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (in accordance with Section 403(b)(11) of the Code) are
limited to the following: when the owner attains age 59 1/2, separates from
services, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code), or in the case of hardship. Hardship withdrawals do not include any
earnings on salary reduction contributions. These limitations on withdrawals
apply to: (1) salary reduction contributions made after December 31, 1988; (2)
income attributable to such contributions; and (3) income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers or exchanges between certain qualified plans. Tax penalties may
also apply. While the foregoing limitations only apply to certain contracts
issued in connection with Section 403(b) qualified plans, all owners should seek
competent tax advice regarding any withdrawals or distributions.
The taxable portion of a withdrawal or distribution from contracts issued under
certain types of plans may, under some circumstances, be "rolled over" into
another eligible plan so as to continue to defer income tax on the taxable
portion. Effective January 1, 1993, such treatment is available for an "eligible
rollover distribution" made by certain types of plans (as described above under
"Withholding Tax on Distributions") that is transferred within 60 days of
receipt into another eligible plan or an IRA, or an individual retirement
account described in section 408(a) of the Code. Plans making such eligible
rollover distributions are also required, with some exceptions specified in the
Code, to provide for a direct transfer of the distribution to the transferee
plan designated by the recipient.
Amounts received from IRAs may also be rolled over into other IRAs, individual
retirement accounts or certain other plans, subject to limitations set forth in
the Code.
Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year following the year in which the employee attains the
later of age 70 1/2 or the date of retirement. In the case of an IRA,
distribution must commence no later than April 1 of the calendar year following
the year in which the owner attains age 70 1/2. Required distributions must be
over a period not exceeding the life or life expectancy of the individual or the
joint lives or life expectancies of the individual and his or her designated
beneficiary. If the required minimum distributions are not made, a 50% penalty
tax is imposed as to the amount not distributed.
TYPES OF QUALIFIED PLANS
The Policy is designed to be suitable for use under various types of qualified
plans. Taxation of participants in each qualified plan varies with the type of
plan and terms and conditions of each specific plan. Owners, Annuitants and
Beneficiaries are cautioned that benefits under a qualified plan may be subject
to the terms and conditions of the plan
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 9
<PAGE>
regardless of the terms and conditions of the policies issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into our administrative procedures. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
the terms of a Policy, unless we specifically consents to be bound. OWNERS,
ANNUITANTS AND BENEFICIARIES ARE RESPONSIBLE FOR DETERMINING THAT CONTRIBUTIONS,
DISTRIBUTIONS AND OTHER TRANSACTIONS WITH RESPECT TO THE POLICY COMPLY WITH
APPLICABLE LAW.
A qualified Policy will not provide any necessary or additional tax deferral if
it is used to fund a qualified plan that is tax deferred. However, the Policy
has features and benefits other than tax deferral that may make it an
appropriate investment for a qualified plan. Following are generally
descriptions of the types of qualified plans with which the Policy may be used.
Such descriptions are not exhaustive and are for general informational purposes
only. THE TAX RULES REGARDING QUALIFIED PLANS ARE VERY COMPLEX AND WILL HAVE
DIFFERING APPLICATIONS DEPENDING ON INDIVIDUAL FACTS AND CIRCUMSTANCES. EACH
PURCHASER SHOULD OBTAIN COMPETENT TAX ADVICE PRIOR TO PURCHASING A POLICY ISSUED
UNDER A QUALIFIED PLAN.
Policies issued pursuant to qualified plans include special provisions
restricting Policy provisions that may otherwise be available as described
herein. Generally, Policies issued pursuant to qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from qualified policies. (See "Tax
Treatment of Withdrawals - Qualified Contracts" above.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Policies sold by the Company in connection with
certain qualified plans will utilize tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c) (3) of the Code. These qualifying employers may make
contributions to the Policy for the benefit of their employees. Such
contributions are not included in the gross income of the employee until the
employee receives distributions from the Policy. The amount of contributions to
the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, non-discrimination and withdrawals. Employee
loans are allowed under this Policy. Any employee should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's taxable income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. Sales of Policies for use with IRAs are subject to special
requirements imposed by the Code, including the requirement that certain
informational disclosure be given to persons desiring to establish an IRA.
PURCHASERS OF POLICIES TO BE QUALIFIED AS IRAS SHOULD OBTAIN COMPETENT TAX
ADVICE AS TO THE TAX TREATMENT AND SUITABILITY OF SUCH AN INVESTMENT.
ROTH IRAS
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRAs and non-Roth IRAs.
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 10
<PAGE>
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that the individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. There are no similar limitations on
rollovers from a Roth IRA to another Roth IRA.
PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Policy to provide benefits under
the plan. Contributions to the plan for the benefit of employees will not be
included in the gross income of the employee until distributed from the plan.
The tax consequences to owners may vary depending upon the particular plan
design. However, the Code places limitations on all plans on such items as
amount of allowable contributions; form, manner and timing of distributions;
vesting and non-forfeitability of interests; nondiscrimination in eligibility
and participation; and the tax treatment of distributions, transferability of
benefits, withdrawals and surrenders. Purchasers of contracts for use with
pension or profit sharing plans should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
NON-QUALIFIED DEFERRED COMPENSATION PLANS -- SECTION 457
Under Code provisions, employees and independent contractors performing services
for state and local governments and other tax-exempt organizations may
participate in Deferred Compensation Plans Under Section 457 of the Code. The
amounts deferred under a plan which meets the requirements of Section 457 of the
Code are not taxable as income to the participant until paid or otherwise made
available to the participant or beneficiary. As a general rule, the maximum
amount which can be deferred in any one year is the lesser of $8,000 or 33 1/3
percent of the participant's includible compensation. However, in limited
circumstances, the plan may provided for additional catch-up contributions in
each of the last three years before normal retirement age. Furthermore, the Code
provides additional requirements and restrictions regarding eligibility and
distributions.
All of the assets and income of a plan established by governmental employer
after August 20, 1996, must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. Plans that were in existence on
August 20, 1996 may be amended to satisfy the trust and exclusive benefit
requirement any time prior to January 1, 1999, and must be amended not later
than that date to continue to receive favorable tax treatment. The requirement
of a trust does not apply to amounts under a plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a plan of a governmental employer if the plan is not an
eligible plan within the meaning of section 457(b) of the Code. In the absence
of such a trust, amounts under the plan will be subject to the claims of the
employer's general creditors.
In general, distributions from a plan are prohibited under section 457 of the
Code unless made after the participating employee attains age 70 1/2, separates
from service, dies, or suffers an unforeseeable financial emergency as defined
in the Code.
Under present federal tax law, amounts accumulated in a plan under section 457
of the Code cannot be transferred or rolled over on a tax-deferred basis except
for certain transfers to other plans under section 457.
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 11
<PAGE>
OTHER INFORMATION
A registration statement has been filed with the SEC under the Securities Act of
1933, as amended, with respect to the Policy described in this Statement. Not
all information set forth in the registration statement is addressed in the
Policy prospectus or this Statement. Statements in the prospectus and this
Statement are intended to be summaries. For a complete statement of the terms of
the registration, refer to the documents we file with the SEC. They may be
accessed on the SEC's internet site at WWW.SEC.GOV./EDQUX/PROSPECT.HTM and type
in "First Ameritas," or you may review and copy it (for a fee) at the SEC's
Public Reference Room in Washington D.C. (Call the SEC at 1-800-SEC-0330 for
details and public hours.)
SERVICE MARKS & COPYRIGHT
"Ameritas," and the bison symbol are registered service marks of Ameritas Life
Insurance Corp., which licenses their use to First Ameritas Life Insurance Corp.
of New York. "OVERTURE ANNUITY III-PLUS" is a registered service mark of
Ameritas Variable Life Insurance Company, which licenses its use to First
Ameritas Life Insurance Corp. of New York. The Policy and Policy prospectus are
copyrighted by First Ameritas Life Insurance Corp. of New York.
FINANCIAL STATEMENTS
Our financial statements follow this page of this Statement. They only bear on
our ability to meet our obligations under the Policy, and should not be
considered as bearing on the investment performance of the assets held in the
Separate Account.
FIRST AMERITAS OVERTURE ANNUITY III-PLUS
Statement of Additional Information 12
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENT OF ADMITTED ASSETS, LIABILITIES AND SURPLUS - STATUTORY BASIS
(Unaudited)
June 30,
ADMITTED ASSETS 2000
--------------
Investments
Bonds $ 11,914,201
Mortgage loans 358,068
Short-term investments 5,126,408
-------------
17,398,677
Loans on insurance policies 69,970
-------------
Total investments 17,468,647
Cash 25,791
Accrued investment income 249,284
Premiums receivable 250,675
Other receivables 17,590
-------------
Total $ 18,011,987
=============
LIABILITIES AND SURPLUS
Policy reserves $ 2,383,368
Reserves for unpaid claims 1,067,097
Accounts payable - affiliates 216,488
Income tax payable - affilates 25,002
Other liabilities 594,816
Asset valuation reserve 28,043
-------------
Total Liabilities 4,314,814
-------------
Common stock, par value $1,000 per share;
2,000 shares authorized, issued and outstanding 2,000,000
Additional paid-in capital 6,800,000
Surplus 4,897,173
-------------
Total Surplus 13,697,173
-------------
Total $ 18,011,987
=============
The accompanying notes are an integral part of these unaudited statutory basis
financial statements.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENT OF OPERATIONS - STATUTORY BASIS
(Unaudited)
For the Six
Months Ended
June 30,
2000
-------------
INCOME:
Premium income, net $ 5,411,223
Net investment income 546,392
Miscellaneous insurance income 260,507
-----------
6,218,122
-----------
BENEFITS AND EXPENSES:
Increase in reserves 287,137
Benefits to policyowners 3,211,688
Commissions 325,618
General insurance expenses 1,298,185
Taxes, licenses and fees 226,044
-----------
5,348,672
-----------
Net income before income taxes 869,450
Income tax expense 341,818
-----------
Net income $ 527,632
===========
The accompanying notes are an integral part of these unaudited statutory basis
financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENT OF CHANGES IN SURPLUS
(Unaudited)
Common Stock Additional
---------------------- Paid-in
Shares Amount Capital Surplus Total
--------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 2000 2,000 $ 2,000,000 $ 6,800,000 $ 4,401,712 $ 13,201,712
Transfer to Valuation Reserve - - - (7,942) (7,942)
Increase in non-admitted assets - - - (24,229) (24,229)
Net income - - - 527,632 527,632
--------- ---------- ----------- ------------ -----------
BALANCE, June 30, 2000 2,000 $ 2,000,000 $ 6,800,000 $ 4,897,173 $ 13,697,173
========= ========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these unaudited statutory basis
financial statements.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENT OF CASH FLOWS - STATUTORY BASIS
(Unaudited)
For the Six
Months Ended
June 30, 2000
----------------
OPERATING ACTIVITIES
Net premium income received $ 5,633,713
Miscellaneous insurance income 174,339
Net investment income received 408,076
Benefits paid to policyowners (3,367,354)
Expense and taxes, other than federal income taxes (1,938,710)
Net increase in loans on insurance policies (8,858)
Federal income tax paid (350,000)
Other operating income and disbursements, net 265,358
-------------
Net cash from operating activities 816,564
-------------
INVESTING ACTIVITIES
Proceeds from investments matured 2,081,768
Cost of investments acquired (8,006,859)
-------------
Net cash (used in) investing activities (5,925,091)
-------------
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (5,108,527)
CASH AND SHORT-TERM INVESTMENTS - BEGINNING OF PERIOD 10,260,726
-------------
CASH AND SHORT-TERM INVESTMENTS - END OF PERIOD $ 5,152,199
=============
The accompanying notes are an integral part of these unaudited statutory basis
financial statements.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
NOTES TO THE UNAUDITED STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Ameritas Life Insurance Corp. of New York (the Company), a stock life
insurance company domiciled in the State of New York, is a wholly owned
subsidiary of Ameritas Life Insurance Corp. (Ameritas). The Company markets
low-load universal and term individual life insurance policies and group dental
insurance in the State of New York.
The financial statements have been prepared, except as to form, on the basis of
accounting practices prescribed or permitted by the Insurance Department of the
State of New York (statutory basis), which are designed primarily to demonstrate
ability to meet claims of policyowners. These practices differ in certain
respects, which in some cases may be material, from those generally accepted
accounting principles (GAAP) applied in the presentation of financial condition
and results of operations on the "going concern" basis commonly followed by
other types of enterprises.
In March 1998, the National Association of Insurance Commissioners adopted the
Codification of Statutory Accounting Principles (Codification). The
Codification, which is intended to standardize regulatory accounting and
reporting to state insurance departments, is proposed to be effective January 1,
2001. However, statutory accounting principles will continue to be established
by individual state laws and permitted practices. The Company has not finalized
the quantification of the effects of Codification on its statutory financial
statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with statutory accounting
practices requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
2. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS
Management believes that all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation of the unaudited interim
financial statements have been included. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statements should be read in conjunction with the
financial statements and notes thereto for the years ended December 31, 1999 and
1998.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
First Ameritas Life Insurance Corp. of New York
Lincoln, Nebraska
We have audited the accompanying statements of admitted assets, liabilities, and
surplus - statutory basis of First Ameritas Life Insurance Corp. of New York (a
wholly owned subsidiary of Ameritas Life Insurance Corp.) as of December 31,
1999 and 1998, and the related statements of operations - statutory basis,
changes in surplus - statutory basis, and cash flows - statutory basis for the
years then ended. 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.
As more fully described in Note 1 to the financial statements, the Company has
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Department of the State of New York, which practices
differ from generally accepted accounting principles. The effects on the
financial statements of the variances between the statutory basis of accounting
and generally accepted accounting principles, although not reasonably
determinable, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, such financial statements do not present fairly, in conformity with
generally accepted accounting principles, the financial position of First
Ameritas Life Insurance Corp. of New York as of December 31, 1999 and 1998, or
the results of its operations or its cash flows for the years then ended.
In our opinion, such financial statements present fairly, in all material
respects, the admitted assets, liabilities, and surplus of First Ameritas Life
Insurance Corp. of New York as of December 31, 1999 and 1998, and the results of
its operations and its cash flows for the years then ended, on the basis of
accounting described in Note 1.
/s/ Deloitte & Touche LLP
Lincoln, Nebraska
October 2, 2000
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS - STATUTORY BASIS
December 31
------------------------------
ADMITTED ASSETS 1999 1998
------------- -------------
Investments
Bonds $ 5,954,700 $ 7,438,830
Mortgage loans 374,154 400,000
Short-term investments 9,931,805 7,387,570
------------- ------------
16,260,659 15,226,400
Loans on insurance policies 61,112 41,513
------------- ------------
Total investments 16,321,771 15,267,913
Cash 328,921 (144,556)
Accrued investment income 129,292 156,313
Premiums receivable 292,447 381,665
Other receivables 17,260 22,468
------------- ------------
Total $ 17,089,691 $ 15,683,803
============= ============
LIABILITIES AND SURPLUS
Policy reserves $ 2,096,231 $ 1,680,435
Reserves for unpaid claims 1,222,434 1,319,123
Accounts payable - affiliates 132,256 123,564
Income tax payable - affilates 33,184 141,175
Other liabilities 383,773 365,518
Asset valuation reserve 20,101 12,967
------------- ------------
Total Liabilities 3,887,979 3,642,782
------------- ------------
Common stock, par value $1,000 per share;
2,000 shares authorized, issued
and outstanding 2,000,000 2,000,000
Additional paid-in capital 6,800,000 6,800,000
Surplus 4,401,712 3,241,021
------------- ------------
Total Surplus 13,201,712 12,041,021
------------- ------------
Total $ 17,089,691 $ 15,683,803
============= ============
The accompanying notes are an integral part of these statutory basis financial
statements.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENTS OF OPERATIONS - STATUTORY BASIS
Years Ended December 31
-------------------------------
1999 1998
-------------- -------------
INCOME
Premium income $ 10,874,755 $ 11,453,477
Net reinsurance:
Yearly renewable term 106,237 (94,793)
-------------- -------------
Net premium income 10,980,992 11,358,684
Net investment income 875,890 864,250
Miscellaneous insurance income 396,220 292,523
-------------- -------------
12,253,102 12,515,457
-------------- -------------
EXPENSES
Increase in reserves 415,796 348,298
Benefits to policyowners 6,628,193 7,164,618
Commissions 692,954 716,644
General insurance expenses 2,344,301 2,120,123
Taxes, licenses and fees 386,219 402,906
-------------- -------------
10,467,463 10,752,589
-------------- -------------
Net income before income taxes 1,785,639 1,762,868
Income tax expense 654,272 681,909
-------------- -------------
Net income $ 1,131,367 $ 1,080,959
============== =============
The accompanying notes are an integral part of these statutory basis financial
statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENTS OF CHANGES IN SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
Additional
Common Stock Paid-in
----------------------
Shares Amount Capital Surplus Total
--------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998 2,000 $ 2,000,000 $ 6,800,000 $ 2,138,835 $ 10,938,835
Transfer to Valuation Reserve - - - (7,325) (7,325)
Decrease in non-admitted assets - - - 28,552 28,552
Net income - - - 1,080,959 1,080,959
--------- ---------- ----------- ------------ -----------
BALANCE, December 31, 1998 2,000 $ 2,000,000 $ 6,800,000 $ 3,241,021 $ 12,041,021
Transfer to Valuation Reserve - - - (7,134) (7,134)
Decrease in non-admitted assets - - - 36,458 36,458
Net income - - - 1,131,367 1,131,367
--------- ---------- ----------- ------------ -----------
BALANCE, December 31, 1999 2,000 $ 2,000,000 $ 6,800,000 $ 4,401,712 $ 13,201,712
========= ========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
STATEMENTS OF CASH FLOWS - STATUTORY BASIS
Years Ended December 31
--------------------------
1999 1998
------------ -------------
OPERATING ACTIVITIES
Net premium income received $ 11,107,837 $11,377,539
Miscellaneous insurance income 348,509 247,821
Net investment income received 887,041 879,795
Benefits paid to policyowners (6,726,262) (7,149,553)
Expense and taxes, other than
federal income taxes (3,329,600) (3,411,831)
Net increase in loans on insurance policies (19,599) (16,803)
Federal income tax paid (762,263) (565,735)
Other operating income and disbursements, net (13,797) 32,158
------------ ------------
Net cash provided by operating activities 1,491,866 1,393,391
------------ ------------
INVESTING ACTIVITIES
Proceeds from investments matured 1,525,846 2,850,000
Cost of investments acquired - (400,000)
------------ ------------
Net cash provided by investing activities 1,525,846 2,450,000
------------ ------------
NET INCREASE IN CASH AND SHORT-TERM
INVESTMENTS 3,017,712 3,843,391
CASH AND SHORT-TERM INVESTMENTS -
BEGINNING OF PERIOD 7,243,014 3,399,623
------------ ------------
CASH AND SHORT-TERM INVESTMENTS -
END OF PERIOD $ 10,260,726 $ 7,243,014
============ ============
The accompanying notes are an integral part of these statutory basis financial
statements.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Ameritas Life Insurance Corp. of New York (the Company), a stock life
insurance company domiciled in the State of New York, is a wholly owned
subsidiary of Ameritas Life Insurance Corp. (Ameritas). The Company markets
low-load universal and term individual life insurance policies and group dental
insurance in the State of New York.
The financial statements have been prepared, except as to form, on the basis of
accounting practices prescribed or permitted by the Insurance Department of the
State of New York (statutory basis), which are designed primarily to demonstrate
ability to meet claims of policyowners. These practices differ in certain
respects, which in some cases may be material, from those generally accepted
accounting principles (GAAP) applied in the presentation of financial condition
and results of operations on the "going concern" basis commonly followed by
other types of enterprises.
In March 1998, the National Association of Insurance Commissioners adopted the
Codification of Statutory Accounting Principles (Codification). The
Codification, which is intended to standardize regulatory accounting and
reporting to state insurance departments, is proposed to be effective January 1,
2001. However, statutory accounting principles will continue to be established
by individual state laws and permitted practices. The Company has not finalized
the quantification of the effects of Codification on its statutory financial
statements.
The accompanying statutory financial statements vary in some respects from
generally accepted accounting principles. The most significant differences
include: (a) bonds are generally carried at amortized cost rather than being
valued at either amortized cost or fair value based on their classification
according to the Company's ability and intent to hold or trade the securities;
(b) costs related to acquiring new business, are charged to operations as
incurred and not deferred, whereas premiums are taken into income on a pro rata
basis over the respective term of the policies; (c) deferred federal income tax
is not provided for temporary differences between tax and financial reporting;
(d) no provision has been made for federal income taxes on unrealized
appreciation of investments which are carried at market value; and (e) changes
in certain assets designated as "non-admitted" assets have been charged to
surplus.
The Company does not prepare separate company financial statements on a GAAP
basis and the impact of the difference between the statutory basis and GAAP, is
not practicably determinable for the purpose of separate company GAAP financial
statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with statutory accounting
practices requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
The principal accounting and reporting practices followed are:
INVESTMENTS
Bonds, mortgage loans and short-term investments earning interest are carried at
amortized cost which, for short-term investments, approximates market. Realized
gains and losses are determined on the basis of specific identification.
NON-ADMITTED ASSETS
Certain assets (primarily organizational costs and state income tax receivable)
are designated as "non-admitted" under Insurance Department accounting
requirements. These assets are excluded from the statements of admitted assets,
liabilities, and surplus by adjustments to surplus. Total "non-admitted assets"
were $6,700 and $43,158 as of December 31, 1999 and 1998, respectively.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
--------------------------------------------------------------------------------
PREMIUMS
Premiums are reported as income when collected or accrued over the premium
paying periods of the policies.
Premium income consists of the following:
Years Ended December 31
----------------------------
1999 1998
------------------------------------------------------------------------------
Individual life $572,556 $376,642
Group health 10,408,436 10,982,042
------------------------------------------------------------------------------
$10,980,992 $11,358,684
------------------------------------------------------------------------------
POLICY RESERVES
Liabilities for future policy benefits for low-load universal life type
contracts are based on the policy account balance. Other policy reserves are
established and maintained on the basis of published mortality tables using
assumed interest rates and valuation methods as prescribed by the Insurance
Department of the State of New York.
RESERVES FOR UNPAID CLAIMS
Reserves for unpaid claims include claims reported and unpaid and claims not yet
reported, the latter estimated on the basis of historical experience. As such
amounts are necessarily estimates, the ultimate liability will differ from the
amount recorded and will be reflected in operations when additional information
becomes known.
ASSET VALUATION RESERVE
Asset valuation reserves are a required appropriation of surplus to provide for
possible losses that may occur on certain investments held by the Company. The
appropriation is based on the holdings of bonds, stocks, mortgages, real estate
and short-term investments. Realized and unrealized gains and losses, other than
those resulting from interest rate changes, are added or charged to the reserve
(subject to certain maximums).
INCOME TAXES
The Company files a consolidated life/non-life tax return with Ameritas Life
Insurance Corp. and its subsidiaries. An agreement among the members of the
consolidated group provides for distribution of consolidated tax results as if
filed on a separate return basis. The current income tax expense or benefit
(including effects of capital gains and losses and net operating losses) is
apportioned generally on a sub-group (life/non-life) basis. As a result of
deferred acquisition costs, current tax benefits differ from the federal
statutory tax rate.
2. BONDS
<TABLE>
<CAPTION>
The table below provides additional information relating to bonds held by the
Company:
December 31, 1999
----------------------------------------------------
Amortized Gross Unrealized Fair
-----------------------
Cost Gains Losses Value
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Industrial $971,375 $4,360 $ -- $975,735
U.S. Treasury securities and obligations
of U.S. government agencies 4,983,325 15,474 3,914 4,994,885
--------------------------------------------------------------------------------------------------
$5,954,700 $19,834 $3,914 $5,970,620
---------------------------------------------------------------------------------------------------
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
2. BONDS (continued)
December 31, 1999
----------------------------------------------------
Amortized Gross Unrealized Fair
-----------------------
Cost Gains Losses Value
--------------------------------------------------------------------------------------------------
U. S. Industrial $967,667 $66,885 $ -- $1,034,552
U.S. Treasury securities and obligations
of U.S. government agencies 6,471,163 212,732 -- 6,683,895
--------------------------------------------------------------------------------------------------
$7,438,830 $279,617 $ -- $7,718,447
--------------------------------------------------------------------------------------------------
The amortized cost and fair value of bonds at December 31, 1999 by contractual
maturity are shown below:
Amortized Fair
Cost Value
--------------------------------------------------------------------------------------------------
Due in one year or less $1,999,607 $2,000,000
Due after one year through five years 3,483,718 3,498,010
Due after five years through ten years 471,375 472,610
--------------------------------------------------------------------------------------------------
$5,954,700 $5,970,620
--------------------------------------------------------------------------------------------------
</TABLE>
Not included above are investments purchased to mature within 12 months which
are carried at amortized cost in the amount of $9,931,805 and $7,387,570 in 1999
and 1998, respectively, included in short-term investments.
At December 31, 1999, the Company had bonds with a book value of $444,965 and
fair value of $449,258 on deposit with the New York State Insurance Department.
3. RELATED PARTY TRANSACTIONS
Ameritas Life Insurance Corp. provides technical, financial and legal support to
the Company under a general cost sharing agreement. The cost of these services
to the Company for the years ended December 31, 1999 and 1998 was $1,109,127 and
$967,228, respectively. The Company also leases office space, furniture and
equipment from Ameritas Life Insurance Corp. The cost of these leases to the
Company for the years ended December 31, 1999 and 1998 was $59,973 and $62,488,
respectively.
Under the terms of an investment advisory agreement, the Company paid $42,257
and $35,680 for the years ended December 31, 1999 and 1998, respectively, to
Ameritas Investment Advisors Inc., a wholly owned subsidiary of Ameritas Life
Insurance Corp.
The Company entered into a reinsurance agreement (yearly renewable term) with
Ameritas Life Insurance Corp. Under this agreement, Ameritas Life Insurance
Corp. assumes life insurance risk in excess of the Company's $100,000 retention
limit. The Company paid $108,375 and $104,020 of reinsurance premiums, net of
first year allowances, for the years ended December 31, 1999 and 1998,
respectively.
Transactions with related parties are not necessarily indicative of revenues and
expenses which would have occurred had the parties not been related.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
4. RESERVE FOR UNPAID CLAIMS
Activity in the reserve for unpaid accident and health claims and claim
adjustment expenses is summarized as follows:
1999 1998
-------------------------------------------------------------------------------
Balance at January 1 $1,319,123 $1,295,929
Reinsurance reserves (net) (56,308) 6,811
-------------------------------------------------------------------------------
1,262,815 1,302,740
-------------------------------------------------------------------------------
Incurred related to:
Current year 6,581,612 7,396,079
Prior year (278,125) (316,264)
-------------------------------------------------------------------------------
Total incurred 6,303,487 7,079,815
-------------------------------------------------------------------------------
Paid related to:
Current year 5,432,166 6,133,264
Prior year 984,690 986,476
-------------------------------------------------------------------------------
Total paid 6,416,856 7,119,740
-------------------------------------------------------------------------------
1,149,446 1,262,815
Reinsurance reserves (net) 72,988 56,308
-------------------------------------------------------------------------------
Balance at December 31 $1,222,434 $1,319,123
-------------------------------------------------------------------------------
5. REINSURANCE
In the ordinary course of business, the Company assumes and cedes reinsurance
with other insurers and reinsurers. These arrangements provide greater
diversification of business and limit the maximum net loss potential on large
risks.
Following is a summary of the transactions through reinsurance operations:
Years Ended December 31
---------------------------
1999 1998
--------------------------------------------------------------------------------
Premiums
Assumed $509,221 $404,015
Ceded 402,984 498,808
--------------------------------------------------------------------------------
Claims
Assumed 529,204 484,708
Ceded 573,587 280,364
--------------------------------------------------------------------------------
Reserves
Assumed 101,892 101,269
Ceded 82,563 99,813
--------------------------------------------------------------------------------
The Company remains contingently liable in the event that a reinsurer is unable
to meet the obligations ceded under the reinsurance agreement.
6. BENEFIT PLANS
The Company is included in the multiple employer noncontributory defined benefit
pension plan that covers substantially all full-time employees of Ameritas Life
Insurance Corp. and its subsidiaries. Pension costs include current service
costs, which are accrued and funded on a current year basis, and past service
costs, which are amortized over the average remaining service life of all
employees on the adoption date. The assets of this plan are not segregated.
Total Company contributions for the years ended December 31, 1999 and 1998 were
$9,846 and $9,908, respectively.
<PAGE>
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
6. BENEFIT PLANS (continued)
The Company's employees also participate in a defined contribution thrift plan
that covers substantially all full-time employees of Ameritas Life Insurance
Corp. and its subsidiaries. Company matching contributions under the plan range
from 1% to 3% of the participant's compensation. Total Company contributions for
the years ended December 31, 1999 and 1998 were $4,673 and $3,964, respectively.
The Company is also included in the postretirement benefit plans providing group
medical coverage to retired employees of Ameritas Life Insurance Corp. and its
subsidiaries. These benefits are a specified percentage of premium until age 65
and a flat dollar amount thereafter. Employees become eligible for these
benefits upon the attainment of age 55, 15 years of service and participation in
the plan for the immediately preceding five years. Benefit costs include the
expected cost of postretirement benefits for newly eligible employees, interest
cost, and gains and losses arising from differences between actuarial
assumptions and actual experience. The assets and liabilities of this plan are
not segregated. Total Company contributions for the years ended December 31,
1999 and 1998 were $4,126 and $2,473, respectively.
7. MAJOR CUSTOMERS
A substantial portion of the Company's dental premium is marketed by an outside
entity. The percentage of dental premium income related to this arrangement for
the years ended December 31, 1999 and 1998 was 32% and 31%, respectively.
8. DIVIDEND LIMITATIONS
The Company is subject to regulation by the insurance department of the State of
New York. Insurance department regulations restrict the advance of funds to
Parent and affiliated companies as well as the amount of dividends that may be
paid without prior approval.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a) Financial Statements:
All required financial statements of First Ameritas Variable Annuity
Separate Account and First Ameritas Life Insurance Corp. of New York are
filed in Part B.
b) Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
(1) Resolution of Board of Directors of First Ameritas Life Insurance
Corp. of New York Establishing First Ameritas Variable Annuity
Separate Account**
(2) Not applicable.
(3) (a) Principal Underwriting Agreement.*
(3) (b) Form of Selling Agreement.*
(4) Form of Variable Annuity Contract.***
(5) Form of Application for Variable Annuity Contract.
(6) (a) Articles of Incorporation of First Ameritas Life Insurance Corp.
of New York.*
(6) (b) Bylaws of First Ameritas Life Insurance Corp. of New York.*
(7) Not Applicable.
(8) Form of Participation Agreement (MFS, Fidelity, Alger American,
Morgan Stanley, Calvert Variable Series Inc Ameritas Portfolios,
Calvert Variable Series, Inc.).*
(9) Opinion and Consent of Counsel.
(10) (a) Independent Auditors' Consent.
(11) Not Applicable.
(12) Not applicable.
(13) Schedule of Computation of Performance Data.
(14) Powers of Attorney *
* Incorporated by reference to the Registration Statement for First Ameritas
Variable Life Separate Account File No. 333-39110 filed on June 12, 2000.
** Incorporated by reference to the Registration Statement for First Ameritas
Variable Annuity Separate Account File No.333-39240 filed on June 14, 2000.
*** Incorporated by reference to the Registration Statement for First Ameritas
Variable Annuity Separate Account File No. 333-39246 filed on June 14,
2000.
<PAGE>
Item 25 Directors and Officers of the Depositor
Name and Principal Position and Offices
Business Address With Depositor
---------------- --------------
Kenneth C. Louis Director, Chairman of the Board
Mitchell F. Politzer * Director, President and Chief Executive Officer
Lawrence J. Arth Director
John P. Carsten Director
Phyllis J. Carsten-Boyle Director, Vice President
Robert J. Lanik Director
JoAnn M. Martin Director, Vice President
David C. Moore Director, Vice President
David J. Myers Director
James F. Nissen Director
Tonn M. Ostergard Director
James E. Rembolt Director
Edmund G. Sullivan Director
Robert C. Barth Controller
Thomas D. Higley Vice President
William W. Lester Treasurer
Donald Reiser Vice President
Donald R. Stading Vice President, Secretary and General Counsel
Principal business address of all, except as noted, is First Ameritas Life
Insurance Corp. of New York, Service Office, 5900 "O" Street, Lincoln, Nebraska
68510.
*Principal business address: First Ameritas Life Insurance Corp. of New York,
400 Rella Blvd., Suite 304, Suffern, New York 10901-4253.
<PAGE>
Item 26.
The Depositor, First Ameritas Life Insurance Corp. of New York, is wholly owned
by Ameritas Life Insurance Corp. The Registrant is a segregated asset account of
First Ameritas Life Insurance Corp. of NewYork.
Organizations under common control with First Ameritas Life Insurance Corp. of
New York include:
<TABLE>
<CAPTION>
NAME OF CORPORATION (WHERE ORGANIZED)* PRINCIPAL BUSINESS
-------------------------------------- ------------------
<S> <C>
Ameritas Acacia Mutual Holding Company (NE) mutual insurance holding company
Ameritas Holding Company (NE) mutual insurance holding company
Ameritas Life Insurance Corp. (NE) life/health insurance company
AMAL Corporation (NE) a joint venture holding company between
Ameritas Life Insurance Corp. (66%) and
AmerUs Life Insurance Company (34%)
Ameritas Investment Corp. (NE) securities broker dealer & investment advisor
Ameritas Variable Life Insurance Company (NE) life insurance company
Ameritas Managed Dental Plan, Inc. (CA) managed care dental insurance company
Pathmark Assurance Company (NE) third-party administrator & reinsurer of dental
insurance plans
Veritas Corp. (NE) insurance marketing agency
Ameritas Investment Advisors, Inc. (NE) investment adviser
Acacia Life Insurance Company (D.C.) life/health insurance company
Acacia National Life Insurance Company (VA) variable life/annuity insurance company
Acacia Financial Corp. (VA) holding company
Acacia Federal Savings Bank (n/a) federally chartered bank
Calvert Group. Ltd. (DE) offering socially responsible investments
its 1940 Act Investment Companies (DE) offering socially responsible mutual funds
The Advisors Group, Inc. (DE) securities broker-dealer & investment advisor
</TABLE>
* Principal operating companies only. Subsidiaries of subsidiaries are indicated
by indentations. Ownership is 100% by the immediate parent company except as
noted.
Item 27. Number of Contractowners
As of December 31, 1999 there were 0 contractowners.
Item 28. Indemnification
First Ameritas Life Insurance Corp. of New York's By-laws provide as follows:
"Any person made or threatened to be made a party to an action or
proceeding, whether civil or criminal, by reason of the fact that he, his
testator or intestate then is or was a director, officer or employee of the
Company, or then serves or has served any other corporation in any capacity at
the request of the Company, shall be indemnified by the Company against
expenses, judgments, fines and amounts paid in settlement to the full extent
that officers and directors are permitted to be indemnified by the laws of the
State of New York. The provisions of this article shall not adversely affect any
right to indemnification which any person may have apart from the provisions of
this article."
Section 721-726 of the New York Business Corporation Law, in general, and
Section 1216 of the New York Insurance Code allows a corporation to indemnify
any director, officer, employee or agent of the corporation for amount paid in
settlement actually and reasonably incurred by him or her in connection with an
action, suit or proceeding, if he or she acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
<PAGE>
In a case of a derivative action, no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the corporation, unless a court in which the action was brought
shall determine that such person is fairly and reasonably entitled to indemnify
for such expenses which the Court shall deem proper.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a 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 Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriters
a) Ameritas Investment Corp. which will serve as the principal
underwriter for the variable annuity contracts issued through
First Ameritas Life Insurance Corp. of New York's First Ameritas
Variable Annuity Separate Account, also serves as the principal
underwriter for variable life insurance contracts issued through
Ameritas Variable Life Insurance Company Separate Account V,
Ameritas Life Insurance Corp. Separate Account LLVL, and First
Ameritas Variable Life Separate Account, and serves as the
principal underwriter for variable annuity insurance contracts
issued through Ameritas Variable Life Insurance Company Separate
Account VA-2 and Ameritas Life Insurance Corp. Separate Account
LLVA. Ameritas Investment Corp. is the underwriter for the
Ameritas Portfolios and also serves as its investment advisor.
b) The following table sets forth certain information regarding the
officers and directors of the principal underwriter, Ameritas
Investment Corp.
Name and Principal Positions and Offices
Business Address and Underwriter
Lawrence J. Arth Director and Chairman of the Board
William R. Giovanni Director, President and Chief Executive Officer
Kenneth C. Louis Director, Senior Vice President
Gary R. McPhail* Director, Senior Vice President
Michael G. Fraizer* Director
Thomas C. Godlasky* Director
Donald R. Stading Secretary and General Counsel
William W. Lester Treasurer
Principal business address of all, except as noted is: Ameritas Investment
Corp., 5900 "O" Street, Lincoln, Nebraska 68510.
* Principal business address: AmerUs Life Insurance Company, 611 Fifth Avenue,
Des Moines, Iowa 50309.
<PAGE>
c) As of the fiscal year ending December 31, 1999, Registrant paid the
following compensation to the Principal Underwriter:
<TABLE>
<CAPTION>
Net Underwriting Compensation
Name of Principal Discounts and on Brokerage
Underwriter (1) Commissions (2) Redemption (3) Commissions (4) Compensation (5)
------------------------------------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Ameritas Investment
Corp. ("AIC") $0 $0 $0 $0
(2)+(4)+(5) = Gross variable annuity compensation received by AIC.
(2) = Sales compensation received and paid out by AIC as underwriter, AIC retains 0.
(4) = Sales compensation received by AIC for retail sales.
(5) = Sales compensation received by AIC and retained as underwriting fee.
</TABLE>
Item 30. Location of Separate Account and Records
The Books, records and other documents required to be maintained by Section
31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder are maintained by
First Ameritas Life Insurance Corp. of New York at its Service Office at 5900
"O" Street, Lincoln, Nebraska 68510.
Item 31. Management Services
All management contracts are discussed in Part A or Part B.
Item 32. Undertakings
a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the
audited financial statement in the registration statement are never
more than 16 months old for so long as payment under the variable
annuity contracts my be accepted.
b) Registrant 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 and send for a
Statement of Additional Information.
c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this form promptly upon written or oral request.
d) The registrant is relying upon the Division of Investment Management
(Division) no-action letter of November 28, 1988 concerning annuities
sold in 403 (b) plans and represents that the requirements of the
no-action letter have been, are and/or will be complied with.
e) First Ameritas Life Insurance Corp. of New York represents that the
fees and charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected
to be incurred, and the risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Pre-Effective Amendment No. 2 to the
Registration Statement to be signed on its behalf in the City of Lincoln, State
of Nebraska on October 10, 2000.
FIRST AMERITAS VARIABLE ANNUITY SEPARATE ACCOUNT, Registrant
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK, Depositor
By: /S/ KENNETH C. LOUIS
----------------------
Kenneth C. Louis
Chairman of the Board
As required by the Securities Act of 1933, this Pre-Effective Amendment No. 2 to
the Registration Statement has been signed by the following persons on October
10, 2000 in the capacities and on the duties indicated.
SIGNATURE TITLE
/S/ KENNETH C. LOUIS* Director, Chairman of the Board
-------------------------
Kenneth C. Louis
/S/ MITCHELL F. POLITZER* Director, President and
------------------------- Chief Executive Officer
Mitchell F. Politzer
/S/ ROBERT C. BARTH* Controller
------------------------- (PRINCIPAL ACCOUNTING OFFICER)
Robert C. Barth
/S/ WILLIAM W. LESTER* Treasurer
------------------------- (PRINCIPAL FINANCIAL OFFICER)
William W. Lester
by: /S/ DONALD R. STADING for and on behalf of:
-----------------------
Donald R. Stading
Lawrence J. Arth* Director
John P. Carsten * Director
Phyliss J. Carsten-Boyle* Director
Robert J. Lanik * Director
JoAnn M. Martin Director
David J. Meyers * Director
David C. Moore Director
James F. Nissen * Director
Tonn Ostergard * Director
James E. Rembolt * Director
Edmund G. Sullivan * Director
* Signed by Donald R. Stading under Powers of Attorney executed effective as of
June 6, 2000.
<PAGE>
EXHIBIT INDEX
(5) Form of Application for Variable Annuity Contract.
(9) Opinion and Consent of Counsel.
(10) (a) Independent Auditors' Consent.
(13) Schedule of Computation of Performance Data.
