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NATIONWIDE LIFE INSURANCE COMPANY
DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED THROUGH NATIONWIDE VARIABLE ACCOUNT
PROSPECTUS DATED MAY 1, 1999
THIS SUPPLEMENT IS FOR USE ONLY WITH CONTRACTS ISSUED TO INDIVIDUAL RETIREMENT
ACCOUNTS THAT ARE DESCRIBED IN SECTION 408(A) OF THE INTERNAL REVENUE CODE AND
WHICH ALSO SATISFY THE DEFINITION OF SIMPLE RETIREMENT ACCOUNTS IN SECTION
408(P) OF THE INTERNAL REVENUE CODE (AS ENACTED IN SECTION 1421 OF THE SMALL
BUSINESS JOB PROTECTION ACT OF 1996).
1. The section entitled "GLOSSARY OF SPECIAL TERMS" in the prospectus is amended
by adding the following:
SIMPLE IRA - An Individual Retirement Account as defined by Section 408(a) or an
Individual Retirement Annuity as defined by Section 408(b) of the Internal
Revenue Code, to which the only contributions that can be made are contributions
under a SIMPLE Plan and rollovers or transfers from another SIMPLE IRA.
SIMPLE PLAN - The Savings Incentive Match Plan for Employees of Small Employers.
This plan is a written arrangement established under Section 408(p) of the
Internal Revenue Code which provides a simplified tax-favored retirement plan
for small employers. In a SIMPLE Plan, each employee may choose whether to have
the small employer make payments as contributions under the SIMPLE Plan or to
receive these payments directly in cash. A small employer that chooses to
establish a SIMPLE Plan must make either matching contributions or non-elective
contributions. All contributions under a SIMPLE Plan are made to SIMPLE IRAs.
SMALL EMPLOYER - An employer that had no more than 100 employees who earned
$5,000 or more in compensation during the preceding calendar year.
TWO-YEAR PERIOD - The two-year period begins on the first day in which
contributions made by a small employer are deposited into the individual
employee's SIMPLE IRA.
2. The section entitled "SUMMARY OF CONTRACT EXPENSES" in the prospectus is
amended by adding the following information at the end of footnote 1:
The CDSC is waived for those contracts issued under a SIMPLE IRA Plan.
Withdrawals may be made from the contract at any time without the imposition of
any CDSC. Any additional references throughout the prospectus to the CDSC do not
apply to contracts issued under SIMPLE IRA Plans. As required by federal tax
law, such charges do not apply to contracts issued under SIMPLE IRA Plans.
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3. The "EXAMPLE" chart in the prospectus is amended with respect to contracts
issued as SIMPLE IRAs as follows:
The following chart shows the amount of expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual return and
no change in expenses. These dollar figures are illustrative only and should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the maximum amount of variable account
charges that could be assessed to a contract (1.30%) and NO CDSC. The Contract
Maintenance Charge is expressed as a percentage of the average contract size for
existing contracts. Since the average contract account size is greater than
$1,000, the expense effect of the Contract Maintenance Charge is reduced
accordingly. Deductions for premium taxes are not reflected but may apply.
The summary of contract expenses and example are to help contract owners
understand the expenses associated with the contract.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- --------------------------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century: Short 21 64 110 237 21 64 110 237 * 64 110 237
Term Government
(formerly Benham
Short-Term Government)
- --------------------------------------------------------------------------------------------------------------------------
American Century: Income 22 67 116 248 22 67 116 248 * 67 116 248
& Growth
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American Century: Growth 25 77 132 281 25 77 132 281 * 77 132 281
(formerly Twentieth
Century Growth)
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American Century: 29 88 150 317 29 88 150 317 * 88 150 317
International Growth
(formerly Twentieth
Century International
Growth)
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American Century: Ultra 25 77 132 281 25 77 132 281 * 77 132 281
(formerly Twentieth
Century Ultra)
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Delchester Fund-Inst'l 22 68 116 249 22 68 116 249 * 68 116 249
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus 25 76 129 276 25 76 129 276 * 76 129 276
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Dreyfus Appreciation 24 74 126 270 24 74 126 270 * 74 126 270
Fund, Inc.
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Dreyfus Balanced Fund, 24 75 128 273 24 75 128 273 * 75 128 273
Inc.
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Dreyfus S & P 500 Index 20 61 105 228 20 61 105 228 * 61 105 228
Fund (Formerly Peoples
Index Fund, Inc.)
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The Dreyfus Third Century 25 76 130 278 25 76 130 278 * 76 130 278
Fund, Inc.
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Evergreen Income and 28 85 145 307 28 85 145 307 * 85 145 307
Growth Fund
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Federated Bond Fund - 26 80 136 289 26 80 136 289 * 80 136 289
Class F
- --------------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 24 73 126 268 24 73 126 268 * 73 126 268
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced 25 78 133 283 25 78 133 283 * 78 133 283
Fund - Class T
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Fund 25 78 133 283 25 78 133 283 * 78 133 283
Equity Income Fund -
Class T
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Fund 25 76 130 277 25 76 130 277 * 76 130 277
Growth Opportunities
Fund - Class T
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High 25 77 132 281 25 77 132 281 * 77 132 281
Yield Fund - Class T
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Fidelity Asset Manager(TM) 21 64 110 237 21 64 110 237 * 64 110 237
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income 23 71 122 261 23 71 122 261 * 71 122 261
Fund
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Fidelity Equity-Income 22 67 114 246 22 67 114 246 * 67 114 246
Fund
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- --------------------------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Magellan Fund 21 64 110 237 21 64 110 237 * 64 110 237
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 21 65 112 242 21 65 112 242 * 65 112 242
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Fidelity VIP High Income 22 68 116 249 22 68 116 249 * 68 116 249
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series 26 80 137 291 26 80 137 291 * 80 137 291
Fund Inc.- Mutual Shares
Fund: Class A
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INVESCO Dynamics Fund 26 80 136 289 26 80 136 289 * 80 136 289
- --------------------------------------------------------------------------------------------------------------------------
Janus Fund 23 72 123 264 23 72 123 264 * 72 123 264
- --------------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 24 73 125 266 24 73 125 266 * 73 125 266
- --------------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 24 74 126 270 24 74 126 270 * 74 126 270
- --------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio 27 82 139 295 27 82 139 295 * 82 139 295
- - Open Shares
- --------------------------------------------------------------------------------------------------------------------------
MFS(R)World 29 88 150 317 29 88 150 317 * 88 150 317
Governments Fund
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Nationwide(R)Bond Fund - 23 71 121 260 23 71 121 260 * 71 121 260
Class D
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class 22 67 116 248 22 67 116 248 * 67 116 248
D
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth 23 70 120 257 23 70 120 257 * 70 120 257
Fund - Class D
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money 21 64 110 236 21 64 110 236 * 64 110 236
Market Fund - Prime
Shares
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Intermediate 23 70 120 258 23 70 120 258 * 70 120 258
U.S. Government Bond
Fund
- --------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) 25 78 133 284 25 78 133 284 * 78 133 284
Index Fund - Class R
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity 27 83 141 299 27 83 141 299 * 83 141 299
Trust(R) - Neuberger
Berman Genesis Trust
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman 23 71 121 259 23 71 121 259 * 71 121 259
Guardian Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman 22 68 116 249 22 68 116 249 * 68 116 249
Limited Maturity Bond
Fund
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman 23 71 121 260 23 71 121 260 * 71 121 260
Partners Fund, Inc.
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Oppenheimer Global 27 82 139 295 27 82 139 295 * 82 139 295
Fund/VA
- --------------------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund 25 76 130 278 25 76 130 278 * 76 130 278
Series
- --------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 26 80 137 291 26 80 137 291 * 80 137 291
Class A
- --------------------------------------------------------------------------------------------------------------------------
Prestige International Fund 28 87 148 312 28 87 148 312 * 87 148 312
- - Class A
- --------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 27 83 142 302 27 83 142 302 * 83 142 302
Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value 27 82 140 297 27 82 140 297 * 82 140 297
Fund - Class A
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Prestige Small Cap Fund - 29 88 150 317 29 88 150 317 * 88 150 317
Class A
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Strong Common Stock 27 83 141 299 27 83 141 299 * 83 141 299
Fund
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Strong Total Return Fund, 25 77 132 282 25 77 132 282 * 77 132 282
Inc.
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Templeton Foreign Fund - 26 81 138 293 26 81 138 293 * 81 138 293
Class A
- --------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 27 84 143 304 27 84 143 304 * 84 143 304
Growth Fund
- --------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global 25 76 129 276 25 76 129 276 * 76 129 276
Fixed Income Fund
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The contracts sold under this prospectus do not permit annuitizations during
the first two contract years.
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4. A new provision entitled "TAXATION OF SIMPLE IRA PLANS" is added to the
prospectus after the provision entitled "QUALIFIED PLANS AND INDIVIDUAL
RETIREMENT ACCOUNTS". The new provision reads as follows:
TAXATION OF SIMPLE IRA PLANS
Generally, distributions from a SIMPLE IRA are taxed in the same manner as an
IRA described under Sections 408(a) and 408(b) of the Internal Revenue Code (see
"Qualified Plans and Individual Retirement Accounts"). However, any payment or
distribution received from a SIMPLE IRA during the two-year period beginning on
the date on which the individual first participated in any SIMPLE Plan
maintained by the individual's employer, will be taxed according to Section
72(t)(6) of the Internal Revenue Code.
A SIMPLE IRA may receive contributions under a qualified salary reduction
arrangement only. Therefore, a SIMPLE IRA cannot receive rollover distributions
from non-SIMPLE IRA individual retirement accounts or individual retirement
annuities; stock bonus, pension, or profit sharing plans; Section 403(b) plans;
or any source other than another SIMPLE IRA.
Distributions from SIMPLE IRAs generally are includible in income similar to the
manner in which distributions from IRAs are included in income. Section 72(t)(6)
of the Internal Revenue Code provides that the rate of additional penalty tax is
increased from 10% to 25% for withdrawals taken prior to age 59 1/2 during the
two-year period. If, however, one of the exceptions to the application of the
tax under Internal Revenue Code Section 72(t) applies (for example, those
amounts paid after age 59 1/2, after death, or as part of a series of
substantially equal payments), the exception also applies to distributions
within the two-year period and the 25% additional penalty tax rate does not
apply.
Distributions from a SIMPLE IRA during the two-year period generally qualify as
rollover contributions (and thus are not includible in gross income) only if the
distributions are paid into another SIMPLE IRA and satisfy all other
requirements as specified in Section 408(d)(3) of the Internal Revenue Code for
treatment as rollover contributions.
Any amount in a SIMPLE IRA can be transferred to another SIMPLE IRA in a
tax-free trustee-to-trustee transfer during the two-year period. If however,
during the two-year period, an amount is paid from a SIMPLE IRA directly to the
trustee of an IRA that is not a SIMPLE IRA, the payment will be treated as a
distribution from the SIMPLE IRA and as a contribution to another IRA, and thus
will not qualify as a rollover contribution. After the expiration of the
two-year period, any amount in a SIMPLE IRA can be transferred in a tax-free
trustee-to-trustee transfer to another IRA that was not established as a SIMPLE
IRA.
For information regarding eligibility to establish or participate in a SIMPLE
IRA Plan, limitations on permissible amounts of purchase payments, and tax
consequences of distributions from SIMPLE IRA Plans, the purchasers of such
contracts should seek competent advice. The terms of such plans may limit the
rights available under the contract.
Any distribution from a SIMPLE IRA that is eligible for rollover treatment will
be subject to federal tax withholding at the statutory rate (currently 20%)
unless the distribution is made directly to an appropriate plan as described
above.
