Registration No. 333-24009
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 6 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
13-5570651
(I.R.S. Employer Identification No.)
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
(212) 554-1234
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
MARY P. BREEN, VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
(212) 554-1234
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Please send copies of all communications to:
PETER E. PANARITES
FREEDMAN, LEVY, KROLL & SIMONDS
1050 CONNECTICUT AVENUE, N.W., SUITE 825
WASHINGTON, D.C. 20036
(202) 457-5100
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<PAGE>
NOTE
The purpose of this Amendment is to include in Registrant's Form S-3
Registration Statement ("Registration Statement") prospectuses and exhibits
relating to new forms of Registrant's Accumulator Combination Variable and
Fixed Deferred Annuity Certificates ("new Certificates"). The new Certificates
are the subject of two new Form N-4 registration statements which the
Registrant is filing contemporaneously herewith. Registrant does not intend
this Amendment to delete or amend any currently effective prospectus or any
supplement thereto contained in the Registration Statement.
<PAGE>
_______________, 1998
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PROFILE OF THE EQUITABLE ACCUMULATOR(SM) (IRA, NQ AND QP)
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
This Profile is a summary of some of the more important points that you should
know and consider before purchasing a Certificate. The Certificate is more fully
described in the prospectus which accompanies this Profile. Please read the
prospectus carefully.
1. THE ANNUITY CERTIFICATE. The Equitable Accumulator Certificate is a
combination variable and fixed deferred annuity issued by Equitable Life.
Certificates can be issued as individual retirement annuities (IRAS, which can
be either TRADITIONAL IRAS or ROTH IRAS) or as non-qualified annuities (NQ) for
after-tax contributions only. NQ Certificates may also be used as an investment
vehicle for certain types of qualified plans (QP) (in states where approved).
The Equitable Accumulator Certificate is designed to provide for the
accumulation of retirement savings and for income through the investment, during
an accumulation phase, of (a) rollover contributions, direct transfers from
other individual retirement arrangements and additional IRA contributions or (b)
after-tax money.
Your Equitable Life agent can provide you with information about other annuity
products we offer and help you decide which one may best meet your needs.
You may allocate amounts to Investment Funds where your Certificate's value may
vary up or down depending upon investment performance. You may also allocate
amounts to Guaranteed Interest Rate Options (GIROS) that when held to maturity
provide guaranteed interest rates that we have set for your class of Certificate
and a guarantee of principal. We allocate an amount (CREDIT) to your Investment
Funds and GIROs based on the amount you put into the Certificate's value. If you
make any transfers or withdrawals, the GIROs' investment value may increase or
decrease until maturity due to interest rate changes. Earnings accumulate under
your Certificate on a tax-deferred basis until amounts are distributed. Amounts
distributed under the Equitable Accumulator Certificate may be subject to income
tax.
The Investment Funds offer the potential for better returns than the interest
rates guaranteed under the GIROs, but the Investment Funds involve risk and you
can lose money. You may make transfers among the Investment Funds and GIROs. The
value of the GIROs prior to their maturity fluctuates and you can lose money on
premature transfers or withdrawals.
--------------
Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104.
Accumulator is a service mark, and baseBUILDER and Income Manager
are registered service marks
of The Equitable Life Assurance Society of the United States.
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The amount accumulated under your Certificate during the accumulation phase will
affect the amount of distribution or annuity benefits you receive.
You can elect the baseBUILDER(R) at issue of the Certificate for an additional
charge. The baseBUILDER provides a combined Guaranteed Minimum Income Benefit
and Guaranteed Minimum Death Benefit. The Guaranteed Minimum Income Benefit
provides a minimum amount of guaranteed lifetime income regardless of investment
performance when converting, at specific times, to the Income Manager(R) (Life
Annuity with a Period Certain) payout annuity certificate.
2. ANNUITY PAYMENTS. When you are ready to start receiving income, annuity
income is available by applying your Certificate's value to an Income Manager
payout annuity certificate. You can also have your IRA or NQ Certificate's value
applied to any of the following ANNUITY BENEFITS: (1) Life Annuity - payments
for the annuitant's life, (2) Life Annuity - Period Certain - payments for the
annuitant's life, but with payments continuing to the beneficiary for the
balance of the selected years if the annuitant dies before the end of the
selected period; (3) Life Annuity - Refund Certain - payments for the
annuitant's life, with payments continuing to the beneficiary after the
annuitant's death until any remaining amount applied to this option runs out;
and (4) Period Certain Annuity - payments for a specified period of time,
usually 5, 10, 15 or 20 years, with no life contingencies. Options (2) and (3)
are also available as a Joint and Survivor Annuity - payments for the
annuitant's life, and after the annuitant's death, continuation of payments to
the survivor for life. Under QP Certificates the only Annuity Benefit available
is Option (2) as a Life Annuity with a 10 Year Period Certain, or a Joint and
Survivor Life Annuity with a 10 Year Period Certain. Annuity Benefits (other
than the Life Annuity in New York, the Refund Certain and the Period Certain
which are only available on a fixed basis) are available as a fixed annuity, or
as a variable annuity, where the dollar amount of your payments will depend upon
the investment performance of the Investment Funds. Any Credits allocated to
your Certificate's value within the prior three years, will be deducted before
amounts are applied to your Annuity Benefit. Once you begin receiving annuity
payments, you cannot change your Annuity Benefit.
3. PURCHASE. You can purchase an Equitable Accumulator IRA Certificate by
rolling over or transferring at least $25,000 or more from one or more
individual retirement arrangements. Under a Traditional IRA Certificate you may
add additional amounts of $1,000 or more at any time (subject to certain
restrictions). Additional amounts under a Traditional IRA Certificate are
limited to $2,000 per year, but additional rollover or IRA transfer amounts are
unlimited. In certain cases, additional amounts may not be added to a Roth IRA
Certificate.
An Equitable Accumulator NQ or QP Certificate can be purchased with $25,000 or
more. Additional amounts of $1,000 or more can be made at any time (subject to
certain restrictions). Certain restrictions also apply to the type of
contributions we will accept under Equitable Accumulator QP Certificates.
A Credit will be added to your Certificate's value with each amount we receive
from you. The Credit is equal to 3% of the amount you initially put in and each
additional amount. The Credit will be allocated to the Investment Funds and/or
GIROs in the same way that you allocate the amounts you put in.
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4. INVESTMENT OPTIONS. You may invest in any or all of the following Investment
Funds, which invest in shares of corresponding portfolios of The Hudson River
Trust (HRT) and EQ Advisors Trust (EQAT). The portfolios are described in the
prospectuses for HRT and EQAT.
<TABLE>
<CAPTION>
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EQUITY SERIES:
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<S> <C> <C>
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
BT Equity 500 Index BT International Equity Index BT Small Company Index
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets MFS Emerging Growth Companies
Equity
MFS Research T. Rowe Price International Warburg Pincus Small Company
Stock Value
Merrill Lynch Basic Value Equity
T. Rowe Price Equity Income
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</TABLE>
<TABLE>
<CAPTION>
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ASSET ALLOCATION SERIES FIXED INCOME SERIES
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<S> <C> <C>
Alliance Conservative Investors AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
Alliance Growth Investors Alliance High Yield Alliance Intermediate Government
EQ/Putnam Balanced Securities
Merrill Lynch World Strategy Alliance Money Market
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</TABLE>
You may also invest in one or more GIROs currently maturing in years 1999
through 2008.
5. EXPENSES. The Certificates have expenses as follows: As a percentage of net
assets in the Investment Funds, a daily charge is deducted for mortality and
expense risks (including the Guaranteed Minimum Death Benefit discussed below)
at an annual rate of 1.10%, a daily charge is deducted for administration
expenses at an annual rate of 0.25%, and a daily distribution charge is deducted
for sales expenses at an annual rate of 0.25%. If baseBUILDER with the 6% Roll
Up to Age 80 Guaranteed Minimum Death Benefit or the Annual Ratchet to Age 80
Guaranteed Minimum Death Benefit is elected, there is an annual charge of 0.30%
expressed as a percentage of the Guaranteed Minimum Income Benefit benefit base.
If baseBUILDER with the 6% Roll Up to Age 70 is elected, the annual charge is
0.15% expressed as a percentage of the Guaranteed Minimum Income Benefit benefit
base. The baseBUILDER charge is deducted from your Certificate's value.
The charges for the portfolios of HRT range from 0.61% to 1.33% of the average
daily net assets of HRT portfolios, depending upon the HRT portfolios selected.
The charges for the portfolios of EQAT range from 0.55% to 1.75% of the average
daily net assets of EQAT portfolios, depending upon the EQAT portfolios
selected. The amounts for HRT are based on average portfolio assets for the year
ended December 31, 1997 and have been restated to reflect the fees that would
have been paid if a new advisory agreement that Alliance, HRT's manager, and HRT
entered into (which went into effect on May 1, 1997) were in effect since
January 1, 1997. The amounts for EQAT are based on current expense caps. The
12b-1 fee (reflected in the "Total Annual Portfolio Charges" column in the chart
below) for the portfolios of HRT (other than the Alliance Small Cap Growth
portfolio) and EQAT are 0.25% of the average daily net assets of HRT and EQAT,
respectively. For the Alliance Small Cap Growth portfolio the 12b-1 fee may be
less than 0.25% under certain circumstances.
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Charges for state premium and other applicable taxes may also apply at the time
you elect to start receiving annuity payments.
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A withdrawal charge is imposed as a percentage of each contribution withdrawn in
excess of a free corridor amount, or if the Certificate is surrendered. The free
corridor amount for withdrawals is 15% of the Certificate's value at the
beginning of the year. The withdrawal charge does not apply under certain of the
distribution methods available under the Equitable Accumulator IRA Certificates.
When applicable, the withdrawal charge is determined in accordance with the
table below, based on the year a contribution is withdrawn. The year in which we
receive your contribution is "Year 1."
Year of Contribution Withdrawal
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10+
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 8.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The following chart is designed to help you understand the charges in the
Certificate. The "Total Annual Charges" column shows the combined total of the
Certificate charges deducted as a percentage of net assets in the Investment
Funds and the portfolio charges, as shown in the first two columns. The last two
columns show you two examples of the charges, in dollars, that you would pay
under a Certificate, and include the 0.30% benefit based charge for the
baseBUILDER benefit. The examples assume that you invested $1,000 in a
Certificate and we add a $30 Credit, earning 5% annually and that you withdraw
your money: (1) at the end of year 1, and (2) at the end of year 10. For year 1,
the Total Annual Charges are assessed as well as the withdrawal charge. For year
10, the example shows the aggregate of all the annual charges assessed for the
10 years, but there is no withdrawal charge. No charges for state premium and
other applicable taxes are assumed in the examples.
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<TABLE>
<CAPTION>
TOTAL ANNUAL TOTAL ANNUAL EXAMPLES
CERTIFICATE PORTFOLIO TOTAL Total Annual
CHARGES CHARGES ANNUAL Expenses at End of:
INVESTMENT FUND CHARGES (1) (2)
1 Year 10 Years
<S> <C> <C> <C> <C> <C>
Alliance Conservative Investors 1.60% 0.80% 2.40%
Alliance Growth Investors 1.60% 0.82% 2.42%
Alliance Growth & Income 1.60% 0.84% 2.44%
Alliance Common Stock 1.60% 0.65% 2.25%
Alliance Global 1.60% 0.98% 2.58%
Alliance International 1.60% 1.33% 2.93%
Alliance Aggressive Stock 1.60% 0.82% 2.42%
Alliance Small Cap Growth 1.60% 1.20% 2.80%
Alliance Money Market 1.60% 0.64% 2.24%
Alliance Intermediate Government [To be inserted by
Securities 1.60% 0.81% 2.41% amendment]
Alliance High Yield 1.60% 0.89% 2.49%
BT Equity 500 Index 1.60% 0.55% 2.15%
BT Small Company Index 1.60% 0.60% 2.20%
BT International Equity Index 1.60% 0.80% 2.40%
MFS Emerging Growth Companies 1.60% 0.85% 2.45%
MFS Research 1.60% 0.85% 2.45%
Merrill Lynch Basic Value Equity 1.60% 0.85% 2.45%
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
Merrill Lynch World Strategy 1.60% 1.20% 2.80%
Morgan Stanley Emerging Markets Equity
1.60% 1.75% 3.35%
EQ/Putnam Balanced 1.60% 0.90% 2.50%
EQ/Putnam Growth & Income Value 1.60% 0.85% 2.45%
T. Rowe Price Equity Income 1.60% 0.85% 2.45%
T. Rowe Price International Stock 1.60% 1.20% 2.80%
Warburg Pincus Small Company Value 1.60% 1.00% 2.60%
</TABLE>
Total annual portfolio charges may vary from year to year. For Investment Funds
investing in portfolios with less than 10 years of operations, charges have been
estimated. The charges reflect any waiver or limitation. For more detailed
information, see the Fee Table in the prospectus.
We may also offer other Equitable Accumulator certificates which have other
features, benefits and charges. A current prospectus for these other Equitable
Accumulator certificates, if available, may be obtained from your agent.
6. TAXES. In most cases, your earnings are not taxed until distributions are
made from your Certificate. If you are younger than age 59 1/2 when you receive
any distributions, in addition to income tax you may be charged a 10% Federal
tax penalty on the taxable amount received. This tax discussion does not apply
to Roth IRA or QP Certificates. Please consult your tax adviser.
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7. ACCESS TO YOUR MONEY. During the accumulation phase, you may receive
distributions under a Certificate through the following WITHDRAWAL OPTIONS.
Under IRA, NQ and QP Certificates: (1) Lump Sum Withdrawals of at least $1,000
taken at any time; and (2) Systematic Withdrawals paid monthly, quarterly or
annually, subject to certain restrictions, including a maximum percentage of
your Certificate's value. Under both the Traditional IRA and Roth IRA
Certificates only: (1) Substantially Equal Payment Withdrawals (if you are less
than age 59 1/2), paid monthly, quarterly or annually based on life expectancy;
and under Traditional IRA Certificates only (2) Minimum Distribution Withdrawals
(after you are age 70 1/2), which pays the minimum amount necessary to meet
minimum distribution requirements in the Internal Revenue Code.
You also have access to your Certificate's value by surrendering the
Certificate. All or a portion of certain withdrawals may be subject to a
withdrawal charge to the extent that the withdrawal exceeds the free corridor
amount. A free corridor amount does not apply to a surrender. Withdrawals and
surrenders may be subject to income tax and a tax penalty. Withdrawals from the
GIROs prior to their maturity may result in a market value adjustment.
8. PERFORMANCE. During the accumulation phase, your Certificate's value in the
Investment Funds may vary up or down depending upon the investment performance
of the Investment Funds you have selected. Past performance is not a guarantee
of future results.
9. DEATH BENEFIT. If the annuitant dies before amounts are applied under an
annuity benefit, the named beneficiary will be paid a death benefit. The death
benefit is equal to your Certificate's value in (i) the Investment Funds, and
(ii) the GIROs, or if greater, the Guaranteed Minimum Death Benefit.
For Traditional IRA and Roth IRA Certificates if the annuitant is between the
ages of 20 through 78 at issue of the Certificate; for NQ Certificates for
annuitant ages 0 through 79 at issue of the Certificate; and for QP Certificates
for annuitant ages 20 through 70 at issue of the Certificate, you may choose one
of two types of Guaranteed Minimum Death Benefit available under the
Certificates: a "6% Roll Up to Age 80" or an "Annual Ratchet to Age 80." Both
types are described below. For NQ Certificates, for annuitant age 80 at issue of
the Certificate, a return of the contributions you have invested under the
Certificate plus any Credits will be the Guaranteed Minimum Death Benefit. The
benefits are based on the amount you initially put in and are adjusted for
additional contributions, Credits, and withdrawals.
6% Roll Up to Age 80 (Not available in New York) -- We add interest at 6% (4%
for amounts in the Alliance Money Market and Alliance Intermediate Government
Securities Funds, and GIROs) to the initial amount and any Credit allocated
through the annuitant's age 80 (or at the annuitant's death, if earlier).
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Annual Ratchet to Age 80 -- The Guaranteed Minimum Death Benefit is reset each
year through the annuitant's age 80 to the Certificate's value, if it is higher
than the prior year's Guaranteed Minimum Death Benefit. In New York, the
Guaranteed Minimum Death Benefit at the death of the annuitant will never be
less than the amounts in the Investment Funds, plus amounts (not reflecting any
increase due to interest rate changes) in the GIROs reflecting guaranteed
interest.
10. OTHER INFORMATION.
QUALIFIED PLANS. If the QP Certificates will be purchased by certain types of
plans qualified under Section 401(a), or 401(k) of the Internal Revenue Code,
please consult your tax adviser first. Any discussion of taxes in this profile
does not apply.
BASEBUILDER BENEFITS. The baseBUILDER (available for annuitant ages 20 through
75 at issue of the Certificates) is an optional benefit that combines the
Guaranteed Minimum Income Benefit and the Guaranteed Minimum Death Benefit.
baseBUILDER benefits are not currently available in New York.
Income Benefit - The Guaranteed Minimum Income Benefit, as part of the
baseBUILDER, provides a minimum amount of guaranteed lifetime income
for your future. When you are ready to convert (at specified future
times) your Certificate's value to the Income Manager (Life Annuity
with a Period Certain) payout annuity certificate the amount of
lifetime income that will be provided will be the greater of (i) your
Guaranteed Minimum Income Benefit or (ii) your Certificate's current
value applied at current annuity purchase factors.
Death Benefit - As part of the baseBUILDER you have the choice, at
issue of the Certificate, of two Guaranteed Minimum Death Benefit
options: (i) the 6% Roll Up to Age 80 or (ii) the Annual Ratchet to Age
80. These options are described in "Death Benefit" above. For annuitant
ages 20 through 60 at issue of the Certificate, there is an alternate
baseBUILDER benefit with a Guaranteed Minimum Death Benefit option
which is a 6% Roll Up to Age 70.
6% Roll Up to Age 70 -- We add interest at 6% (4% for amounts
in the Alliance Money Market and Alliance Intermediate
Government Securities Funds, and GIROs) to the initial amount
and any Credit allocated through the annuitant's age 70 (or at
the annuitant's death, if earlier).
FREE LOOK. You can examine the Certificate for a period of 10 days after you
receive it, and return it to us for a refund. The free look period is longer in
some states.
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Your refund will equal your Certificate's value, reflecting any investment gain
or loss, in the Investment Funds, any increase or decrease in the value of any
amounts held in the GIROs, through the date we receive your Certificate minus
the amount, as of the date applied, of any Credits. Some states or Federal
income tax regulations may require that we calculate the refund differently. In
the case of a complete conversion of an existing Traditional IRA Certificate to
a Roth IRA, you may cancel your Roth IRA and return to a Traditional IRA by
following the instructions in the request for full conversion form available
from the Processing Office or your agent.
AUTOMATIC INVESTMENT PROGRAM (AIP). AIP provides for a specified amount to be
automatically deducted from a bank checking account, bank money market account
or credit union checking account and to be applied as additional amounts under
NQ and Traditional IRA Certificates. AIP is not available for Roth IRA and QP
Certificates.
PRINCIPAL ASSURANCE. This option is designed to assure the return of your
original amount invested on a GIRO maturity date, by putting a portion of your
money in a particular GIRO, and the balance in the Investment Funds in any way
you choose. Assuming that you make no transfers or withdrawals of the portion in
the GIRO, such amount will grow to your original investment upon maturity.
DOLLAR COST AVERAGING. You can elect at any time to put money into the Alliance
Money Market Fund and have a dollar amount or percentage transferred from the
Alliance Money Market Fund into the other Investment Funds on a periodic basis.
Dollar Cost Averaging does not assure a profit or protect against a loss should
market prices decline.
REBALANCING. You can have your money automatically readjusted among the
Investment Funds quarterly, semiannually or annually as you select. The amounts
you have in each selected Investment Fund will grow or decline in value at
different rates during each time period. Rebalancing is intended to transfer
amounts among the chosen Investment Funds in order to retain the allocation
percentages you specify. Rebalancing does not assure a profit or protect against
a loss should market prices decline and should be reviewed periodically, as your
needs may change.
REPORTS. We will provide you with an annual statement of your Certificate's
values as of the last day of each year, and three additional reports of your
Certificate's values each year. You also will be provided with written
confirmations of each financial transaction, and copies of annual and semiannual
statements of HRT and EQAT.
You may call toll-free at 1-800-789-7771 for a recording of daily Investment
Fund values and guaranteed rates applicable to the GIROs .
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11. INQUIRIES. If you need more information, please contact your agent. You may
also contact us at:
The Equitable Life Assurance Society of the United States
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
Telephone 1-800-789-7771 and Fax 1-201-583-2224
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EQUITABLE ACCUMULATOR(SM)
(IRA, NQ AND QP)
PROSPECTUS DATED ___________, 1998
-------------------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
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This prospectus describes certificates The Equitable Life Assurance Society of
the United States (EQUITABLE LIFE, WE, OUR and US) offers under a combination
variable and fixed deferred annuity contract issued on a group basis or as
individual contracts. Enrollment under a group contract is evidenced by issuance
of a certificate. Certificates and individual contracts are each referred to as
"Certificates." Certificates can be issued as individual retirement annuities
(IRAS, which can be either TRADITIONAL IRAS or ROTH IRAS), or non-qualified
annuities for after-tax contributions only (NQ). NQ Certificates may also be
used as an investment vehicle for a defined contribution plan or defined benefit
plan (QP). Under IRA Certificates we accept only initial contributions that are
rollover contributions or that are direct transfers from other individual
retirement arrangements, as described in this prospectus. Under QP Certificates
we will only accept employer contributions from a trust under a plan qualified
under Section 401(a) or 401(k) of the Code. A minimum initial contribution of
$25,000 is required to put a Certificate into effect. We add an amount (CREDIT)
to your Certificate with each contribution received.
The Certificates are designed to provide for the accumulation of retirement
savings and for income. Contributions accumulate on a tax-deferred basis and can
be distributed under a number of different methods which are designed to be
responsive to the owner's (CERTIFICATE OWNER, YOU and YOUR) objectives.
The Certificates offer investment options (INVESTMENT OPTIONS) that permit you
to create your own strategies. These Investment Options include 24 variable
investment funds (INVESTMENT FUNDS) and each GUARANTEED INTEREST RATE OPTION
(GIRO) in the GUARANTEED PERIOD ACCOUNT.
We invest each Investment Fund in Class IB shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (HRT) and EQ Advisors Trust (EQAT), mutual
funds whose shares are purchased by separate accounts of insurance companies.
The prospectuses for HRT (in which the Alliance Funds invest) and EQAT (in which
the other Investment Funds invest), both of which accompany this prospectus,
describe the investment objectives, policies and risks, of the Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
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EQUITY SERIES
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<S> <C> <C>
DOMESTIC EQUITY INTERNATIONAL EQUITY AGGRESSIVE EQUITY
Alliance Common Stock Alliance Global Alliance Aggressive Stock
Alliance Growth & Income Alliance International Alliance Small Cap Growth
BT Equity 500 Index BT International Equity Index BT Small Company Index
EQ/Putnam Growth & Income Value Morgan Stanley Emerging Markets MFS Emerging Growth Companies
MFS Research Equity Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity T. Rowe Price International Stock
T. Rowe Price Equity Income
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<CAPTION>
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ASSET ALLOCATION SERIES FIXED INCOME SERIES
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<S> <C> <C>
Alliance Conservative Investors AGGRESSIVE FIXED INCOME DOMESTIC FIXED INCOME
Alliance Growth Investors Alliance High Yield Alliance Intermediate Government
EQ/Putnam Balanced Securities
Merrill Lynch World Strategy Alliance Money Market
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</TABLE>
Amounts allocated to a GIRO accumulate on a fixed basis and are credited with
interest at a rate we set (GUARANTEED RATE) for your class of Certificate for
the entire period. On each business day (BUSINESS DAY) we will determine the
Guaranteed Rates available for amounts newly allocated to GIROs. A market value
adjustment (positive or negative) will be made for withdrawals, transfers,
surrender and certain other transactions from a GIRO before its expiration date
(EXPIRATION DATE). Each GIRO has its own Guaranteed Rates. The GIROs currently
available have Expiration Dates of February 15, in years 1999 through 2008.
This prospectus provides information about IRA, NQ and QP Certificates that
prospective investors should know before investing. You should read it carefully
and retain it for future reference. The prospectus is not valid unless
accompanied by current prospectuses for HRT and EQAT, both of which you should
also read carefully.
Your Equitable Life agent can provide you with information about other annuity
products we offer and help you decide which one may best meet your needs.
Registration statements relating to Separate Account No. 45 (SEPARATE ACCOUNT)
and interests under the GIROs have been filed
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Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104. All rights reserved. Accumulator is a service mark,
and baseBUILDER and Income Manager are registered service marks of
The Equitable Life Assurance Society of the United States.
<PAGE>
with the Securities and Exchange Commission (SEC). The statement of additional
information (SAI), dated ________, 1998, which is part of the registration
statement for the Separate Account, is available free of charge upon request by
writing to our Processing Office or calling 1-800-789-7771, our toll-free
number. The SAI has been incorporated by reference into this prospectus. The
Table of Contents for the SAI appears at the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE
SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1997, its Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1998, and its current report on Form 8-K dated April
7, 1998 are incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference in this prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
and superseded, to constitute a part of this prospectus. Equitable Life files
its Exchange Act documents and reports, including its annual and quarterly
reports on Form 10-K and Form 10-Q, electronically pursuant to EDGAR under CIK
No. 0000727920. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. The address of the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits not specifically incorporated by reference into the text of such
documents). Requests for such documents should be directed to The Equitable Life
Assurance Society of the United States, 1290 Avenue of the Americas, New York,
New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234).
3
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL TERMS PAGE 6
FEE TABLE PAGE 8
PART 1: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE
INVESTMENT FUNDS PAGE 13
Equitable Life 13
Separate Account No. 45 13
The Trusts 13
HRT's Manager and Adviser 14
EQAT's Manager 14
EQAT's Investment Advisers 14
Investment Policies and Objectives of HRT's
Portfolios and EQAT's Portfolios 16
PART 2: THE GUARANTEED PERIOD
ACCOUNT PAGE 19
GIROs 19
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 20
Investments 20
PART 3: PROVISIONS OF THE
CERTIFICATES AND SERVICES
WE PROVIDE PAGE 22
What Is the Equitable Accumulator? 22
Joint Ownership 22
Contributions under the Certificates 22
Methods of Payment 23
Allocation of Contributions 23
Free Look Period 24
Annuity Account Value 24
Transfers among Investment Options 25
Dollar Cost Averaging 25
Rebalancing 25
baseBUILDER Benefits 26
Guaranteed Minimum Income Benefit 26
Death Benefit 28
How Death Benefit Payment Is Made 28
When an NQ Certificate Owner Dies
before the Annuitant 29
Cash Value 29
Surrendering the Certificates to
Receive the Cash Value 29
When Payments Are Made 29
Assignment 29
Services We Provide 30
Distribution of the Certificates 30
PART 4: DISTRIBUTION METHODS
UNDER THE CERTIFICATES PAGE 31
Withdrawal Options 31
How Withdrawals Affect Your
Guaranteed Minimum Income Benefit
and Guaranteed Minimum Death Benefit 33
Annuity Benefits and Payout Annuity Options 33
PART 5: DEDUCTIONS AND CHARGES PAGE 36
Charges Deducted from the Annuity
Account Value 36
Charges Deducted from the Investment Funds 37
HRT Charges to Portfolios 37
EQAT Charges to Portfolios 37
Group or Sponsored Arrangements 38
Other Distribution Arrangements 38
PART 6: VOTING RIGHTS PAGE 39
The Trusts' Voting Rights 39
Voting Rights of Others 39
Separate Account Voting Rights 39
Changes in Applicable Law 39
PART 7: TAX ASPECTS
OF THE CERTIFICATES PAGE 40
Tax Changes 40
Taxation of Non-Qualified Annuities 40
Special Rules for NQ Certificates Issued
in Puerto Rico 41
IRA Tax Information 41
Traditional Individual Retirement Annuities
(Traditional IRAs) 42
Roth Individual Retirement Annuities
(Roth IRAs) 47
Federal and State Income Tax Withholding and
Information Reporting 50
Other Withholding 50
Impact of Taxes to Equitable Life 50
PART 8: OTHER INFORMATION PAGE 51
Independent Accountants 51
Legal Proceedings 51
PART 9: INVESTMENT PERFORMANCE PAGE 52
Communicating Performance Data 59
Alliance Money Market Fund, Alliance
Intermediate Government Securities
Fund and Alliance High Yield Fund Yield
Information 60
4
<PAGE>
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 61
APPENDIX II: PURCHASE CONSIDERATIONS
FOR QP CERTIFICATES PAGE 62
APPENDIX III: GUARANTEED MINIMUM
DEATH BENEFIT EXAMPLE PAGE 63
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS PAGE 64
5
<PAGE>
- --------------------------------------------------------------------------------
GENERAL TERMS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT -- Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE -- The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT -- The individual who is the measuring life for determining benefits
under the Certificate. Under NQ Certificates, the Annuitant can be different
from the Certificate Owner; under both Traditional and Roth IRA Certificates,
the Annuitant and Certificate Owner must be the same individual. Under QP
Certificates, the Annuitant must be the Participant/Employee.
ANNUITY ACCOUNT VALUE -- The sum of the amounts in the Investment Options under
the Certificate. See "Annuity Account Value" in Part 3.
ANNUITY COMMENCEMENT DATE -- The date on which Annuity Benefit payments are to
commence.
BASEBUILDER(R) -- Optional protection benefit, consisting of the Guaranteed
Minimum Income Benefit and the Guaranteed Minimum Death Benefit.
BUSINESS DAY -- Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our Business
Day ends at 4:00 p.m. Eastern Time.
CASH VALUE -- The Annuity Account Value minus any withdrawal charges.
CERTIFICATE -- The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER -- The person who owns a Certificate and has the right to
exercise all rights under the Certificate. Under NQ Certificates, the
Certificate Owner can be different from the Annuitant; under both Traditional
and Roth IRA Certificates, the Certificate Owner must be the same individual as
the Annuitant. Under QP Certificates, the Certificate Owner must be the trustee
of a trust for a qualified plan maintained by an employer.
CODE -- The Internal Revenue Code of 1986, as amended.
CONTRACT DATE -- The effective date of the Certificates. This is usually the
Business Day we receive the initial contribution at our Processing Office.
CONTRACT YEAR -- The 12-month period beginning on your Contract Date and each
anniversary of that date.
CREDIT -- An amount allocated to your Annuity Account Value at the time a
Contribution is received. Credits are not considered "contributions" for
purposes of any discussion in this prospectus.
EQAT -- EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants, Inc. (EQ
FINANCIAL) is the manager of EQAT and has appointed advisers for each of the
Portfolios.
EXPIRATION DATE -- The date on which a GIRO ends.
GUARANTEED MINIMUM DEATH BENEFIT -- The minimum amount payable upon death of the
Annuitant.
GUARANTEED MINIMUM INCOME BENEFIT -- The minimum amount of future guaranteed
lifetime income.
GIROS -- Any of the periods of time ending on an Expiration Date that are
available for investment under the Certificates. GIROs are referred to as
Guarantee Periods in the Certificates.
GUARANTEED PERIOD ACCOUNT -- The Account that contains the GIROs.
GUARANTEED RATE -- The annual interest rate established for each allocation to a
GIRO.
HRT -- The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. Alliance Capital Management L.P.
(ALLIANCE) is the manager and adviser to HRT.
INVESTMENT FUNDS -- The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS -- The choices for investment: the Investment Funds and each
available GIRO.
IRA -- An individual retirement annuity, as defined in Section 408(b) of the
Code. There are two types of IRAs, a Traditional IRA and a Roth IRA. A Roth IRA
must also meet the requirements of Section 408A of the Code.
JOINT OWNERS -- Two individuals who own undivided interests in the entire
Certificate. If Joint Owners are named, reference to "Certificate Owner," "you"
or "your" will apply to both Joint Owners or either of them. Joint Owners may be
selected only for NQ Certificates.
MATURITY VALUE -- The amount in a GIRO on its Expiration Date.
6
<PAGE>
NQ -- An annuity contract which may be purchased only with after-tax
contributions, but is not a Roth IRA.
PARTICIPANT/EMPLOYEE -- An individual who participates in an employer's plan
funded by an Equitable Accumulator QP Certificate.
PORTFOLIOS -- The portfolios of HRT and EQAT that correspond to the Investment
Funds of the Separate Account.
PROCESSING DATE -- The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on the
next succeeding Business Day. The Processing Date will be once each year on each
anniversary of the Contract Date.
PROCESSING OFFICE -- The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 3.
QP -- When issued with the appropriate endorsement, an NQ Certificate which is
used as an investment vehicle for a defined contribution plan within the meaning
of Section 401(a) and 401(k) of the Code, or a defined benefit plan within the
meaning of Section 401(a) of the Code.
ROTH IRA -- An IRA which must be funded on an after-tax basis, the distributions
from which may be tax free under specified circumstances.
SAI -- The statement of additional information for the Separate Account under
the Certificates.
SEPARATE ACCOUNT -- Equitable Life's Separate Account No. 45.
TRADITIONAL IRA -- An IRA which is generally purchased with pre-tax
contributions, the distributions from which are treated as taxable.
TRANSACTION DATE -- The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If your
contribution or request reaches our Processing Office on a non-Business Day, or
after the close of the Business Day, the Transaction Date will be the next
following Business Day. Transaction requests must be made in a form acceptable
to us.
TRUSTS -- HRT and EQAT.
VALUATION PERIOD -- Each Business Day together with any preceding non-business
days.
7
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE
- --------------------------------------------------------------------------------
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificates so
that you may compare them with other similar products. The table reflects both
the charges of the Separate Account and the expenses of HRT and EQAT. Charges
for applicable taxes such as state or local premium taxes may also apply. For a
complete description of the charges under the Certificates, see "Part 5:
Deductions and Charges." For a complete description of the Trusts' charges and
expenses, see the prospectuses for HRT and EQAT.
As explained in Part 2, the GIROs are not a part of the Separate Account and are
not covered by the fee table and examples. The only charge shown in the Table
that will be deducted from amounts allocated to the GIROs is the withdrawal
charge. A market value adjustment (either positive or negative) also may be
applicable as a result of a withdrawal, transfer or surrender of amounts from a
GIRO. See "Part 2: The Guaranteed Period Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender or for CONTRACT
certain withdrawals. The applicable withdrawal charge percentage is determined by YEAR
----
<S> <C> <C>
the Contract Year in which the withdrawal is made or the Certificate is surrendered
beginning with Contract Year 1 with respect to each contribution withdrawn or 1.......................8.00%
surrendered. For each contribution, the Contract Year in which we receive that 2.......................8.00
contribution is "Contract Year 1").(1) 3.......................7.00
4.......................6.00
5.......................5.00
6.......................4.00
7.......................3.00
8.......................2.00
9.......................1.00
10+......................0.00
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF NET ASSETS IN EACH INVESTMENT FUND)
- ----------------------------------------------------------------------------------------
<S> <C>
MORTALITY AND EXPENSE RISKS(2).............................................................................. 1.10%
ADMINISTRATION(3)........................................................................................... 0.25%
DISTRIBUTION(4)............................................................................................. 0.25%
=====
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES................................................................... 1.60%
=====
<CAPTION>
OPTIONAL BENEFIT EXPENSE (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- -------------------------------------------------------------
BASEBUILDER BENEFITS EXPENSE (calculated as a percentage of the Guaranteed Minimum Income
<S> <C>
Benefit benefit base)(5)................................................................................. 0.30%
</TABLE>
- -------------------
See footnotes on next page.
8
<PAGE>
<TABLE>
<CAPTION>
HRT AND EQAT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT PORTFOLIOS
-----------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE GROWTH GROWTH & COMMON ALLIANCE ALLIANCE
HRT INVESTORS INVESTORS INCOME STOCK GLOBAL INTERNATIONAL
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Management and Advisory Fee 0.48% 0.52% 0.55% 0.37% 0.65% 0.90%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.07% 0.05% 0.04% 0.03% 0.08% 0.18%
===============================================================================================================================
TOTAL HRT ANNUAL EXPENSES(7) 0.80% 0.82% 0.84% 0.65% 0.98% 1.33%
===============================================================================================================================
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE INTERMEDIATE ALLIANCE
AGGRESSIVE SMALL CAP MONEY GOVT. HIGH
HRT STOCK GROWTH MARKET SECURITIES YIELD
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Management and Advisory Fee 0.54% 0.90% 0.35% 0.50% 0.60%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.03% 0.05% 0.04% 0.06% 0.04%
===================================================================================================================
TOTAL HRT ANNUAL EXPENSES(7) 0.82% 1.20% 0.64% 0.81% 0.89%
===================================================================================================================
<CAPTION>
BT BT MFS MERRILL
BT SMALL INTERNATIONAL EMERGING LYNCH
EQUITY 500 COMPANY EQUITY GROWTH MFS BASIC VALUE
EQAT INDEX INDEX INDEX COMPANIES RESEARCH EQUITY
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Management and Advisory Fee 0.25% 0.25% 0.35% 0.55% 0.55% 0.55%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.05% 0.10% 0.20% 0.05% 0.05% 0.05%
===============================================================================================================================
TOTAL EQAT ANNUAL EXPENSES(8) 0.55% 0.60% 0.80% 0.85% 0.85% 0.85%
===============================================================================================================================
<CAPTION>
MORGAN T. ROWE WARBURG
MERRILL STANLEY EQ/PUTNAM T. ROWE PRICE PINCUS
LYNCH EMERGING GROWTH & PRICE INTER- SMALL
WORLD MARKETS EQ/PUTNAM INCOME EQUITY NATIONAL COMPANY
EQAT STRATEGY EQUITY BALANCED VALUE INCOME STOCK VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Management and Advisory Fee 0.70% 1.15% 0.55% 0.55% 0.55% 0.75% 0.65%
12b-1 Fee(6) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.35% 0.10% 0.05% 0.05% 0.20% 0.10%
===============================================================================================================================
TOTAL EQAT ANNUAL EXPENSES(8) 1.20% 1.75% 0.90% 0.85% 0.85% 1.20% 1.00%
===============================================================================================================================
</TABLE>
- -------------------
Notes:
(1) Deducted upon a withdrawal with respect to amounts in excess of the 15% free
corridor amount, and upon surrender of a Certificate. See "Withdrawal
Charge" in Part 5.
(2) A portion of this charge is for providing the Guaranteed Minimum Death
Benefit. See "Mortality and Expense Risks Charge" in Part 5.
(3) We reserve the right to increase this charge to an annual rate of 0.35%, the
maximum permitted under the Certificates.
(4) The deduction of this charge is subject to regulatory limits. See
"Distribution Charge" in Part 5.
(5 The 0.30% charge is for the baseBUILDER with the "6% Roll Up to Age 80"
Guaranteed Minimum Death Benefit and the "Annual Ratchet to Age 80"
Guaranteed Minimum Death Benefit. The charge for the baseBUILDER with the
"6% Roll Up to Age 70" Guaranteed Minimum Death Benefit, available under
only Traditional IRA Certificates, is 0.15%. See "baseBUILDER Benefits" in
Part 3. If the baseBUILDER is elected, this charge is deducted annually on
each Processing Date. See "baseBUILDER Benefits Charge" in Part 5. For the
description of the Guaranteed Minimum Income Benefit benefit base, see
"Guaranteed Minimum Income Benefit Benefit Base" in Part 4.
(6) The Class IB shares of HRT and EQAT are subject to fees imposed under
distribution plans (herein, the "Rule 12b-1 Plans" ) adopted by HRT and EQAT
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended.
The Rule 12b-1 Plans provide that HRT and EQAT, on behalf of each Portfolio
(other than the Alliance Small Cap Growth Portfolio of HRT), may pay
annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fee will
not be increased for the life of the Certificates. The Rule 12b-1 Plan for
the Alliance Small Cap Growth Portfolio of HRT provides that Equitable
Distributors Inc. ("EDI") will receive an annual fee not to exceed the
lesser of (a) 0.25% of the average daily net assets of the Portfolio
attributable to Class IB shares and (b) an amount that, when added to
certain other expenses of the Class IB shares, would result in the ratio of
expenses to average daily net assets attributable to Class IB shares
equalling 1.20%.
(7) Effective May 1, 1997, a new Investment Advisory Agreement was entered into
between HRT and Alliance Capital Management L.P. ("Alliance"), HRT's
Investment Adviser, which effected changes in HRT's management fee and
expense structure. See HRT's prospectus for more information. The amounts
shown for the Portfolios of HRT are based on average daily net assets for
the year ended December 31, 1997 and have been restated to reflect (i) the
fees that would have been paid to Alliance if the current Investment
Advisory Agreement had been in effect as of January 1, 1997 and (ii)
estimated accounting expenses for the year ending December 31, 1997. The
investment management and advisory fees for each Portfolio may vary from
year to year depending upon the average daily net assets of the respective
Portfolio of HRT. The maximum investment management and advisory fees,
however, cannot be increased without a vote of that Portfolio's
shareholders. The other direct operating expenses will also fluctuate from
year to year depending on actual expenses. See "HRT Charges to Portfolios"
in Part 5.
9
<PAGE>
(8) All EQAT Portfolios commenced operations on May 1, 1997, except the Morgan
Stanley Emerging Markets Equity Portfolio, which commenced operations on
August 20, 1997, and the following Portfolios, which had initial seed
capital invested on December 31, 1997: BT Equity 500 Index, BT Small Company
Index, and BT International Equity Index.
The maximum investment management and advisory fees for each EQAT Portfolio
cannot be increased without a vote of that Portfolio's shareholders. The
amounts shown as "Other Expenses" will fluctuate from year to year depending
on actual expenses, however, EQ Financial Consultants, Inc. ("EQ Financial"),
EQAT's manager, has entered into an expense limitation agreement with respect
to each Portfolio ("Expense Limitation Agreement"), pursuant to which EQ
Financial has agreed to waive or limit its fees and assume other expenses.
Under the Expense Limitation Agreement, total annual operating expenses of
each Portfolio (other than interest, taxes, brokerage commissions,
capitalized expenditures, extraordinary expenses, and 12b-1 fees) are limited
for the respective average daily net assets of each Portfolio as follows: BT
Equity 500 Index - 0.30%; BT Small Company Index - 0.35%; BT International
Equity Index - 0.55%; MFS Research, MFS Emerging Growth Companies, Merrill
Lynch Basic Value Equity, EQ/Putnam Growth & Income Value, T. Rowe Price
Equity Income - 0.60%; Merrill Lynch World Strategy and T. Rowe Price
International - 0.95%; Morgan Stanley Emerging Markets Equity - 1.50%;
EQ/Putnam Balanced - 0.65%; and Warburg Pincus Small Company - 0.75%.
Absent the expense limitation, the "Other Expenses" for 1997 on an annualized
basis for each of the following Portfolios would have been as follows: MFS
Emerging Growth Companies - 1.02%; MFS Research - 0.98%; Merrill Lynch Basic
Value Equity - 1.09%; Merrill Lynch World Strategy - 2.10%; Morgan Stanley
Emerging Markets Equity - 1.21%; EQ/Putnam Balanced - 1.75%; EQ/Putnam Growth
& Income Value - 0.95%; T. Rowe Price Equity Income - 0.94%; T. Rowe Price
International Stock - 1.56%; and Warburg Pincus Small Company Value - 0.80%.
For EQAT Portfolios which had initial seed capital invested on December 31,
1997, the "Other Expenses" for 1998 are estimated to be as follows (absent
the expense limitation): BT Equity 500 Index - 0.29%; BT Small Company Index
- 0.23%; and BT International Equity Index - 0.47%.
See "EQAT Charges to Portfolios" in Part 5.
Each Portfolio may at a later date make a reimbursement to EQ Financial for
any of the management fees waived or limited and other expenses assumed and
paid by EQ Financial pursuant to the Expense Limitation Agreement provided
that, among other things, such Portfolio has reached sufficient size to
permit such reimbursement to be made and provided that the Portfolio's
current annual operating expenses do not exceed the operating expense limit
determined for such Portfolio. See the EQAT prospectus for more information.
We may also offer Equitable Accumulator certificates, which have other features,
benefits and charges. A current prospectus for these other Equitable Accumulator
certificates, if available, may be obtained from your agent.
10
<PAGE>
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner (who
has elected the baseBUILDER with a 6% Roll Up to Age 80 Guaranteed Minimum Death
Benefit or an Annual Ratchet to Age 80 Guaranteed Minimum Death Benefit would
pay in the two situations noted below assuming a $1,000 contribution plus a $30
Credit invested in one of the Investment Funds listed, and a 5% annual return on
assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
EXPENSES REFLECTING BASEBUILDER BENEFIT ELECTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CERTIFICATE AT THE IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT
END OF EACH PERIOD SHOWN, THE EXPENSES THE END OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE: WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------
HRT
- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Conservative
Investors
Alliance Growth Investors
Alliance Growth & Income
Alliance Common Stock
Alliance Global
Alliance International
Alliance Aggressive Stock
Alliance Small Cap Growth
Alliance Money Market
Alliance Intermediate Gov't
Securities
Alliance High Yield [to be inserted by amendment]
EQAT
- ----
BT Equity 500 Index
BT Small Company Index
BT International Equity Index
MFS Emerging
Growth Companies
MFS Research
Merrill Lynch Basic Value
Equity
Merrill Lynch World Strategy
Morgan Stanley Emerging
Markets Equity
EQ/Putnam Balanced
EQ/Putnam Growth & Income
Value
T. Rowe Price Equity Income
T. Rowe Price
International Stock
Warburg Pincus
Small Company Value
</TABLE>
- -------------------
See footnote on next page.
11
<PAGE>
Note:
(1)The amount accumulated from the $1,000 contribution plus $30 Credit could
not be paid in the form of an annuity at the end of any of the periods shown
in the examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20, we may pay the amount to the
payee in a single sum instead of as payments under an annuity form. See
"Annuity Benefits and Payout Annuity Options" in Part 4. The examples do not
reflect charges for applicable taxes such as state or local premium taxes
that may also be deducted in certain jurisdictions.
12
<PAGE>
- --------------------------------------------------------------------------------
PART 1: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
- --------------------------------------------------------------------------------
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest life
insurance companies in the United States. Our home office is located at 1290
Avenue of the Americas, New York, New York 10104. We are authorized to sell life
insurance and annuities in all fifty states, the District of Columbia, Puerto
Rico and the U.S. Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (THE HOLDING COMPANY). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1997, AXA beneficially owned
approximately 58.7% of the outstanding common stock of the Holding Company.
Under its investment arrangements with Equitable Life and the Holding Company,
AXA is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable Life.
AXA, a French company, is the holding company for an international group of
insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed approximately
$274.1 billion of assets as of December 31, 1997.
SEPARATE ACCOUNT NO. 45
Separate Account No. 45 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment Company
Act of 1940, as amended (1940 ACT). This registration does not involve any
supervision by the SEC of the management or investment policies of the Separate
Account. The Separate Account has several Investment Funds, each of which
invests in shares of a corresponding Portfolio of HRT and EQAT. Because amounts
allocated to the Investment Funds are invested in a mutual fund, investment
return and principal will fluctuate and the Certificate Owner's Accumulation
Units may be worth more or less than the original cost when redeemed.
Under the New York Insurance Law, the portion of the Separate Account's assets
equal to the reserves and other liabilities relating to the Certificates are not
chargeable with liabilities arising out of any other business we may conduct.
Income, gains or losses, whether or not realized, from assets of the Separate
Account are credited to or charged against the Separate Account without regard
to our other income gains or losses. This means that assets supporting Annuity
Account Value in the Separate Account are not subject to claims of Equitable
Life's creditors. We are the issuer of the Certificates, and the obligations set
forth in the Certificates (other than those of Annuitants or Certificate Owners)
are our obligations.
In addition to contributions made under the Certificates, we may allocate to the
Separate Account monies received under other contracts, certificates, or
agreements. Owners of all such contracts, certificates or agreements will
participate in the Separate Account in proportion to the amounts they have in
the Investment Funds that relate to their contracts, certificates or agreements.
We may retain in the Separate Account assets that are in excess of the reserves
and other liabilities relating to the Certificates or to other contracts,
certificates or agreements, or we may transfer the excess to our General
Account.
We reserve the right, subject to compliance with applicable law: (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove Investment
Funds (or sub-funds) from, the Separate Account, or to add other separate
accounts; (2) to combine any two or more Investment Funds or sub-funds thereof;
(3) to transfer the assets we determine to be the share of the class of
contracts to which the Certificates belong from any Investment Fund to another
Investment Fund; (4) to operate the Separate Account or any Investment Fund as a
management investment company under the 1940 Act, in which case charges and
expenses that otherwise would be assessed against an underlying mutual fund
would be assessed against the Separate Account; (5) to deregister the Separate
Account under the 1940 Act, provided that such action conforms with the
requirements of applicable law; (6) to restrict or eliminate any voting rights
as to the Separate Account; and (7) to cause one or more Investment Funds to
invest some or all of their assets in one or more other trusts or investment
companies. If any changes are made that result in a material change in the
underlying investment policy of an Investment Fund, you will be notified as
required by law.
THE TRUSTS
The Trusts are open-end management investment companies registered under the
1940 Act, more commonly called mutual funds. As a "series" type of
13
<PAGE>
mutual fund, each Trust issues several different series of stock, each of which
relates to a different Portfolio of that Trust. HRT commenced operations in
January 1976 with a predecessor of its Alliance Common Stock Portfolio. EQAT
commenced operations on May 1, 1997. The Trusts do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a Portfolio's shares are reinvested in full and fractional
shares of the Portfolio to which they relate. Each Investment Fund invests in
Class IB shares of a corresponding Portfolio. All of the Portfolios, except for
the Morgan Stanley Emerging Markets Equity Portfolio, are diversified for 1940
Act purposes. The Board of Trustees of HRT and EQAT may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about the Trusts, their investment objectives, policies,
restrictions, risks, expenses, their respective Rule 12b-1 Plans relating to
their respective Class IB shares, and other aspects of their operations, appears
in the HRT prospectus (beginning after this prospectus), the EQAT prospectus
(beginning after the HRT prospectus), or in their respective Statements of
Additional Information, which are available upon request.
HRT'S MANAGER AND ADVISER
HRT is managed and its Portfolios are advised by Alliance Capital Management
L.P. (ALLIANCE), which is registered with the SEC as an investment adviser under
the Investment Advisers Act of 1940, as amended (ADVISERS ACT).
In its role as manager of HRT, Alliance has overall responsibility for the
general management and administration of HRT, including selecting the portfolio
managers for HRT's Portfolios, monitoring their investment programs and results,
reviewing brokerage matters, performing fund accounting, overseeing compliance
by HRT with various Federal and state statutes, and carrying out the directives
of its Board of Trustees. With the approval of HRT's Trustees, Alliance may
enter into agreements with other companies to assist with its administrative and
management responsibilities to HRT.
As adviser for all HRT Portfolios, Alliance is responsible for developing the
Portfolios' investment programs, making investment decisions for the Portfolios,
placing all orders for the purchase and sale of those investments and performing
certain limited related administrative functions.
ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance, a leading international investment adviser, provides investment
management and consulting services to mutual funds, endowment funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and tax-exempt
organizations.
Alliance is a publicly traded limited partnership incorporated in Delaware. On
December 31, 1997, Alliance was managing approximately $218.7 billion in assets.
Alliance employs 223 investment professionals, including 83 research analysts.
Portfolio managers have average investment experience of more than 14 years.
Alliance is an indirect, majority-owned subsidiary of Equitable Life, and its
main office is located at 1345 Avenue of the Americas, New York, NY 10105.
Additional information regarding Alliance is located in the HRT prospectus which
directly follows this prospectus.
EQAT'S MANAGER
EQ Financial Consultants, Inc. (EQ FINANCIAL), subject to the supervision and
direction of the Board of Trustees of EQAT, has overall responsibility for the
general management and administration of EQAT. EQ Financial is an investment
adviser registered under the Advisers Act, and a broker-dealer registered under
the Exchange Act. EQ Financial currently furnishes specialized investment advice
to other clients, including individuals, pension and profit-sharing plans,
trusts, charitable organizations, corporations, and other business entities. EQ
Financial is a Delaware corporation and an indirect, wholly owned subsidiary of
Equitable Life.
EQ Financial is responsible for providing management and administrative services
to EQAT and selects the investment advisers for EQAT's Portfolios, monitors the
EQAT advisers' investment programs and results, reviews brokerage matters,
oversees compliance by EQAT with various Federal and state statutes, and carries
out the directives of its Board of Trustees. EQ Financial Consultants, Inc.'s
main office is located at 1290 Avenue of the Americas, New York, NY 10104.
Pursuant to a service agreement, Chase Global Funds Services Company assists EQ
Financial in the performance of its administrative responsibilities to EQAT with
other necessary administrative, fund accounting and compliance services.
EQAT'S INVESTMENT ADVISERS
Bankers Trust Company, Massachusetts Financial Services Company, Merrill Lynch
Asset Management, L.P., Morgan Stanley Asset Management Inc., Putnam Investment
Management Inc., T. Rowe Price Associates, Inc., and Rowe Price-Fleming
International, Inc., and Warburg Pincus Asset Management, Inc. serve as EQAT
advisers only for their respective EQAT Portfolios.
Each EQAT adviser furnishes EQAT's manager, EQ Financial, with an investment
program (updated periodically) for each of its Portfolios, makes investment
decisions on behalf of its EQAT Portfolios, places all
14
<PAGE>
orders for the purchase and sale of investments for the Portfolio's account with
brokers or dealers selected by such adviser and may perform certain limited
related administrative functions.
The assets of each Portfolio are allocated currently among the EQAT advisers. If
an EQAT Portfolio shall at any time have more than one EQAT adviser, the
allocation of an EQAT Portfolio's assets among EQAT advisers may be changed at
any time by EQ Financial.
BANKERS TRUST COMPANY
Bankers Trust Company (BANKERS TRUST) is a wholly owned subsidiary of Bankers
Trust New York Corporation which was founded in 1903. Bankers Trust conducts a
variety of general banking and trust activities and is a major wholesale
supplier of financial services to the international and domestic institutional
markets. Bankers Trust advises BT Equity 500 Index, a domestic equity portfolio,
BT Small Company Index, an aggressive equity portfolio, and BT International
Equity Index, an international equity portfolio. As of December 31, 1997,
Bankers Trust had approximately $317.8 billion in assets under management
worldwide. The executive offices of Bankers Trust are located at 130 Liberty
Street (One Bankers Trust Plaza), New York, NY 10006.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
Massachusetts Financial Services Company (MFS) is America's oldest mutual fund
organization, whose assets under management as of December 31, 1997 were
approximately $70.2 billion on behalf of more than 2.7 million investors. MFS
advises MFS Research, a domestic equity portfolio, and MFS Emerging Growth
Companies, an aggressive equity portfolio. MFS is an indirect subsidiary of Sun
Life Assurance Company of Canada and is located at 500 Boylston Street, Boston,
MA 02116.
MERRILL LYNCH ASSET MANAGEMENT, L.P.
Founded in 1976, Merrill Lynch Asset Management, L.P. (MLAM) is a dedicated
asset management affiliate of Merrill Lynch & Co., Inc., a financial management
and advisory company with more than a century of experience. As of December 31,
1997, MLAM, along with its advisory affiliates held approximately $278 billion
in investment company and other portfolio assets under management. MLAM advises
Merrill Lynch Basic Value Equity, a domestic equity portfolio with a value
approach to investing, and Merrill Lynch World Strategy, a global flexible asset
allocation portfolio that invests in equities and fixed income securities
worldwide. The company is located at 800 Scudders Mill Road, Plainsboro, NJ
08543-9011.
MORGAN STANLEY ASSET MANAGEMENT INC.
Morgan Stanley Asset Management Inc. (MSAM) provides a broad range of portfolio
management services to customers in the United States and abroad and serves as
an investment adviser to numerous open-end and closed-end investment companies.
MSAM, together with its affiliated institutional investment management
companies, had approximately $146 billion in assets under management and
fiduciary care as of December 31, 1997. MSAM advises Morgan Stanley Emerging
Markets Equity, an international equity portfolio. MSAM is a subsidiary of
Morgan Stanley, Dean Witter & Co. and is located at 1221 Avenue of the Americas,
New York, NY 10020.
PUTNAM INVESTMENT MANAGEMENT, INC.
Putnam Investment Management, Inc. (PUTNAM) has been managing mutual funds since
1937. As of December 31, 1997, Putnam and its affiliates managed more than $235
billion in assets. Putnam advises EQ/Putnam Balanced, a balanced stock and bond
portfolio and EQ/Putnam Growth & Income Value, a domestic equity portfolio.
Putnam is an indirect subsidiary of Marsh & McLennan Companies, Inc. and is
located at One Post Office Square, Boston, MA 02109.
T. ROWE PRICE ASSOCIATES, INC. AND
ROWE PRICE-FLEMING INTERNATIONAL, INC.
Founded in 1937, T. Rowe Price Associates, Inc. (T. ROWE PRICE) provides
investment management to both individuals and institutions. With its affiliates,
assets under management were over $126 billion as of December 31, 1997. T. Rowe
Price advises T. Rowe Price Equity Income, a domestic equity portfolio. The
company is located at 100 East Pratt Street, Baltimore, MD 21202.
Rowe Price-Fleming International, Inc., (PRICE-FLEMING) was founded as a joint
venture between T. Rowe Price and Robert Fleming Holdings, Ltd., a diversified
British investment organization. Price-Fleming's predominately non-U.S. assets
under management were the equivalent to approximately $30 billion as of December
31, 1997. Price-Fleming advises T. Rowe Price International Stock, an
international equity portfolio, and is located at 100 East Pratt Street,
Baltimore, MD 21202.
WARBURG PINCUS ASSET MANAGEMENT, INC.
Warburg Pincus Asset Management, Inc. (WPAM) is a professional investment
advisory firm which provides services to investment companies, employee benefit
plans, endowment funds, foundations, and other institutions and individuals.
Assets under management were approximately $19.6 billion as of December 31,
1997. WPAM is indirectly controlled by Warburg, Pincus & Co., a New York
partnership, which serves as a holding company of WPAM. WPAM advises Warburg
Pincus Small Company Value, an aggressive equity portfolio. The company is
located at 466 Lexington Avenue, New York, NY 10017.
Additional information regarding each of the companies which serve as an EQAT
adviser appears in the EQAT prospectus beginning after the HRT prospectus.
15
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF HRT'S PORTFOLIOS AND EQAT'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve by
following separate investment policies. The policies and objectives of each
Portfolio will affect its return and its risks. There is no guarantee that these
objectives will be achieved. Set forth below is a summary of the investment
policies and objectives of each Portfolio. This summary is qualified in its
entirety by reference to the prospectuses for HRT and EQAT, both of which
accompany this prospectus. Please read the prospectuses for each of the trusts
carefully before investing.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
HRT PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Conservative Diversified mix of publicly traded equity and High total return without, in the
Investors debt securities. adviser's opinion, undue risk to
principal
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors Diversified mix of publicly traded equity and High total return consistent with
fixed-income securities, including at times the adviser's determination of
common stocks issued by intermediate and reasonable risk
small-sized companies and at times
lower-quality fixed-income securities commonly
known as "junk bonds."
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income and
capital appreciation
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock Primarily common stock and other equity-type Long-term growth of capital and
instruments. increasing income
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Global Primarily equity securities of non-United Long-term growth of capital
States as well as United States companies.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance International Primarily equity securities selected Long-term growth of capital
principally to permit participation in
non-United States companies with prospects for
growth.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by quality small- and
intermediate-sized companies with strong growth
prospects and in covered options on those
securities.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Primarily U.S. common stocks and other Long-term growth of capital
equity-type securities issued by smaller
companies that, in the opinion of the adviser,
have favorable growth prospects.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Money Market Primarily high-quality U.S. dollar-denominated High level of current income
money market instruments. while preserving assets and
maintaining liquidity
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Primarily debt securities issued or guaranteed High current income consistent
Government Securities as to principal and interest by the U.S. with relative stability of
government or any of its agencies or principal
instrumentalities. Each investment will have a
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield Primarily a diversified mix of high-yield, High return by maximizing current
fixed-income securities which generally involve income and, to the extent
greater volatility of price and risk of consistent with that objective,
principal and income than higher-quality capital appreciation
fixed-income securities. Lower-quality debt
securities are commonly known as "junk bonds."
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
EQAT PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BT Equity 500 Index Invest in a statistically selected sample of Replicate as closely as possible
the 500 stocks included in the S&P 500. (before the deduction of
Portfolio expenses) the total
return of the S&P 500
- -------------------------------------------------------------------------------------------------------------------------------
BT Small Company Index Invest in a statistically selected sample of Replicate as closely as possible
the 2,000 stocks included in the Russell 2000 (before the deduction of
Index ("Russell 2000"). Portfolio expenses) the total
return of the Russell 2000
- -------------------------------------------------------------------------------------------------------------------------------
BT International Equity Index Invest in a statistically selected sample of Replicate as closely as possible
the securities of companies included in the (before the deduction of
Morgan Stanley Capital International Europe, Portfolio expenses) the total
Australia, Far East Index ("EAFE"), although return of the EAFE
not all companies within a country will be
represented in the Portfolio at the same time.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Primarily (i.e., at least 80% of its assets Long-term growth of capital
Companies under normal circumstances) in common stocks of
emerging growth companies that the adviser
believes are early in their life cycle but
which have the potential to become major
enterprises.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Research A substantial portion of assets invested in Long-term growth of capital and
common stock or securities convertible into future income
common stock of companies believed by the
adviser to possess better than average
prospects for long-term growth.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Investment in securities, primarily equities, Capital appreciation and, secondarily,
Equity that the adviser believes are undervalued income
and therefore represent basic investment
value.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy Investment primarily in a portfolio of equity High total investment return
and fixed-income securities, including
convertible securities, of U.S. and foreign
issuers.
- -------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Primarily equity securities of emerging market Long-term capital appreciation
Equity country issuers with a focus on those in which
the adviser believes the economies are
developing strongly and in which the markets
are becoming more sophisticated.
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced A well-diversified portfolio of stocks and Balanced investment
bonds that will produce both capital growth and
current income.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
EQAT PORTFOLIO (CONTINUED) INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Putnam Growth Primarily common stocks that offer potential Capital growth and, secondarily,
& Income Value for capital growth and may, consistent with the current income
Portfolio's investment objective, invest in
common stocks that offer potential for current
income.
- -------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income Primarily dividend paying common stocks of Substantial dividend income and
established companies. also capital appreciation
- -------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Primarily common stocks of established Long-term growth of capital
non-United States companies.
- -------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Primarily in a portfolio of equity securities Long-term capital appreciation
Company Value of small capitalization companies (i.e.,
companies having market capitalizations of
$1 billion or less at the time of initial
purchase) that the adviser considers to be
relatively undervalued.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
- --------------------------------------------------------------------------------
PART 2: THE GUARANTEED PERIOD ACCOUNT
- --------------------------------------------------------------------------------
GIROS
Each amount allocated to a GIRO and held to the GIRO's Expiration Date
accumulates interest at a Guaranteed Rate. The Guaranteed Rate for each
allocation is the annual interest rate applicable under your class of
Certificate to new allocations to that GIRO, which was in effect on the
Transaction Date for the allocation. We may establish different Guaranteed Rates
under other classes of Certificates. We use the term GUARANTEED PERIOD AMOUNT to
refer to the amount allocated to and accumulated in each GIRO. The Guaranteed
Period Amount is reduced or increased by any market value adjustment as a result
of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the GIROs to which you have allocated
Annuity Account Value. On the Expiration Date of a GIRO, its Guaranteed Period
Amount and its value in the Guaranteed Period Account are equal. We call the
Guaranteed Period Amount on an Expiration Date the GIRO's Maturity Value. We
report the Annuity Account Value in your Guaranteed Period Account to reflect
any market value adjustment that would apply if all Guaranteed Period Amounts
were withdrawn as of the calculation date. The Annuity Account Value in the
Guaranteed Period Account with respect to the GIROs on any Business Day,
therefore, will be the sum of the present value of the Maturity Value in each
GIRO, using the Guaranteed Rate in effect for new allocations to each such GIRO
on such date.
GIROs and Expiration Dates
We currently offer GIROs ending on February 15th for each of the maturity years
1999 through 2008. Not all of these GIROs will be available for Annuitant ages
76 and above. See "Allocation of Contributions" in Part 3. Also, the GIROs may
not be available for investment in all states. As GIROs expire we expect to add
maturity years so that generally 10 are available at any time.
We will not accept allocations to a GIRO if, on the Transaction Date:
o Such Transaction Date and the Expiration Date for such GIRO fall within the
same calendar year.
o The Guaranteed Rate is 3%.
o The GIRO has an Expiration Date beyond the February 15th immediately following
the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a GIRO can be
determined at the time it is made, you can determine the amount required to be
allocated to a GIRO in order to produce a target Maturity Value (assuming no
transfers or withdrawals are made and no charges are allocated to the GIRO). The
required amount is the present value of that Maturity Value at the Guaranteed
Rate on the Transaction Date for the contribution, which may also be expressed
as the price per $100 of Maturity Value on such Transaction Date.
Guaranteed Rates for new allocations as of ________, 1998 and the related price
per $100 of Maturity Value for each currently available GIRO were as follows:
- -------------------------------------------------------------
GUARANTEE
PERIODS WITH GUARANTEED
EXPIRATION DATE RATE AS OF PRICE
FEBRUARY 15TH OF ________, PER $100 OF
MATURITY YEAR 1998 MATURITY VALUE
- -------------------------------------------------------------
1999 x.xx% $xx.xx
2000 x.xx xx.xx
2001 x.xx xx.xx
2002 x.xx xx.xx
2003 x.xx xx.xx
2004 x.xx xx.xx
2005 x.xx xx.xx
2006 x.xx xx.xx
2007 x.xx xx.xx
2008 x.xx xx.xx
- -------------------------------------------------------------
Allocation among GIROs
The same approach as described above may also be used to determine the amount
which you would need to allocate to each GIRO in order to create a series of
constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of years
1999 through 2003, then according to the above table the lump sum contribution
you would have to make as of ________, 1998 would be $______ (the sum of the
prices per $100 of Maturity Value for each maturity year from 1999 through
2003).
The above example is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted, withdrawals or transfers to be made from GIROs or for the market value
adjustment that would apply to such transactions. Actual calculations will be
based on Guaranteed Rates on each actual Transaction Date, which may differ.
19
<PAGE>
Options at Expiration Date
We will notify you on or before December 31st prior to the Expiration Date of
each GIRO in which you have any Guaranteed Period Amount. You may elect one of
the following options to be effective at the Expiration Date, subject to the
restrictions set forth on the prior page and under "Allocation of Contributions"
in Part 3:
(a) to transfer the Maturity Value into any GIRO we are then offering, or
into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges which
may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired GIRO will be transferred into the GIRO with the earliest
Expiration Date.
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR SURRENDER PRIOR TO THE
EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a GIRO prior
to its Expiration Date will cause any remaining Guaranteed Period Amount for
that GIRO to be increased or decreased by a market value adjustment. The amount
of the adjustment will depend on two factors: (a) the difference between the
Guaranteed Rate applicable to the amount being withdrawn and the Guaranteed Rate
on the Transaction Date for new allocations to a GIRO with the same Expiration
Date, and (b) the length of time remaining until the Expiration Date. In
general, if interest rates have risen between the time when an amount was
originally allocated to a GIRO and the time it is withdrawn, the market value
adjustment will be negative, and vice versa; and the longer the period of time
remaining until the Expiration Date, the greater the impact of the interest rate
difference. Therefore, it is possible that a significant rise in interest rates
could result in a substantial reduction in your Annuity Account Value in the
Guaranteed Period Account related to longer-term GIROs.
The market value adjustment (positive or negative) resulting from a withdrawal
of all funds from a GIRO will be determined for each contribution allocated to
that Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction Date
as follows:
(a) We determine the Guaranteed Period Amount that would be payable on the
Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your GIRO (based on the Transaction
Date) and convert it to fractional years based on a 365-day year. For
example, three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same GIRO.
(d) We determine the present value of the Guaranteed Period Amount payable
at the Expiration Date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market value
adjustment applicable to such GIRO, which may be positive or negative.
The market value adjustment (positive or negative) resulting from a withdrawal
(including any withdrawal charges) of a portion of the amount in a GIRO will be
a percentage of the market value adjustment that would be applicable upon a
withdrawal of all funds from a GIRO. This percentage is determined by (i)
dividing the amount of the withdrawal or transfer from the GIRO by (ii) the
Annuity Account Value in such GIRO prior to the withdrawal or transfer. See
Appendix I for an example.
The Guaranteed Rate for new allocations to a GIRO is the rate we have in effect
for this purpose even if new allocations to that GIRO would not be accepted at
the time. This rate will not be less than 3%. If we do not have a Guaranteed
Rate in effect for a GIRO to which the "current Guaranteed Rate" in (1)(c) would
apply, we will use the rate at the next closest Expiration Date. If we are no
longer offering new GIROs, the "current Guaranteed Rate" will be determined in
accordance with our procedures then in effect. For purposes of calculating the
market value adjustment only, we reserve the right to add up to 0.25% to the
current rate in (1)(c) above.
INVESTMENTS
Amounts allocated to GIROs will be held in a "nonunitized" separate account
established by Equitable Life under the laws of New York. This separate account
provides an additional measure of assurance that full payment of amounts due
under the GIROs will be made. Under the New York Insurance Law, the portion of
the separate account's assets equal to the reserves and other contract
liabilities relating to the Certificates are not chargeable with liabilities
arising out of any other business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
(and any earnings on those amounts) are the property of Equitable Life. Any
favorable investment performance on the assets held in the separate account
accrues solely to Equitable Life's benefit. Certificate Owners do not
participate in the performance of the assets held in this separate account.
20
<PAGE>
Equitable Life may, subject to applicable state law, transfer all assets
allocated to the separate account to its general account. Regardless of whether
assets supporting Guaranteed Period Accounts are held in a separate account or
our general account, all benefits relating to the Annuity Account Value in the
Guaranteed Period Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates for
the GIROs. Equitable Life expects the rates to be influenced by, but not
necessarily correspond to, among other things, the yields on the fixed-income
securities to be acquired with amounts that are allocated to the GIROs at the
time that the Guaranteed Rates are established. Our current plans are to invest
such amounts in fixed-income obligations, including corporate bonds,
mortgage-backed and asset-backed securities and government and agency issues
having durations in the aggregate consistent with those of the GIROs.
Although the foregoing generally describes Equitable Life's plans for investing
the assets supporting Equitable Life's obligations under the fixed portion of
the Certificates, Equitable Life is not obligated to invest those assets
according to any particular plan except as may be required by state insurance
laws, nor will the Guaranteed Rates Equitable Life establishes be determined by
the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Credits allocated to your Annuity Account Value are funded
from our general account.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations of
all jurisdictions where we are authorized to do business. Because of applicable
exemptions and exclusionary provisions, interests in the general account have
not been registered under the Securities Act of 1933, as amended (1933 ACT), nor
is the general account an investment company under the 1940 Act. Accordingly,
the general account is not subject to regulation under the 1933 Act or the 1940
Act. However, the market value adjustment interests under the Certificates are
registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in the prospectus for your information that relates
to the general account (other than market value adjustment interests). The
disclosure, however, may be subject to certain generally applicable provisions
of the Federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
21
<PAGE>
- --------------------------------------------------------------------------------
PART 3: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
- --------------------------------------------------------------------------------
WHAT IS THE EQUITABLE ACCUMULATOR?
The Equitable Accumulator is a deferred annuity designed to provide for the
accumulation of retirement savings, and for income at a future date. Investment
Options available are Investment Funds providing variable returns and GIROs
providing guaranteed interest when held to maturity. Equitable Accumulator
Certificates can be issued as two different types of individual retirement
annuities (IRAS), TRADITIONAL IRAS and ROTH IRAS, or non-qualified annuities
(NQ). NQ Certificates may also be used as an investment vehicle for qualified
plans (QP). The provisions of your Certificate may be restricted by applicable
laws or regulations. Roth IRA Certificates may not currently be available in
your state. Your agent can provide information about state availability, or you
may contact our Processing Office.
Earnings generally accumulate on a tax-deferred basis until withdrawn or when
distributions become payable. Withdrawals made prior to 59 1/2 may also be
subject to tax penalty.
IRA CERTIFICATES
IRA Certificates are available for Annuitant issue ages 20 through 78. IRA
Certificates are not available in Puerto Rico.
NQ CERTIFICATES
NQ Certificates are available for Annuitant issue ages 0 through 80.
QP CERTIFICATES
When issued with the appropriate endorsement, an NQ Certificate may be purchased
by a plan qualified under Section 401(a) or 401(k) of the Code. Such purchases
may not be available in all states. QP Certificates are available for Annuitant
issue ages 20 through 70. Plan fiduciaries considering purchase of a Certificate
should read the important information in "Appendix II: Purchase Considerations
for QP Certificates."
JOINT OWNERSHIP
If Joint Owners are named under an NQ Certificate, both Owners must be of legal
age, and joint ownership with non-natural persons is not permitted. Unless
otherwise provided in writing, the exercise of any ownership right in the
Certificate must be in a written form satisfactory to us and signed by both
Owners. A Joint Owner designation supersedes any beneficiary designation (see
"Death Benefit" below). This feature may not currently be available in your
state. Your agent can provide information about state availability, or you may
contact our Processing Office.
CONTRIBUTIONS UNDER THE CERTIFICATES
The minimum initial contribution under all Certificates is $25,000. We may
refuse to accept any contribution if the sum of all contributions under all
accumulation Certificates with the same Annuitant would then total more than
$1,500,000. We reserve the right to limit aggregate contributions made after the
first Contract Year to 150% of first-year contributions. We may also refuse to
accept any contribution if the sum of all contributions under all Equitable Life
annuity accumulation certificates/contracts that you own would then total more
than $2,500,000.
Contributions are credited as of the Transaction Date.
IRA CERTIFICATES
Under Traditional IRA Certificates, we will only accept initial contributions
which are either rollover contributions under Sections 402(c), 403(a)(4),
403(b)(8), or 408(d)(3) of the Code, or direct custodian-to-custodian transfers
from other traditional individual retirement arrangements. Under Roth IRA
Certificates, we will only accept rollover contributions from Traditional IRAs,
or Roth IRAs, or direct custodian-to-custodian transfers from other Roth IRAs.
See "Part 7: Tax Aspects of the Certificates."
Under IRA Certificates, you may make subsequent contributions of at least
$1,000. Subsequent Traditional IRA Certificate contributions may be "regular"
IRA contributions (limited to a maximum of $2,000 a year), or rollover
contributions or direct transfers as described above.
"Regular" contributions to Traditional IRAs may not be made for the taxable year
in which you attain age 70 1/2 or thereafter. Rollover and direct transfer
contributions may be made until you attain age 79. However, under the Code, any
amount contributed after you attain age 70 1/2 must be net of your required
minimum distribution for the year in which the rollover or direct transfer
contribution is made. See "Traditional Individual Retirement Annuities
(Traditional IRAs)" in Part 7. For the consequences of making a "regular" IRA
contribution to your IRA Certificate, also see Part 7.
We will not accept "regular" IRA contributions to Roth IRAs. Rollover and direct
custodian-to-custodian transfer contributions can be made any time until you
attain age 79, provided you meet certain requirements.
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See "Roth Individual Retirement Annuities (Roth IRAs)" in Part 7.
NQ CERTIFICATES
Under NQ Certificates, you may make subsequent contributions of at least $1,000
at any time until the Annuitant attains age 81.
QP CERTIFICATES
Under QP Certificates, we will only accept contributions which are employer
contributions from a trust under a plan qualified under Section 401(a) of the
Code. If a defined contribution plan is qualified under Section 401(k) of the
Code, contributions may include employee pre-tax and employer matching
contributions, but not employee after-tax contributions to the plan. For defined
benefit plans, contributions may not be made by employees. The employer shall
contribute to the Certificates such amounts as shall be determined by the plan
trustee.
Under QP Certificates, you may make subsequent contributions of at least $1,000
once per Contract Year at any time during the Contract Year until the Annuitant
attains age 71.
METHODS OF PAYMENT
Except as indicated under "Wire Transmittals" and "Automatic Investment Plan"
below, all contributions must be made by check drawn on a bank in the U.S.
clearing through the Federal Reserve System, in U.S. dollars and payable to
Equitable Life. Third party checks endorsed to Equitable Life are not acceptable
forms of payment except in cases of a rollover from a qualified plan, a tax-free
exchange under the Code or a trustee check that involves no refund. All checks
are accepted subject to collection. Equitable Life reserves the right to reject
a payment if an unacceptable form of payment is received.
Contributions must be sent to Equitable Life at our Processing Office address
designated for contributions. Your initial contribution must be accompanied by a
completed application which is acceptable to us. In the event the application
information is incomplete or the application is otherwise not acceptable, we may
retain your contribution for a period not exceeding five Business Days while an
attempt is made to obtain the required information. If the required information
cannot be obtained within those five Business Days, the Processing Office will
inform the agent, on behalf of the applicant, of the reasons for the delay or
non-acceptability and return the contribution immediately to the applicant,
unless the applicant specifically consents to our retaining the contribution
until the required information is received by the Processing Office.
Section 1035 Exchanges
You may apply the values of an existing NQ life insurance or deferred annuity
contract to purchase an Equitable Accumulator NQ Certificate in a tax-deferred
exchange, if you follow certain procedures. For further information, consult
your tax adviser. See also "Taxation of Non-Qualified Annuities: Withdrawals" in
Part 7. In the case of joint ownership, 1035 exchanges will not be permitted
unless both owners authorize the exchange.
Automatic Investment Program
Our Automatic Investment Program (AIP) provides for a specified amount to be
automatically deducted from a bank checking account, bank money market account,
or credit union checking account and to be contributed as a subsequent
contribution into an NQ or a Traditional IRA Certificate on a monthly or
quarterly basis. AIP is not available for Roth IRA and QP Certificates.
The minimum amount that will be deducted is $100 monthly and $300 quarterly
(subject to the maximum $2,000 annually for Traditional IRAs). AIP subsequent
contributions may be allocated to any of the Investment Funds and available
GIROs. You may elect AIP by properly completing the appropriate form, which is
available from your agent, and returning it to our Processing Office. You elect
which day of the month (other than the 29th, 30th, or 31st) you wish to have
your account debited. That date, or the next Business Day if that day is a
non-Business Day, will be the Transaction Date.
You may cancel AIP at any time by notifying our Processing Office in writing at
least two business days prior to the next scheduled transaction. Equitable Life
is not responsible for any debits made to your account prior to the time written
notice of revocation is received at our Processing Office.
ALLOCATION OF CONTRIBUTIONS
You may choose Self-Directed or Principal Assurance allocations.
A contribution allocated to an Investment Fund purchases Accumulation Units in
that Investment Fund based on the Accumulation Unit Value for that Investment
Fund computed for the Transaction Date. A contribution allocated to the
Guaranteed Period Account will have the Guaranteed Rate for the specified GIRO
offered on the Transaction Date.
A Credit will be allocated to your Annuity Account Value when we receive a
contribution from you. The Credit is equal to 3% of the amount of each
contribution. Credits are allocated pro rata to the Investment Options in the
same proportion as your contributions are allocated. If you annuitize your
Certificate within three years of making a subse-
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quent contribution, we will recover the amount of any Credit applicable to such
contribution.
Credits are not considered to be investment or basis in the Certificate for
income tax purposes. See "Part 7: Tax Aspects of the Certificates."
Self-Directed Allocation
You allocate your contributions to one or up to all of the available Investment
Funds and GIROs. Allocations among the available Investment Options must be in
whole percentages. Allocation percentages can be changed at any time by writing
to our Processing Office, or by telephone. The change will be effective on the
Transaction Date and will remain in effect for future contributions unless
another change is requested.
At Annuitant ages 76 and above, allocations to GIROs must be limited to those
with maturities of five years or less and with maturity dates no later than the
February 15th immediately following the Annuity Commencement Date.
Principal Assurance Allocation
This option (for Annuitant issue ages up through age 75) assures that your
Maturity Value in a specified GIRO will equal your initial contribution on the
GIRO's Expiration Date, while at the same time allowing you to invest in the
Investment Funds. It may be elected only at issue of your Certificate and
assumes no withdrawals or transfers from the GIRO. The maturity year generally
may not be later than 10 years nor earlier than seven years from the Contract
Date. In order to accomplish this strategy, we will allocate a portion of your
initial contribution to the selected GIRO. See "Guaranteed Rates and Price Per
$100 of Maturity Value" in Part 2. The balance of your initial contribution and
all subsequent contributions must be allocated under "Self-Directed Allocation"
as described above.
If you are applying for a Traditional IRA Certificate, before you select a
maturity year that would extend beyond the year in which you will attain age 70
1/2, you should consider your ability to take minimum distributions from other
Traditional IRA funds that you may have or from the Investment Funds to the
extent possible. See "Traditional Individual Retirement Annuities (Traditional
IRAs): Required Minimum Distributions" in Part 7.
FREE LOOK PERIOD
You have the right to examine your Certificate for a period of 10 days after you
receive it, and to return it to us for a refund. You cancel it by sending it to
our Processing Office. The free look period is extended if your state requires a
refund period of longer than 10 days.
Your refund will equal the Annuity Account Value reflecting any investment gain
or loss, and any positive or negative market value adjustment, through the date
we receive your Certificate at our Processing Office, minus the amount of any
Credits as of the date applied. Some states or Federal income tax regulations
may require that we calculate the refund differently. If you cancel your
Certificate during the free look period, we may require that you wait six months
before you may apply for a Certificate with us again.
We follow these same procedures if you change your mind before you receive your
Certificate, but after a contribution has been made. See "Part 7: Tax Aspects of
the Certificates" for possible consequences of cancelling your Certificate
during the free look period.
In the case of a complete conversion of an existing Equitable Accumulator
Traditional IRA Certificate to an Equitable Accumulator Roth IRA Certificate,
you may cancel your Equitable Accumulator Roth IRA Certificate and return to an
Equitable Accumulator Traditional IRA Certificate by following the instructions
in the request for full conversion form available from our Processing Office or
your agent.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value is the sum of the amounts in the Investment Options.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal to
the number of Accumulation Units in that Investment Fund times the Accumulation
Unit Value for the Investment Fund for that date. The number of Accumulation
Units in an Investment Fund at any time is equal to the sum of Accumulation
Units purchased by contributions, Credits and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund equals
the dollar amount of the transaction divided by the Accumulation Unit Value for
that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of each respective trust,
which in turn reflects the investment income and realized and unrealized capital
gains and losses of the Portfolios, as well as each respective trust's fees and
expenses. The Accumulation Unit Value is also stated after deduction of the
Separate Account asset charges relating to the Certificates. A description of
the computation of the Accumulation Unit Value is found in the SAI.
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Annuity Account Value in Guaranteed Period Account
The Annuity Account Value in the Guaranteed Period Account on any Business Day
will be the sum of the present value of the Maturity Value in each GIRO, using
the Guaranteed Rate in effect for new allocations to such GIRO on such date.
(This is equivalent to the Guaranteed Period Amount increased or decreased by
the full market value adjustment.) The Annuity Account Value, therefore, may be
higher or lower than the contributions (less withdrawals) accumulated at the
Guaranteed Rate. At the Expiration Date the Annuity Account Value in the
Guaranteed Period Account will equal the Maturity Value.
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject to
the following:
o Transfers out of a GIRO other than at the Expiration Date will result in a
market value adjustment. See "Part 2: The Guaranteed Period Account."
o At Annuitant age 76 and above, transfers to GIROs must be limited to those
with maturities of five years or less and with maturity dates no later than
the February 15th immediately following the Annuity Commencement Date.
o Transfers may not be made to a GIRO with an Expiration Date in the current
calendar year, or if the Guaranteed Rate is 3%.
Transfer requests must be made directly to our Processing Office. Your request
for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which the
amounts are to be transferred. Your transfer request may be in writing or by
telephone.
For telephone transfer requests, procedures have been established by Equitable
Life that are considered to be reasonable and are designed to confirm that
instructions communicated by telephone are genuine. Such procedures include
requiring certain personal identification information prior to acting on
telephone instructions and providing written confirmation. In light of the
procedures established, Equitable Life will not be liable for following
telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must be
on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer to
or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in writing.
DOLLAR COST AVERAGING
If you have at least $25,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage of
your Annuity Account Value transferred from the Alliance Money Market Fund to
other Investment Funds on a monthly, quarterly or annual basis. The main
objective of dollar cost averaging is to attempt to shield your investment from
short-term price fluctuations. Since approximately the same dollar amounts are
transferred from the Alliance Money Market Fund to the other Investment Funds
periodically, more Accumulation Units are purchased in an Investment Fund if the
value per Accumulation Unit is low and fewer Accumulation Units are purchased if
the value per Accumulation Unit is high. Therefore, a lower average value per
Accumulation Unit may be achieved over the long term. This plan of investing
allows you to take advantage of market fluctuations but does not assure a profit
or protect against a loss in declining markets. You may not have Annuity Account
Value transferred to the GIROs. This program may be elected at any time.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred on
each Transaction Date is $250. The maximum amount which may be transferred is
equal to the Annuity Account Value in the Alliance Money Market Fund at the time
the program is elected, divided by the number of transfers scheduled to be made
each Contract Year.
The transfer date will be the same calendar day each month as the Contract Date.
If, on any transfer date, the Annuity Account Value in the Alliance Money Market
Fund is equal to or less than the amount you have elected to have transferred,
the entire amount will be transferred and the Dollar Cost Averaging program will
end. You may change the transfer amount once each Contract Year, or cancel this
program by sending us satisfactory notice to our Processing Office at least
seven calendar days before the next transfer date.
REBALANCING
We currently offer a rebalancing program under which you authorize us to
automatically transfer your Annuity Account Value among the Investment Funds
selected by you in order to maintain a particular percentage allocation (which
you specify) in such Investment Funds. Such percentages must be in whole
numbers. You select the period of time at the end of which the transfers will
take place. The period of time may be
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quarterly, semiannually, or annually on a Contract Year basis on the same day of
the month as the Contract Date (other than the 29th, 30th or 31st). Rebalancing
automatically reallocates the Annuity Account Value in the chosen Investment
Funds at the end of each period to the specified allocation percentages. The
transfers to and from each chosen Investment Fund will be made at the
Accumulation Unit Value next computed after the Transaction Date. Rebalancing is
not available for amounts in the Guaranteed Period Account.
Rebalancing does not assure a profit or protect against a loss in declining
markets and should be periodically reviewed as your needs may change. You may
want to discuss the rebalancing program with your financial adviser before
electing such program.
You may elect the rebalancing program at any time by properly completing the
appropriate form, which is available from your agent or our Processing Office.
You may change your rebalancing allocation percentages or cancel this program at
any time by submitting a request in a form satisfactory to us. Such request must
be received at our Processing Office at least seven days before the next
scheduled rebalancing date. A transfer request from you while the rebalancing
program is in effect, will cancel the rebalancing program.
Rebalancing may not be elected if the Dollar Cost Averaging program (discussed
above) is in effect.
BASEBUILDER BENEFITS
The baseBUILDER option provides guaranteed benefits in the form of a Combined
Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit. The
combined benefit is available for Annuitant issue ages 20 through 75 and is
subject to an additional charge (see "baseBUILDER Benefits Charge" in Part 5).
The baseBUILDER provides a degree of protection while you live (Income Benefit),
as well as for your beneficiary should you die. As part of the baseBUILDER you
will have a choice of two Guaranteed Minimum Death Benefit options for Annuitant
issue ages 20 through 75: (i) a 6% Roll Up to Age 80 or (ii) an Annual Ratchet
to Age 80. Under Traditional IRA Certificates for Annuitant issue ages 20
through 60, we offer an alternate Guaranteed Minimum Death Benefit under the
baseBUILDER which is a 6% Roll Up to Age 70. The three baseBUILDER Guaranteed
Minimum Death Benefit options are described below. If you do not elect the
baseBUILDER, and for Annuitant issue ages 0 through 19 under NQ Certificates,
the 6% Roll Up to Age 80 and the Annual Ratchet to Age 80 Guaranteed Minimum
Death Benefit choices are still provided under the Certificate. The 6% Roll Up
to Age 70 Guaranteed Minimum Death Benefit is available only under the
baseBUILDER. The baseBUILDER is not currently available in New York.
The main advantages of the Guaranteed Minimum Income Benefit relate to amounts
allocated to the Investment Funds. Before electing the baseBUILDER, you should
consider the extent to which you expect to utilize the Investment Funds. You
elect the baseBUILDER guaranteed benefits when you apply for a Certificate and
once elected, it may not be changed or cancelled.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit provides a minimum amount of guaranteed
lifetime income when you apply the Annuity Account Value under your Equitable
Accumulator Certificate to an Income Manager(R) (Life Annuity with a Period
Certain) payout annuity certificate during the periods of time indicated below.
This Income Manager payout annuity certificate provides payments during a period
certain with payments continuing for life thereafter. This means that payments
will be made for the rest of the Annuitant's life. In addition, if the Annuitant
dies before a specified period of time (period certain) has ended, payments will
continue to the beneficiary for the balance of the period certain.
On the Transaction Date that you exercise the Guaranteed Minimum Income Benefit,
the annual lifetime income that will be provided under the Income Manager (Life
Annuity with a Period Certain) payout annuity certificate will be the greater of
(i) your Guaranteed Minimum Income Benefit, and (ii) the income provided by
application of your Annuity Account Value at our then current annuity purchase
factors. The Guaranteed Minimum Income Benefit does not provide an Annuity
Account Value or guarantee performance of your Investment Options. Because this
benefit is based on conservative actuarial factors, the level of lifetime income
that it guarantees may often be less than the level that would be provided by
application of your Annuity Account Value at current annuity purchase factors.
It should therefore be regarded as a safety net.
Illustrated below are Guaranteed Minimum Income Benefit amounts per $100,000
allocated for a male Annuitant age 60 (at issue) on Contract Date anniversaries
as indicated below, assuming no subsequent contributions, Credits or withdrawals
and assuming there were no allocations to the Alliance Money Market Fund or the
Guaranteed Period Account.
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- -------------------------------------------------------------
GUARANTEED MINIMUM
CONTRACT DATE INCOME BENEFIT -- ANNUAL INCOME
ANNIVERSARY AT ELECTION PAYABLE FOR LIFE WITH
10 YEAR PERIOD CERTAIN
- -------------------------------------------------------------
7 $ 8,992
10 12,160
15 18,358
- -------------------------------------------------------------
Withdrawals will reduce your Guaranteed Minimum Income Benefit, see "How
Withdrawals Affect Your Guaranteed Minimum Income Benefit and Guaranteed Minimum
Death Benefit" in Part 4.
Under Traditional IRA, Roth IRA and NQ Certificates, the Guaranteed Minimum
Income Benefit may be exercised only within 30 days following the seventh or
later Contract Date anniversary under your Equitable Accumulator Certificate.
However, it may not be exercised earlier than the Annuitant's age 60, nor later
than the Annuitant's age 83; except that for Annuitant issue ages 20 through 44,
it may be exercised following the 15th or later Contract Date anniversary.
For information on when the Guaranteed Minimum Income Benefit may be exercised
under QP Certificates, see "Exercise of the Guaranteed Minimum Income Benefit
under QP Certificates" below.
When you exercise the Guaranteed Minimum Income Benefit, you will receive an
Income Manager (Life Annuity with a Period Certain) payout annuity certificate
and extinguish your rights in your Equitable Accumulator Certificate, with at
least the minimum annual income specified and a period certain based on the
Annuitant's age at the time the benefit is exercised as follows:
- -------------------------------------------------------------
LEVEL PAYMENTS*
PERIOD CERTAIN YEARS
ANNUITANT'S TRADITIONAL AND
AGE AT ELECTION ROTH IRA NQ
- -------------------------------------------------------------
60 to 75 10 10
76 9 10
77 8 10
78 7 10
79 7 10
80 7 10
81 7 9
82 7 8
83 7 7
- ----------------
* Other forms and periods certain may also be available.
For Traditional IRA Certificates, please see
"Traditional Individual Retirement Annuities
(Traditional IRAs): Required Minimum Distributions" in
Part 7 to see how this option may be affected if
exercised after age 70 1/2.
- --------------------------------------------------------------------------------
Payments will start one payment mode from the Contract Date of the Income
Manager payout annuity certificate.
Each year on your Contract Date anniversary, if you are eligible to exercise the
Guaranteed Minimum Income Benefit, we will send you an eligibility notice
illustrating how much income could be provided on the Contract Date anniversary.
You may then notify us within 30 days following the Contract Date anniversary if
you want to exercise the Guaranteed Minimum Income Benefit by submitting the
proper form and returning your Equitable Accumulator Certificate. The amount of
income you actually receive will be determined on the Transaction Date that we
receive your properly completed exercise notice.
You may also apply your Cash Value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity certificate, and after five years
you may always apply your Annuity Account Value to any of our life annuity
benefits. The annuity benefits are discussed in Part 4. These benefits differ
from the Income Manager payout annuity certificates and may provide higher or
lower income levels, but do not have all the features of the Income Manager
payout annuity certificates. You may request an illustration from your agent.
The Income Manager (Life Annuity with a Period Certain) payout annuity
certificates are offered through our prospectus for the Income Manager payout
annuities. A copy of the most current version may be obtained from your agent.
You should read it carefully before you decide to exercise your Guaranteed
Minimum Income Benefit.
Successor Annuitant/Certificate Owner
If the successor Annuitant/Certificate Owner (discussed below) elects to
continue the Certificate after your death, the Guaranteed Minimum Income Benefit
will continue to be available on Contract Date anniversaries specified above
based on the Contract Date of your Equitable Accumulator Certificate, provided
the Guaranteed Minimum Income Benefit is exercised as specified above based on
the age of the successor Annuitant/Certificate Owner.
Exercise of the Guaranteed Minimum Income Benefit under QP Certificates
Under QP Certificates, the Guaranteed Minimum Income Benefit may be exercised,
on Contract Date anniversaries as indicated above, only after the trustee of the
qualified plan changes ownership of the QP Certificate to the Annuitant and the
Annuitant, as the new Certificate Owner, converts such QP Certificate in a
direct rollover to a Traditional IRA Certificate according to our rules at the
time of the change. The change of ownership and rollover to a Traditional IRA
Certificate may only occur when the Annuitant will no longer be a participant in
the qualified plan.
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DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death
prior to the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the time
you apply for the Certificate. While the Certificate is in effect, you may
change your beneficiary by writing to our Processing Office. The change will be
effective on the date the written submission was signed. If the Certificate is
jointly owned, the surviving Owner will be deemed the beneficiary, superseding
any other beneficiary designations. (The joint ownership feature may not
currently be available in your state.) The death benefit payable will be
determined as of the date we receive such proof of death and any required
instructions as to the method of payment.
The death benefit is equal to the Annuity Account Value or, if greater, the
Guaranteed Minimum Death Benefit described below.
GUARANTEED MINIMUM DEATH BENEFIT
Applicable for Annuitant Issue Ages 0 through 79 under NQ Certificates; 20
through 78 under Traditional IRA and Roth IRA Certificates; and 20 through 70
under QP Certificates
You elect either the "6% Roll Up to Age 80" or the "Annual Ratchet to Age 80"
Guaranteed Minimum Death Benefit when you apply for a Certificate. Once elected,
the benefit may not be changed.
6% Roll Up to Age 80 -- On the Contract Date the Guaranteed Minimum Death
Benefit is equal to the initial contribution plus any Credit which applies.
Thereafter, the Guaranteed Minimum Death Benefit is credited with interest at 6%
(4% for amounts in the Alliance Money Market and Alliance Intermediate
Government Securities Funds, and the GIROs) on each Contract Date anniversary
through the Annuitant's age 80 (or at the Annuitant's death, if earlier), and 0%
thereafter, and is adjusted for any subsequent contributions, Credits, and
withdrawals. The 6% Roll Up to Age 80 is not available in New York.
Annual Ratchet to Age 80 -- On the Contract Date, the Guaranteed Minimum Death
Benefit is equal to the initial contribution plus any Credit which applies.
Thereafter, the Guaranteed Minimum Death Benefit is reset through the
Annuitant's age 80, to the Annuity Account Value on a Contract Date anniversary
if higher than the then current Guaranteed Minimum Death Benefit, and is
adjusted for any subsequent contributions, Credits, and withdrawals.
Alternate baseBUILDER Guaranteed Minimum Death Benefit applicable under
Traditional IRA Certificates for Annuitant Issue Ages 20 through 60
6% Roll Up to Age 70 -- Interest will be credited at 6% and 4% respectively (as
described under the 6% Roll Up to Age 80 above) through the Annuitant's age 70
(or at the Annuitant`s death, if earlier) and 0% thereafter and is adjusted for
any subsequent contributions, Credits, and withdrawals. You also elect this
benefit when you apply for a Certificate and once elected, the benefit may not
be changed.
Under NQ Certificates Applicable for Annuitant Issue Age 80
On the Contract Date, the Guaranteed Minimum Death Benefit is equal to the
initial contribution plus any Credit which applies. Thereafter, the initial
contribution is adjusted for any subsequent contributions, Credits, and
withdrawals.
Withdrawals will reduce your Guaranteed Minimum Death Benefit, see "How
Withdrawals Affect Your Guaranteed Minimum Income Benefit and Guaranteed Minimum
Death Benefit" in Part 4. For Certificates issued in New York, the Guaranteed
Minimum Death Benefit at the Annuitant's death will not be less than the Annuity
Account Value in the Investment Funds plus the sum of the Guaranteed Period
Amounts in each GIRO. See "GIROs" in Part 2.
See Appendix III for an example of the calculation of the Guaranteed Minimum
Death Benefit.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
benefit you have chosen under your Certificate. If no annuity benefit has been
chosen at the time of the Annuitant's death, the beneficiary will receive the
death benefit in a lump sum. However, subject to any exceptions in the
Certificate, Equitable Life's rules then in effect and any other applicable
requirements under the Code, the beneficiary may elect to apply the death
benefit to one or more annuity benefits offered by Equitable Life. See "Annuity
Benefits and Payout Annuity Options" in Part 4. Note that if you are both the
Certificate Owner and the Annuitant, only a life annuity or an annuity that does
not extend beyond the life expectancy of the beneficiary may be elected.
Successor Annuitant/Certificate Owner
If you are both the Certificate Owner and the Annuitant, and if your spouse is
the sole primary beneficiary or the Joint Owner under the Certificate, then upon
your death your spouse beneficiary may elect to receive the death benefit, or to
continue the Certificate and become the successor Annuitant/ Certificate Owner
by completing the appropriate form and sending it to our Processing Office.
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If the successor Annuitant/Certificate Owner elects to continue the Certificate,
then on the Contract Date anniversary following your death, the Annuity Account
Value will be reset to the then current Guaranteed Minimum Death Benefit if it
is higher than the Annuity Account Value as of such date. In determining whether
the Guaranteed Minimum Death Benefit will continue to grow, we will use the age
(as of the Contract Date anniversary) of the successor Annuitant/Certificate
Owner.
WHEN AN NQ CERTIFICATE OWNER DIES BEFORE THE ANNUITANT
When you are not the Annuitant under an NQ Certificate and you die before the
Annuity Commencement Date, the beneficiary named to receive the death benefit
upon the Annuitant's death will automatically succeed as Certificate Owner
(unless you name a different person as a successor Owner in a written form
acceptable to us and send it to our Processing Office). If the Certificate is
jointly owned and the first Owner to die is not the Annuitant, the surviving
Owner becomes the sole Certificate Owner and will be deemed the "beneficiary"
for purposes of the distribution rules described in this section, automatically
superseding any other beneficiary designation.
Unless the surviving spouse of the deceased Owner (or in the case of a joint
ownership situation, the surviving spouse of the first Owner to die) is the
designated beneficiary for this purpose, the entire interest in the Certificate
must be distributed under these rules.
The Cash Value in the Certificate must be fully paid to the designated
beneficiary (new Owner) by December 31st of the fifth calendar year after your
death (or in a joint ownership situation, the death of the first Owner to die).
A permissible alternative is for the new Owner to elect to receive such amounts
as a life annuity (or payments for a period certain of not longer than the new
Owner's life expectancy), with payments beginning no later than December 31st
following the calendar year of the non-Annuitant Owner's death. If such an
annuity benefit or payments for a period certain is not elected, we will pay any
Cash Value in the Certificate on December 31st of the fifth calendar year
following the year of your death (or the death of the first Owner to die).
Where a surviving spouse is designated beneficiary or Joint Owner, the spouse
may elect to continue the Certificate. No distributions are required as long as
the surviving spouse and Annuitant are living.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward or
downward market value adjustment. We do not guarantee any minimum Cash Value
except for amounts in a GIRO held to the Expiration Date. See "Part 2: The
Guaranteed Period Account." On any date before the Annuity Commencement Date
while the Certificate is in effect, the Cash Value is equal to the Annuity
Account Value, less any withdrawal charge. The free corridor amount will not
apply when calculating the withdrawal charge applicable upon a surrender. See
"Part 5: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while the
Annuitant is living and before the Annuity Commencement Date. For a surrender to
be effective, we must receive your written request and the Certificate at our
Processing Office. The Cash Value will be determined on the Transaction Date.
All benefits under the Certificate will be terminated as of that date.
You may receive the Cash Value in a single sum payment or apply it under one or
more of the annuity benefits. See "Annuity Benefits and Payout Annuity Options"
in Part 4. We will usually pay the Cash Value within seven calendar days, but we
may delay payment as described in "When Payments Are Made" below.
For the tax consequences of surrenders, see "Part 7: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds, payment
of any portion of the Annuity Account Value (less any applicable withdrawal
charge) from the Investment Funds, and, upon surrender, payment of the Cash
Value from the Investment Funds will be made within seven calendar days after
the Transaction Date. Payments or application of proceeds from the Investment
Funds can be deferred for any period during which (1) the New York Stock
Exchange is closed or trading on it is restricted, (2) sales of securities or
determination of the fair value of an Investment Fund's assets is not reasonably
practicable because of an emergency, or (3) the SEC, by order, permits us to
defer payment in order to protect persons with interest in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period Account (other than for death benefits) for up to six months
while you are living. We may also defer payments for any amount attributable to
a contribution made in the form of a check for a reasonable amount of time (not
to exceed 15 days) to permit the check to clear.
ASSIGNMENT
Traditional IRA and Roth IRA Certificates are not assignable or transferable
except through surrender to
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us. They may not be borrowed against or used as collateral for a loan or other
obligation.
QP Certificates may not be assigned.
The NQ Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and we
have received it at our Processing Office. In some cases, an assignment may have
adverse tax consequences. See "Part 7: Tax Aspects of the Certificates."
SERVICES WE PROVIDE
o REGULAR REPORTS
o Statement of your Certificate values as of the last day of the calendar
year;
o Three additional reports of your Certificate values each year;
o Annual and semiannual statements of each trust; and
o Written confirmation of financial transactions.
o TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values and
Guaranteed Rates applicable to the GIROs. Also call during our regular
business hours to speak to one of our customer service representatives.
o PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Equitable Accumulator
P.O. Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY REGULAR MAIL:
Equitable Life
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY EXPRESS MAIL:
Equitable Life
Equitable Accumulator
200 Plaza Drive, 4th Floor
Secaucus, NJ 07096
YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
Certificate and operate the Investment Options. Some of these systems belong to
service providers who are not affiliated with Equitable Life.
In 1995, Equitable Life began addressing the question of whether its computer
systems would recognize the year 2000 before, on or after January 1, 2000, and
Equitable Life believes it has identified those of its systems critical to
business operations that are not Year 2000 compliant. By year end 1998,
Equitable Life expects that the work of modifying or replacing non-compliant
systems will substantially be completed and expects a comprehensive test of its
Year 2000 compliance will be performed in the first half of 1999. Equitable Life
is in the process of seeking assurances from third party service providers that
they are acting to address the Year 2000 issue with the goal of avoiding any
material adverse effect on services provided to Certificate Owners and on
operations of the Investment Options. Any significant unresolved difficulty
related to the Year 2000 compliance initiatives could have a material adverse
effect on the ability to administer your Certificate and operate the Investment
Options. Assuming the timely completion of computer modifications by Equitable
Life and third party service providers, there should be no material adverse
effect on the ability to perform these functions.
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates effective May 1, 1998, EQ Financial
Consultants, Inc. (EQFC), an indirect, wholly owned subsidiary of Equitable
Life, has responsibility for sales and marketing functions for the Certificates.
Effective on the same date, EQFC also serves as the principal underwriter of the
Separate Account under the 1940 Act. EQFC is registered with the SEC as a
broker-dealer under the Exchange Act and is a member of the National Association
of Securities Dealers, Inc. EQFC's principal business address is 1290 Avenue of
the Americas, New York, New York 10104. Prior to May 1, 1998, Equitable
Distributors, Inc. (EDI), also an indirect, wholly owned subsidiary of Equitable
Life, served as the distributor of the Certificates and the principal
underwriter of the Separate Account under the 1940 Act. Pursuant to a
"Distribution Agreement" between Equitable Life, certain of Equitable Life's
separate accounts, including the Separate Account, and EDI, Equitable Life paid
EDI distribution fees of $9,444,621 for 1997, $884,486 for 1996 and $68,676 for
1995 as the distributor of the Certificates and as the principal underwriter of
the Separate Account.
The Certificates will be sold by registered representatives of EQFC and its
affiliates, who are also our licensed insurance agents. EQFC may receive
compensation and reimbursement for its marketing services under the terms of its
distribution agreement with Equitable Life. The offering of the Certificates is
intended to be continuous.
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- --------------------------------------------------------------------------------
PART 4: DISTRIBUTION METHODS UNDER THE CERTIFICATES
- --------------------------------------------------------------------------------
The Certificates offer several distribution methods specifically designed to
provide retirement income. Traditional IRA and Roth IRA Certificates permit Lump
Sum Withdrawals, Substantially Equal Payment Withdrawals, and Systematic
Withdrawals. Minimum Distribution Withdrawals are available only under
Traditional IRA Certificates. NQ Certificates permit Lump Sum Withdrawals and
Systematic Withdrawals. The Certificates also offer fixed and variable annuity
benefits and Income Manager payout annuity options. Traditional IRA Certificate
Owners should consider how the distribution method selected may affect the
ability to comply with the minimum distribution rules discussed in "Part 7: Tax
Aspects of the Certificates."
For Traditional IRA retirement benefits subject to minimum distribution
requirements, we will send a form outlining the distribution options available
before you reach age 70 1/2 (if you have not begun your annuity payments before
that time).
WITHDRAWAL OPTIONS
The Certificates are annuity contracts, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while you are alive.
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration Date"
in Part 2. Withdrawals may be taxable and subject to tax penalty. See "Part 7:
Tax Aspects of the Certificates."
As a deterrent to early withdrawal (generally prior to age 59 1/2), the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 7: Tax Aspects of
the Certificates."
LUMP SUM WITHDRAWALS
(Available under Traditional IRA, Roth IRA and NQ Certificates)
You may take Lump Sum Withdrawals at any time subject to a minimum withdrawal
amount of $1,000. A request to withdraw more than 90% of the Cash Value as of
the Transaction Date will result in the termination of the Certificate and will
be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value" in Part 3.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal will
be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" in Part 3. If we receive only
partially completed information, our Processing Office will contact you for
specific instructions before your request can be processed.
Lump Sum Withdrawals in excess of the 15% free corridor amount may be subject to
a withdrawal charge. See "Withdrawal Charge" in Part 5.
SYSTEMATIC WITHDRAWALS
(Available under Traditional IRA, Roth IRA and NQ Certificates)
Under Traditional IRA and Roth IRA Certificates this option may be elected only
if you are between age 59 1/2 to 70 1/2.
Systematic Withdrawals provide level percentage or level amount payouts. You may
choose to receive Systematic Withdrawals on a monthly, quarterly or annual
basis. You select a dollar amount or percentage of the Annuity Account Value to
be withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly and 15.0%
annually, but in no event may any payment be less than $250. If at the time a
Systematic Withdrawal is to be made, the withdrawal amount would be less than
$250, no payment will be made and your Systematic Withdrawal election will
terminate.
You select the date of the month when the withdrawals will be made, but you may
not choose a date later than the 28th day of the month. If no date is selected,
withdrawals will be made on the same calendar day of the month as the Contract
Date. The commencement of payments under the Systematic Withdrawal option may
not be elected to start sooner than 28 days after issue of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper form
and sending it to our Processing Office. You may change the payment frequency of
your Systematic Withdrawals once each Contract Year or cancel this withdrawal
option at any time by sending notice in a form satisfactory to us. The notice
must be received at our Processing Office at least seven calendar days prior to
the next scheduled withdrawal date. You may also change the amount or percentage
of your Systematic Withdrawals once in each Contract Year. However, you may not
change the amount or percentage in any Contract Year where you
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have previously taken another withdrawal under the Lump Sum Withdrawal option
described above.
Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a pro
rata basis from your Annuity Account Value in the Investment Funds. If there is
insufficient value or no value in the Investment Funds, any additional amount of
the withdrawal required or the total amount of the withdrawal, as applicable,
will be withdrawn from the GIROs in order of the earliest Expiration Date(s)
first (a market value adjustment may apply).
Systematic Withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a Lump Sum Withdrawal previously taken in the same
Contract Year, the Systematic Withdrawal exceeds the 15% free corridor amount.
See "Withdrawal Charge" in Part 5.
SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS
(Available under Traditional IRA and Roth IRA Certificates)
Substantially Equal Payment Withdrawals provide distributions from the Annuity
Account Value of the amounts necessary so that the 10% penalty tax, normally
applicable to distributions made prior to age 59 1/2, does not apply. See "Part
7: Tax Aspects of the Certificates." Once distributions begin, they should not
be changed or stopped until the later of age 59 1/2 or five years from the date
of the first distribution. If you change or stop the distributions or take a
Lump Sum Withdrawal, you may be liable for the 10% penalty tax that would have
otherwise been due on all prior distributions made under this option and for any
interest thereon.
Substantially Equal Payment Withdrawals may be elected at any time if you are
below age 59 1/2. You can elect this option by submitting the proper election
form. You select the day and the month when the first withdrawal will be made,
but it may not be sooner than 28 days after the issue of the Certificate. In no
event may you elect to receive the first payment in the same Contract Year in
which a Lump Sum Withdrawal was taken. We will calculate the amount of the
distribution under a method we select and payments will be made monthly,
quarterly or annually as you select. These payments will continue to be made
until we receive written notice from you to cancel this option. Such notice must
be received at our Processing Office at least seven calendar days prior to the
next scheduled withdrawal date. A Lump Sum Withdrawal taken while Substantially
Equal Payment Withdrawals are in effect will cancel such withdrawals. You may
elect to start receiving Substantially Equal Payment Withdrawals again, but in
no event can the payments start in the same Contract Year in which a Lump Sum
Withdrawal was taken. We will calculate a new distribution amount. As indicated
in the preceding paragraph, you may be liable for the 10% penalty tax on
Substantially Equal Payment Withdrawals made before cancellation.
Unless you specify otherwise, Substantially Equal Payment Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal or the total amount of the withdrawal, as
applicable, will be withdrawn from the GIROs in order of the earliest Expiration
Date(s) first (a market value adjustment may apply).
Substantially Equal Payment Withdrawals are not subject to a withdrawal charge.
MINIMUM DISTRIBUTION WITHDRAWALS
(Available under Traditional IRA Certificates)
Minimum Distribution Withdrawals provide distributions from the Annuity Account
Value of the amounts necessary to meet minimum distribution requirements set
forth in the Code. This option may be elected in the year in which you attain
age 70 1/2. You can elect Minimum Distribution Withdrawals by submitting the
proper election form. The minimum amount we will pay out is $250. You may elect
Minimum Distribution Withdrawals for each Traditional IRA Certificate you own,
subject to our rules then in effect. Currently, Minimum Distribution Withdrawal
payments will be made annually.
Unless you specify otherwise, Minimum Distributions Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal required or the total amount of the
withdrawal, as applicable, will be withdrawn from the GIROs in order of the
earliest Expiration Date(s) first (a market value adjustment may apply).
Minimum Distribution Withdrawals are not subject to a withdrawal charge, except
to the extent that, when added to a Lump Sum Withdrawal previously taken in the
same Contract Year, the Minimum Distribution Withdrawal exceeds the 15% free
corridor amount. See "Withdrawal Charge" in Part 5.
Example
- -------
The chart below illustrates the pattern of payments, under Minimum Distribution
Withdrawals for a male who purchases a Traditional IRA Certificate at age 70
with a single contribution of $100,000 and we add a $3,000 Credit, with payments
commencing at the end of the first Contract Year.
PATTERN OF MINIMUM DISTRIBUTION WITHDRAWALS
$100,000 SINGLE CONTRIBUTION PLUS A $3,000 CREDIT
FOR A SINGLE LIFE -- MALE AGE 70
[Insert by Amendment]
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Payments are calculated each year based on the Annuity Account Value at the end
of each year, using the recalculation method of determining payments. (See "Part
1 -- Minimum Distribution Withdrawals -- Traditional IRA Certificates" in the
SAI.) Payments are made annually, and it is further assumed that no Lump Sum
Withdrawals are taken.
This example assumes an annual rate of return of 6.0% compounded annually for
both the Investment Funds and the Guaranteed Period Account. This rate of return
is for illustrative purposes only and is not intended to represent an expected
or guaranteed rate of return. Your investment results will vary. In addition,
this example does not reflect any charges that may be applicable under the
Traditional IRA. Such charges would effectively reduce the actual return.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED
MINIMUM DEATH BENEFIT
Except as described in the next sentence, each withdrawal will cause a reduction
in your current Guaranteed Minimum Death Benefit and Guaranteed Minimum Income
Benefit benefit base (described below) on a pro rata basis. Your current
Guaranteed Minimum Death Benefit if based on the 6% Roll Up to Age 70 or 6% Roll
Up to Age 80, and your Guaranteed Minimum Income Benefit benefit base, will be
reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in
any Contract Year is 6% or less of the beginning of Contract Year Guaranteed
Minimum Death Benefit. Once a withdrawal is made that causes cumulative
withdrawals in a Contract Year to exceed 6% of the beginning of Contract Year
Guaranteed Minimum Death Benefit, that withdrawal and any subsequent withdrawals
in that Contract Year will cause a pro rata reduction to occur.
Reduction on a dollar-for-dollar basis means your current Guaranteed Minimum
Death Benefit and Guaranteed Minimum Income Benefit benefit base are reduced by
the dollar amount of the withdrawal. Reduction on a pro rata basis means that we
calculate the percentage of the Annuity Account Value as of the Transaction Date
that is being withdrawn and we reduce your current Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit benefit base by that same
percentage. For example, if your Annuity Account Value is $30,000 and you
withdraw $12,000, you have withdrawn 40% ($12,000/ $30,000) of your Annuity
Account Value. If your Guaranteed Minimum Death Benefit was $40,000 prior to the
withdrawal, it would be reduced by $16,000 ($40,000 x .40) and your new
Guaranteed Minimum Death Benefit after the withdrawal would be $24,000 ($40,000
- - $16,000).
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your Guaranteed Minimum Death
Benefit or Guaranteed Minimum Income Benefit.
GUARANTEED MINIMUM INCOME BENEFIT BENEFIT BASE
The Guaranteed Minimum Income Benefit benefit base is equal to the initial
contribution on the Contract Date plus any Credit which applies. Thereafter, the
Guaranteed Minimum Income Benefit benefit base is credited with interest at 6%
(4% for amounts in the Alliance Money Market and Alliance Intermediate
Government Securities Funds, and the GIROs) on each Contract Date anniversary
through the Annuitant's age 80 (age 70 if the 6% Roll Up to Age 70 is elected),
and 0% thereafter, and is adjusted for any subsequent contributions, Credits,
and withdrawals. The Guaranteed Minimum Income Benefit benefit base will also be
reduced by any withdrawal charge remaining on the Transaction Date that you
exercise your Guaranteed Minimum Income Benefit.
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity purchase factors to determine the Guaranteed Minimum Income
Benefit. The guaranteed minimum annuity purchase factors are based on (i)
interest at 2.5% if the Guaranteed Minimum Income Benefit is exercised within 30
days following a Contract Date anniversary in years 7 through 9 and at 3% if
exercised within 30 days following the 10th or later Contract Date anniversary,
and (ii) mortality tables that assume increasing longevity. These interest and
mortality factors are generally more conservative than the basis underlying
current annuity purchase factors, which means that they would produce less
periodic income for an equal amount applied.
Your Guaranteed Minimum Income Benefit benefit base does not create an Annuity
Account Value or a Cash Value and is used solely for purposes of calculating
your Guaranteed Minimum Income Benefit.
ANNUITY BENEFITS AND PAYOUT ANNUITY OPTIONS
The Equitable Accumulator Certificates offer annuity benefits and Income Manager
payout annuity options, described below, for providing retirement income.
ANNUITY BENEFITS
Annuity benefits under the Equitable Accumulator provide periodic payments over
a specified period of time which may be fixed or may be based on the Annuitant's
life. Annuity forms of payment are calculated as of the Annuity Commencement
Date, which is on file with our Processing Office. You can change the Annuity
Commencement Date by writing to our Processing Office anytime before the Annuity
Commencement Date. The Annuity Commencement Date
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may not be earlier than five years from the Contract Date and the date chosen
may not be later than the 28th day of any month. Also, based on the issue age of
the Annuitant, the Annuity Commencement Date may not be later than the
Processing Date which follows the Annuitant's 90th birthday (may be different in
some states).
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay fixed
annuity benefits on the "normal form" indicated for your Certificate as of the
Annuity Commencement Date. The amount applied to provide the annuity benefit
will be (1) the Annuity Account Value for any life annuity form or (2) the Cash
Value for any period certain only annuity form except that if the period certain
is more than five years, the amount applied will be no less than 95% of the
Annuity Account Value. Any Credits applicable to subsequent contributions made
during the last three years will be deducted from the Annuity Account Value
before it is applied to the annuity benefit.
Amounts in the GIROs that are applied to an annuity benefit prior to an
Expiration Date will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration Date"
in Part 2.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with this
annuity form, it provides the highest monthly payment of any of the life
income annuity options, so long as the Annuitant is living.
o Life Annuity -- Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before the end of a selected period of time (the "certain period"), payments
will continue to the beneficiary for the balance of the certain period. A
life annuity with a certain period of 10 years is the normal form of annuity
under the Certificates.
o Life Annuity -- Refund Certain: This annuity form guarantees payments to you
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before the amount applied to purchase this annuity option has been recovered,
payments will continue to your beneficiary until that amount has been
recovered. This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years, and does not involve life
contingencies. Currently this annuity option is available only as a fixed
annuity.
o Joint and Survivor Life Annuity: This annuity form guarantees payments for
the rest of the Annuitant's life and, after the Annuitant's death,
continuation of payments to the survivor.
The life annuity -- period certain and the life annuity -- refund certain are
available on either a single life or joint and survivor life basis.
We offer the annuity distribution options outlined above in fixed form. In
variable form, only the following options are available: Life Annuity (except in
New York), Life Annuity -- Period Certain, Joint and Survivor Life Annuity and
Life Period Certain Annuity (100% to Survivor). Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever is
more favorable for the Annuitant. Variable income annuities may be funded
through your choice of Investment Funds of HRT through the purchase of annuity
units. The amount of each variable annuity payment may fluctuate, depending upon
the performance of the Investment Funds. That is because the annuity unit value
rises and falls depending on whether the actual rate of net investment return
(after deduction of charges) is higher or lower than the assumed base rate. See
"Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Funds of other separate accounts we
offer.
Under QP Certificates, the only annuity forms available are a Life Annuity 10
Year Period Certain, or a Joint and Survivor Life Annuity 10 Year Period
Certain.
For all Annuitants under Traditional IRA, Roth IRA and NQ Certificates, the
normal form of annuity provides for fixed payments. We may offer other forms not
outlined here. Your agent can provide details.
For each annuity benefit, we will issue a separate written agreement putting the
benefit into effect. Before we pay any annuity benefit, we require the return of
the Certificate.
The amount of the annuity payments will depend on the amount applied to purchase
the annuity, the type of annuity chosen and, in the case of a life annuity form,
the Annuitant's age (or the Annuitant's and joint Annuitant's ages) and in
certain instances, the sex of the Annuitant(s). Once an income annuity form is
chosen and payments have commenced, no change can be made.
If, at the time you elect an annuity form, the amount to be applied is less than
$2,000 or the initial payment under the form elected is less than $20 monthly,
we reserve the right to pay the Annuity Account Value in a single sum rather
than as payments under the annuity form chosen.
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INCOME MANAGER PAYOUT ANNUITY OPTIONS
Under Traditional IRA, Roth IRA and NQ Certificates, you may apply your Annuity
Account Value to an Income Manager (Life Annuity with a Period Certain) payout
annuity certificate, or an Income Manager (Period Certain) payout annuity
certificate.
Under QP Certificates, Income Manager payout annuity certificates are available
only after the trustee of the qualified plan changes ownership of the QP
Certificate to the Annuitant, and the Annuitant, as the new Certificate Owner,
converts such QP Certificate in a direct rollover to a Traditional IRA
Certificate according to our rules at the time of the change. The change of
ownership and rollover to a Traditional IRA Certificate may only occur when the
Annuitant will no longer be a Participant/Employee in the qualified plan.
The Income Manager (Life Annuity with a Period Certain) payout annuity
certificates provide guaranteed payments for the Annuitant's life or for the
Annuitant's life and the life of a joint Annuitant. Income Manager (Period
Certain) payout annuity certificates provide payments for a specified period.
The Certificate Owner and Annuitant must meet the issue age and payment
requirements. Income Manager payout annuity certificates provide guaranteed
level payments (Traditional IRA, Roth IRA and NQ Certificates) under both forms
of certificate, or guaranteed increasing payments (NQ Certificates) under only
Income Manager (Life Annuity with a Period Certain) payout annuity certificates.
If you apply a part of the Annuity Account Value under any of the above Income
Manager payout annuity certificates, it will be considered a withdrawal and may
be subject to withdrawal charges. See "Withdrawal Options" above. If 100% of the
Annuity Account Value is applied from an Equitable Accumulator Certificate at a
time when the dollar amount of the withdrawal charge is greater than 2% of
remaining contributions (after withdrawals), such withdrawal charge will not be
deducted. However, a new withdrawal charge schedule will apply under the new
certificate. For purposes of the withdrawal charge schedule, the year in which
your Annuity Account Value is applied under the new certificate will be
"Contract Year 1." If 100% of the Annuity Account Value is applied from the
Equitable Accumulator when the dollar amount of the withdrawal charge is 2% or
less, such withdrawal charge will not be deducted and there will be no
withdrawal charge schedule under the new certificate. You should consider the
timing of your purchase as it relates to the potential for withdrawal charges
under the new certificate. No subsequent contributions will be permitted under
an Income Manager (Life Annuity with a Period Certain) payout annuity
certificate.
You may also apply your Annuity Account Value to an Income Manager (Period
Certain) payout annuity certificate once withdrawal charges are no longer in
effect under your Equitable Accumulator Certificate. No withdrawal charges will
apply under this Income Manager (Period Certain) payout annuity certificate.
The payout annuities are described in our prospectus for the Income Manager.
Copies of the most current version are available from your agent. To purchase an
Income Manager payout annuity certificate we also require the return of your
Equitable Accumulator Certificate. An Income Manager payout annuity certificate
will be issued to put one of the payout annuity options into effect. Depending
upon your circumstances, this may be accomplished on a tax-free basis. Consult
your tax adviser.
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PART 5: DEDUCTIONS AND CHARGES
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CHARGES DEDUCTED FROM THE ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options you
select, subject to certain restrictions. We then periodically deduct certain
amounts from your Annuity Account Value. Unless otherwise indicated, the charges
described below and under "Charges Deducted from the Investment Funds" below
will not be increased by us for the life of the Certificates. We may reduce
certain charges under group or sponsored arrangements. See "Group or Sponsored
Arrangements" below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made to
the extent that (i) a Lump Sum Withdrawal or cumulative withdrawals during a
Contract Year exceed the free corridor amount, or (ii) if the Certificate is
surrendered to receive its Cash Value. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
CONTRACT YEAR
1 2 3 4 5 6 7 8 9 10+
- --------------------------------------------------------------------------------
Percentage of
Contribution 8.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
The applicable withdrawal charge percentage is determined by the Contract Year
in which the excess withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn or
surrendered. For purposes of the table, for each contribution, the Contract Year
in which we receive that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the beginning of
the Contract Year, minus any amount previously withdrawn during that Contract
Year.
There is no withdrawal charge if a Lump Sum Withdrawal is taken to satisfy
minimum distribution requirements under a Traditional IRA Certificate. A free
corridor amount is not applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions as
being withdrawn on a first-in, first-out basis, and (2) amounts withdrawn up to
the free corridor amount are not considered a withdrawal of any contributions.
Although we treat contributions as withdrawn before earnings for purposes of
calculating the withdrawal charge, the Federal income tax law treats earnings
under Equitable Accumulator Certificates as withdrawn first. See "Part 7: Tax
Aspects of the Certificates."
The withdrawal charge is to help cover sales expenses.
We may also offer other Equitable Accumulator certificates, which have other
charges. A current prospectus for these other Equitable Accumulator
certificates, if available, may be obtained from your agent.
baseBUILDER Benefits Charge
If you elect the Combined Guaranteed Minimum Income Benefit and Guaranteed
Minimum Death Benefit, we deduct a charge annually on each Processing Date. The
charge is equal to a percentage of the Guaranteed Minimum Income Benefit benefit
base in effect on the Processing Date. For the baseBUILDER with the 6% Roll Up
to Age 80 Guaranteed Minimum Death Benefit and the Annual Ratchet to Age 80
Guaranteed Minimum Death Benefit (available for Annuitant issue ages 20 through
75), the percentage is equal to 0.30%. For the baseBUILDER with the 6% Roll Up
to Age 70 Guaranteed Minimum Death Benefit (available under Traditional IRA
Certificates for Annuitant issue ages 20 through 60), the percentage is equal to
0.15%. The Guaranteed Minimum Income Benefit benefit base is described under
"How Withdrawals Affect Your Guaranteed Minimum Income Benefit and Guaranteed
Minimum Death Benefit" in Part 4.
This charge will be deducted from your Annuity Account Value in the Investment
Funds on a pro rata basis. If there is insufficient value in the Investment
Funds, all or a portion of such charge will be deducted from the GIROs in order
of the earliest Expiration Date(s) first. A market value adjustment may apply.
See "Market Value Adjustment for Transfers, Withdrawals or Surrender Prior to
the Expiration Date" in Part 2.
Charges for State Premium and Other Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium taxes,
that might be imposed in your state. Generally, we deduct this charge from the
amount applied to provide an annuity benefit. In certain states, however, we may
deduct the charge for taxes from contributions. The current tax charge that
might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico
and 5% in the U.S. Virgin Islands).
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CHARGES DEDUCTED FROM THE INVESTMENT FUNDS
Mortality and Expense Risks Charge
We will deduct a daily charge from the net assets in each Investment Fund to
compensate us for mortality and expense risks, including the Guaranteed Minimum
Death Benefit. The daily charge is at the rate of 0.003032%, which is equivalent
to an annual rate of 1.10%, on the assets in each Investment Fund.
The mortality risk assumed is the risk that Annuitants as a group will live for
a longer time than our actuarial tables predict. As a result, we would be paying
more in annuity income than we planned. We also assume a risk that the mortality
assumptions reflected in our guaranteed annuity payment tables, shown in each
Certificate, will differ from actual mortality experience. Lastly, we assume a
mortality risk to the extent that at the time of death, the Guaranteed Minimum
Death Benefit exceeds the Cash Value of the Certificate. The expense risk
assumed is the risk that it will cost us more to issue and administer the
Certificates than we expect.
Administration Charge
We will deduct a daily charge from the net assets in each Investment Fund, to
compensate us for administration expenses under the Certificates. The daily
charge is at a rate of 0.000692% (equivalent to an annual rate of 0.25%) on the
assets in each Investment Fund. We reserve the right to increase this charge to
an annual rate of 0.35%, the maximum permitted under the Certificates.
Distribution Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for a portion of our sales expenses. The daily charge is at a rate
of 0.000695% (equivalent to an annual rate of 0.25%) on the assets in each
Investment Fund. This charge will never exceed applicable regulatory
limitations.
HRT CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HRT's assets, the 12b-1 fee,
direct operating expenses of HRT (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and liability
insurance), and certain investment-related expenses of HRT (such as brokerage
commissions and other expenses related to the purchase and sale of securities),
are reflected in each Portfolio's daily share price. The maximum investment
advisory fees paid annually by the Portfolios cannot be changed without a vote
by shareholders. They are as follows:
- -------------------------------------------------------------
MAXIMUM
INVESTMENT
ADVISORY FEE
HRT PORTFOLIO (ANNUAL RATE)
- -------------------------------------------------------------
Alliance Conservative Investors 0.475%
Alliance Growth Investors 0.550%
Alliance Growth & Income 0.550%
Alliance Common Stock 0.475%
Alliance Global 0.675%
Alliance International 0.900%
Alliance Aggressive Stock 0.625%
Alliance Small Cap Growth 0.900%
Alliance Money Market 0.350%
Alliance Intermediate Government
Securities 0.500%
Alliance High Yield 0.600%
- -------------------------------------------------------------
Investment advisory fees are established under HRT's investment advisory
agreements between HRT and its investment adviser, Alliance.
The Rule 12b-1 Plan provides that HRT, on behalf of each Portfolio (other than
the Alliance Small Cap Growth Portfolio), may pay to EDI annually up to 0.25% of
the average daily net assets of a Portfolio attributable to its Class IB shares
in respect of activities primarily intended to result in the sale of the Class
IB shares. This fee will not be increased for the life of the Certificates. With
respect to the Alliance Small Cap Growth Portfolio, EDI will receive an annual
fee not to exceed the lesser of (a) 0.25% of the average daily net assets of the
Portfolio attributable to Class IB shares and (b) an amount that, when added to
certain other expenses of the Class IB shares, would result in a ratio of
expenses to average daily net assets attributable to Class IB shares equalling
1.20%. Prior to October 8, 1997, EDI waived a portion of the 12b-1 fee with
respect to the Alliance Small Cap Growth Portfolio. Fees and expenses are
described more fully in the HRT prospectus.
EQAT CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQAT's assets, the 12b-1 fee,
direct operating expenses of EQAT (such as trustees' fees, expenses of
independent auditors and legal counsel, administrative service fees, custodian
fees, and liability insurance), and certain investment-related expenses of EQAT
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
investment management fees paid annually by the Portfolios cannot be changed
without a vote by shareholders. They are as follows:
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- -------------------------------------------------------------
MAXIMUM
INVESTMENT
MANAGEMENT AND
ADVISORY FEE
EQAT PORTFOLIO (ANNUAL RATE)
- -------------------------------------------------------------
BT Equity 500 Index 0.25%
BT Small Company Index 0.25%
BT International Equity Index 0.35%
MFS Emerging Growth Companies 0.55%
MFS Research 0.55%
Merrill Lynch Basic Value Equity 0.55%
Merrill Lynch World Strategy 0.70%
Morgan Stanley Emerging Markets Equity
1.15%
EQ/Putnam Balanced 0.55%
EQ/Putnam Growth and Income Value 0.55%
T. Rowe Price Equity Income 0.55%
T. Rowe Price International Stock 0.75%
Warburg Pincus Small Company Value 0.65%
- --------------------------------------------------------------
EQ Financial has entered into expense limitation agreements with EQAT, with
respect to each Portfolio, pursuant to which EQ Financial has agreed to waive or
limit its fees and to assume other expenses so that the total annual operating
expenses of each Portfolio (other than interest, taxes, and brokerage
commissions, in accordance with generally accepted accounting principles, other
extraordinary expenses not incurred in the ordinary course of such Portfolio's
business and amounts payable pursuant to a plan adopted in accordance with Rule
12b-1 under the 1940 Act) are limited to certain amounts. See the prospectus for
EQAT for more information.
The Rule 12b-1 Plan provides that EQAT, on behalf of each Portfolio, may pay to
EDI annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily intended
to result in the sale of the Class IB shares. This fee will not be increased for
the life of the Certificates. Fees and expenses are described more fully in the
EQAT prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal charge
or the mortality and expense risks charge, or change the minimum initial
contribution requirements. We may also change the Guaranteed Minimum Death
Benefit and the Guaranteed Minimum Income Benefit. We may also offer Investment
Funds investing in Class IA shares of HRT and EQAT, which are not subject to the
12b-1 fee. Group arrangements include those in which a trustee or an employer,
for example, purchases contracts covering a group of individuals on a group
basis. Group arrangements are not available for Traditional IRA and Roth IRA
Certificates. Sponsored arrangements include those in which an employer allows
us to sell Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the size
and stability of the group or sponsoring organization among other factors. We
take all these factors into account when reducing charges. To qualify for
reduced charges, a group or sponsored arrangement must meet certain
requirements, including our requirements for size and number of years in
existence. Group or sponsored arrangements that have been set up solely to buy
Certificates or that have been in existence less than six months will not
qualify for reduced charges.
We may also establish different Guaranteed Rates for the GIROs under different
classes of Certificates for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in effect
when a Certificate is approved for issue. We may change these rules from time to
time. Any variation in the withdrawal charge will reflect differences in costs
or services and will not be unfairly discriminatory.
Group or sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR MAKING
CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE ADVICE OF THEIR
OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
Charges may be reduced or eliminated when sales are made in a manner that
results in savings of sales and administrative expenses, such as sales through
persons who are compensated by clients for recommending investments and receive
no commission or reduced commissions in connection with the sale of the
Certificates. In no event will a reduction or elimination of charges be
permitted where it would be unfairly discriminatory.
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PART 6: VOTING RIGHTS
- --------------------------------------------------------------------------------
THE TRUSTS' VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of HRT and EQAT. Since we own
the assets of the Separate Account, we are the legal owner of the shares and, as
such, have the right to vote on certain matters. Among other things, we may
vote:
o to elect the Trusts' Board of Trustees,
o to ratify the selection of independent auditors for the Trusts, and
o on any other matters described in the current prospectuses for the Trusts or
requiring a vote by shareholders under the 1940 Act.
Because HRT is a Massachusetts business trust and EQAT is a Delaware business
trust, annual meetings are not required. Whenever a shareholder vote is taken,
we will give Certificate Owners the opportunity to instruct us how to vote the
number of shares attributable to their Certificates. If we do not receive
instructions in time from all Certificate Owners, we will vote the shares of a
Portfolio for which no instructions have been received in the same proportion as
we vote shares of that Portfolio for which we have received instructions. We
will also vote any shares that we are entitled to vote directly because of
amounts we have in an Investment Fund in the same proportions that Certificate
Owners vote.
Each share of the Trusts is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted upon.
However, if the Trustees determine that shareholders in a Portfolio are not
affected by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQAT shares currently are sold only to our
separate accounts. HRT shares are held by other separate accounts of ours and by
separate accounts of insurance companies unaffiliated with us. Shares held by
these separate accounts will probably be voted according to the instructions of
the owners of insurance policies and contracts issued by those insurance
companies. While this will dilute the effect of the voting instructions of the
Certificate Owners, we currently do not foresee any disadvantages arising out of
this. HRT's Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts that possibly may arise and to determine what
action, if any, should be taken in response. If we believe that HRT's response
to any of those events insufficiently protects our Certificate Owners, we will
see to it that appropriate action is taken to protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner approval,
Certificate Owners will be entitled to one vote for each Accumulation Unit they
have in the Investment Funds. Each Certificate Owner who has elected a variable
annuity payout may cast the number of votes equal to the dollar amount of
reserves we are holding for that annuity in an Investment Fund divided by the
Accumulation Unit Value for that Investment Fund. We will cast votes
attributable to any amounts we have in the Investment Funds in the same
proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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PART 7: TAX ASPECTS OF THE CERTIFICATES
- --------------------------------------------------------------------------------
This Part of the prospectus generally covers our understanding of the current
Federal income tax rules that apply to NQ, Traditional IRA, and Roth IRA
Certificates owned by United States taxpayers.
This Part does not apply to NQ Certificates used as the investment vehicle for
qualified plans discussed throughout the prospectus and in Appendix II.
This prospectus does not provide detailed tax information and does not address
issues such as state income and other taxes, Federal income tax and withholding
rules for non-U.S. taxpayers, or Federal gift and estate taxes. A gift or estate
tax transfer may arise whenever payments or contract rights are provided to
someone other than the original owner of the Certificates. Please consult a tax
adviser when considering the tax aspects of the Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities and individual retirement arrangements. In addition, the
Treasury Department may amend existing regulations, issue new regulations, or
adopt new interpretations of existing laws. State tax laws and, if you are not a
United States resident, foreign tax laws, may also affect the tax consequences
to you or the beneficiary. These laws may change from time to time without
notice and, as a result, the tax consequences may be altered. There is no way of
predicting whether, when or in what form any such change would be adopted. Any
such change could have retroactive effects regardless of the date of enactment.
We suggest you consult your legal or tax adviser.
TRANSFERS AMONG INVESTMENT OPTIONS
Under current law, there will not be any tax liability if you transfer Annuity
Account Value among the Investment Funds, or between the Guaranteed Period
Account and one or more Investment Funds.
TAXATION OF NON-QUALIFIED ANNUITIES
This section generally covers our understanding of the current Federal income
tax laws that apply to a non-qualified annuity purchased with only after-tax
dollars and not subject to any special retirement plan rules.
Equitable Life has designed the NQ Certificate to qualify as an "annuity" for
purposes of Federal income tax law. Gains in the Annuity Account Value of the
Certificate generally will not be taxable to you until a distribution occurs,
either by a withdrawal of part or all of its value or as a series of periodic
payments. However, there are some exceptions to this rule: (1) if a Certificate
fails the investment diversification requirements; (2) if you transfer a
Certificate, for example, as a gift to someone other than your spouse (or
divorced spouse), any gain in its Annuity Account Value will be taxed at the
time of transfer; (3) the assignment or pledge of any portion of the value of a
Certificate will be treated as a distribution of that portion of the
Certificate; and (4) when an insurance company (or its affiliate) issues more
than one non-qualified deferred annuity certificate or contract during any
calendar year to the same taxpayer, the certificates or contracts are required
to be aggregated in computing the taxable amount of any distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate unless
an exception under the Code applies.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawal which does not terminate
your total interest in the NQ Certificate is taxable to you as ordinary income
to the extent there has been a gain in the Annuity Account Value, and is subject
to income tax withholding. See "Federal and State Income Tax Withholding" below.
The balance of the distribution is treated as a return of the "investment" or
"basis" in the Certificate and is not taxable. Generally, the investment or
basis in the NQ Certificate equals the contributions made, less any amounts
previously withdrawn which were not taxable. If your Equitable Accumulator NQ
Certificate was issued as a result of a tax-free exchange of another NQ life
insurance or deferred annuity contract as described in "Methods of Payment:
Section 1035 Exchanges" in Part 3, your investment in that original contract
generally is treated as the basis in the Equitable Accumulator NQ Certificate
regardless of the value of that original contract at the time of the exchange.
Special rules may apply if contributions made to another annuity certificate or
contract prior to August 14, 1982 are transferred to a Certificate in a tax-free
exchange. To take advantage of these rules, you must notify us prior to such an
exchange.
If you surrender or cancel the NQ Certificate, the distribution is taxable to
the extent it exceeds the investment in the NQ Certificate.
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Annuity Payments
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the NQ Certificate. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the payments
received in a year are less than the amount permitted to be recovered tax free.
In the case of a life annuity, after the total investment has been recovered,
future payments are fully taxable. If payments cease as a result of death, a
deduction for any unrecovered investment will be allowed.
Early Distribution Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable portion
of a distribution unless the distribution is (1) made on or after the date you
attain age 59 1/2, (2) made on or after your death, (3) attributable to your
disability, (4) part of a series of substantially equal installments as an
annuity for your life (or life expectancy) or the joint lives (or joint life
expectancies) of you and a beneficiary, or (5) with respect to income allocable
to amounts contributed to an annuity certificate or contract prior to August 14,
1982 which are transferred to the Certificate in a tax-free exchange.
Payments as a Result of Death
If, as a result of the Annuitant's death, the beneficiary is entitled to receive
the death benefit described in Part 3, the beneficiary is generally subject to
the same tax treatment as would apply to you, had you surrendered the
Certificate (discussed above).
If the beneficiary elects to take the death benefit in the form of a life income
or installment option, the election should be made within 60 days after the day
on which a lump sum death benefit first becomes payable and before any benefit
is actually paid. The tax computation will reflect your investment in the
Certificate.
The Certificate provides a minimum guaranteed death benefit that in certain
circumstances may be greater than either the contributions made or the Annuity
Account Value. This provision provides investment protection against an untimely
termination of a Certificate on the death of an Annuitant at a time when the
Certificate's Annuity Account Value might otherwise have provided a lower
benefit. Although we do not believe that the provision of this benefit should
have any adverse tax effect, it is possible that the IRS could take a contrary
position and could assert that some portion of the charges for the minimum
guaranteed death benefit should be treated for Federal income tax purposes as a
partial withdrawal from the Certificate. If this were so, such a deemed
withdrawal could be taxable, and for Certificate Owners under age 59 1/2, also
subject to tax penalty.
Special distribution requirements apply upon the death of the owner of a
non-qualified annuity. That is, in the case of a contract where the owner and
annuitant are different, even though the annuity contract could continue because
the annuitant has not died, Federal tax law requires that the person who
succeeds as owner of the contract take taxable distribution of the contract
within a specified period of time. This includes the surviving Joint Owner in a
nonspousal joint ownership situation. See "When an NQ Certificate Owner Dies
before the Annuitant" in Part 3.
SPECIAL RULES FOR NQ CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from NQ Certificates as
U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is
excludable from U.S. taxation. Income from NQ Certificates is also subject to
Puerto Rico tax. The computation of the taxable portion of amounts distributed
from a Certificate may differ in the two jurisdictions. Therefore, you might
have to file both U.S. and Puerto Rico tax returns, showing different amounts of
income for each. Puerto Rico generally provides a credit against Puerto Rico tax
for U.S. tax paid. Depending on your personal situation and the timing of the
different tax liabilities, you may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules to
your own tax situation.
IRA TAX INFORMATION
The term "IRA" may generally refer to all individual retirement arrangements,
including individual retirement accounts and individual retirement annuities. In
addition to being available in both trusteed or custodial account form or
individual annuity form, there are many varieties of IRAs. There are
"Traditional IRAs" which are generally funded on a pre-tax basis. There are Roth
IRAs, newly available in 1998, which must be funded on an after-tax basis.
SEP-IRAs (including SARSEP-IRAs) and SIMPLE-IRAs are issued and funded in
connection with employer-sponsored retirement plans. Regardless of the type of
IRA, your interest in the IRA cannot be forfeited. You or your beneficiaries who
survive you are the only ones who can receive the benefits or payments.
The Equitable Accumulator Certificate is designed to qualify as an "individual
retirement annuity" under Section 408(b) of the Code. This prospectus contains
the information which the Internal Revenue Service (IRS) requires to be
disclosed to you before you purchase an individual retirement arrangement. This
section of Part 7 covers some of the special tax
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rules that apply to individual retirement arrangements, including Traditional
IRAs and Roth IRAs. Education IRAs are not discussed in this prospectus because
they are not available in individual retirement annuity form.
Further information regarding individual retirement arrangements generally can
be found in Internal Revenue Service Publication 590, entitled "Individual
Retirement Arrangements (IRAs)," which is generally updated annually, and can be
obtained from any IRS district office.
There is no limit to the number of IRAs (including Roth IRAs) you may establish
or maintain as long as you meet the requirements for establishing and funding
the IRA. However, if you maintain multiple IRAs, you may be required to
aggregate IRA values or contributions for tax purposes. You should be aware that
all types of IRAs are subject to certain restrictions in order to qualify for
special treatment under the Federal tax law.
The Equitable Accumulator IRA Certificate has been approved by the IRS as to
form for use as a Traditional IRA. This IRS approval is a determination only as
to the form of the annuity, does not represent a determination of the merits of
the annuity as an investment, and may not address certain features under the
Equitable Accumulator IRA Certificate. The IRS does not yet have a procedure in
place for approving the form of Roth IRAs.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS)
Cancellation
You can cancel a Certificate issued as a Traditional IRA by following the
directions in Part 3 under "Free Look Period." Since there may be adverse tax
consequences if a Certificate is cancelled (and because we are required to
report to the IRS certain distributions from cancelled Traditional IRAs), you
should consult with a tax adviser before making any such decision. If you cancel
this Certificate, you may establish a new individual retirement arrangement if
at the time you meet the requirements for establishing an individual retirement
arrangement.
Contributions to Traditional IRAs
Individuals may make three different types of contributions to purchase a
Traditional IRA, or as later additions to an existing Traditional IRA: "regular"
contributions out of earnings, tax-free "rollover" contributions from
tax-qualified plans, or direct custodian-to-custodian transfers from other
traditional individual retirement arrangements ("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Rollovers and Transfers" discussed
below. Any subsequent contributions you make may be any of rollovers, direct
transfers or "regular" Traditional IRA contributions. See "Contributions under
the Certificates" in Part 3. The immediately following discussion relates to
"regular" Traditional IRA contributions. For the reasons noted in "Rollovers and
Transfers" below, you should consult with your tax adviser before making any
subsequent contributions to a Traditional IRA which is intended to serve as a
"conduit" IRA.
Generally, $2,000 is the maximum amount of contributions which you may make to
all IRAs (including Roth IRAs) in any taxable year. The above limit may be less
when your earnings are below $2,000. This limit does not apply to rollover
contributions or direct custodian-to-custodian transfers into a Traditional IRA.
If you are married and file a joint income tax return, your and your spouse's
compensation effectively can be aggregated for purposes of determining the
permissible amount of regular contributions to Traditional IRAs (and Roth IRAs
discussed below). Even if one spouse has no compensation or compensation under
$2,000, married individuals filing jointly can contribute up to $4,000 for any
taxable year to any combination of Traditional IRAs and Roth IRAs. (Any
contributions to Roth IRAs reduce the ability to contribute to Traditional IRAs
and vice versa.) The maximum amount may be less if earnings are less and the
other spouse has made IRA contributions. No more than a combined total of $2,000
can be contributed annually to either spouse's traditional and Roth individual
retirement arrangements. Each spouse owns his or her individual retirement
arrangements (Traditional and Roth IRA) even if contributions were fully funded
by the other spouse.
The amount of Traditional IRA contributions for a tax year that you can deduct
depends on whether you are covered by an employer-sponsored tax-favored
retirement plan. An employer-sponsored tax-favored retirement plan includes a
qualified plan, a tax-sheltered account or annuity under Section 403(b) of the
Code (TSA) or a simplified employee pension plan. In certain cases, individuals
covered by a tax-favored retirement plan include persons eligible to participate
in the plan although not actually participating. Whether or not a person is
covered by a retirement plan will be reported on an employee's Form W-2.
Regardless of adjusted gross income (AGI), you may make deductible contributions
to a Traditional IRA for each tax year up to the lesser of $2,000 or 100% of
compensation (MAXIMUM PERMISSIBLE DOLLAR DEDUCTION) if not covered by a
retirement plan.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for
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IRA contributions phases out with AGI between $30,000 and $40,000 in 1998. This
amount will be indexed every year until 2005. If you are married and file a
joint return, and you are covered by a tax-favored retirement plan during any
part of the taxable year, the deduction for Traditional IRA contributions phases
out with AGI between $50,000 and $60,000 in 1998. This amount will be indexed
every year until 2007. Married individuals filing separately and living apart at
all times are not treated as being married for purposes of this deductible
contribution calculation. Generally, the active participation in an
employer-sponsored retirement plan of an individual is determined independently
for each spouse. Where spouses have "married filing jointly" status, however,
the maximum deductible Traditional IRA contribution for an individual who is not
an active participant (but whose spouse is an active participant) is phased out
for taxpayers with AGI of between $150,000 and $160,000.
To determine the deductible amount of the contribution with the phase out, you
determine AGI and subtract $30,000 if you are single, $50,000 if you are married
and file a joint return with your spouse. The resulting amount is your Excess
AGI. You then determine the limit on the deduction for Traditional IRA
contributions using the following formula:
Maximum Adjusted
$10,000 - Excess AGI x Permissible = Dollar
$10,000 Dollar Deduction
Deduction Limit
If you are not eligible to deduct part or all of the Traditional IRA
contribution you may still make nondeductible contributions on which earnings
will accumulate on a tax-deferred basis. The deductible and nondeductible
contributions to your Traditional IRA (or the nonworking spouse's Traditional
IRA) may not, however, together exceed the maximum $2,000 per person limit. See
"Excess Contributions" below. You must keep your own records of deductible and
non-deductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Distributions from Traditional
IRA Certificates" below.
If you are making nondeductible contributions in any taxable year, or you have
made nondeductible contributions to a Traditional IRA in prior years and are
receiving amounts from any Traditional IRA, you must file the required
information with the IRS. Moreover, if you are making nondeductible Traditional
IRA contributions, you must retain all income tax returns and records pertaining
to such contributions until interests in all Traditional IRAs are fully
distributed.
Traditional IRA contributions may be made for a tax year until the deadline for
filing a Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which you attain age 70 1/2 or any
tax year after that. A working spouse age 70 1/2 or over, however, can
contribute up to the lesser of $2,000 or 100% of "earned income" to a spousal
individual retirement arrangement for a nonworking spouse until the year in
which the nonworking spouse reaches age 70 1/2.
EXCESS CONTRIBUTIONS
Excess contributions to a Traditional IRA are subject to a 6% excise tax for the
year in which made and for each year thereafter until withdrawn. In the case of
"regular" Traditional IRA contributions any contribution in excess of the lesser
of $2,000 or 100% of compensation or earned income is an "excess contribution"
(without regard to the deductibility or nondeductibility of Traditional IRA
contributions under this limit). Also, any "regular" contributions made after
you reach age 70 1/2 are excess contributions. In the case of rollover
Traditional IRA contributions, excess contributions are amounts which are not
eligible to be rolled over (for example, after-tax contributions to a qualified
plan or minimum distributions required to be made after age 70 1/2). An excess
contribution (rollover or "regular") which is withdrawn, however, before the
time for filing your Federal income tax return for the tax year (including
extensions) is not includable in income and therefore is not subject to the 10%
penalty tax on early distributions (discussed below under "Penalty Tax on Early
Distributions"), provided any earnings attributable to the excess contribution
are also withdrawn and no tax deduction is taken for the excess contribution.
The withdrawn earnings on the excess contribution, however, would be includable
in your gross income and would be subject to the 10% penalty tax. If excess
contributions are not withdrawn before the time for filing your Federal income
tax return for the year (including extensions), "regular" contributions may
still be withdrawn after that time if the Traditional IRA contribution for the
tax year did not exceed $2,000 and no tax deduction was taken for the excess
contribution; in that event, the excess contribution would not be includable in
gross income and would not be subject to the 10% penalty tax. Lastly, excess
"regular" contributions may also be removed by underutilizing the allowable
contribution limits for a later year.
If excess rollover contributions are not withdrawn before the time for filing
your Federal tax return for the year (including extensions) and the excess
contribution occurred as a result of incorrect information provided by the plan,
any such excess amount can be withdrawn if no tax deduction was taken for the
excess contribution. As above, excess rollover contributions withdrawn under
those circumstances would not be includable in gross income and would not be
subject to the 10% penalty tax.
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ROLLOVERS AND TRANSFERS
Rollover contributions may be made to a Traditional IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other traditional individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within 60
days of the date the proceeds from another traditional individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally, the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax free to a Traditional IRA unless the distribution is (i) a required
minimum distribution under Section 401(a)(9) of the Code; or (ii) one of a
series of substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or the
joint lives (or joint life expectancies) of the plan participant and his or her
designated beneficiary, or (b) for a specified period of ten years or more. Any
amount contributed to a Traditional IRA after you attain age 70 1/2 must be net
of your required minimum distribution for the year in which the rollover or
direct transfer contribution is made.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" Traditional IRA
treatment, the source of funds used to establish the Traditional IRA must be a
rollover contribution from the qualified plan and the entire amount received
from the Traditional IRA (including any earnings on the rollover contribution)
must be rolled over into another qualified plan within 60 days of the date
received. Similar rules apply in the case of a TSA. If you make a contribution
to the Certificate which is from an eligible rollover distribution and you
commingle such contribution with other contributions, you may not be able to
roll over these eligible rollover distribution contributions and earnings to
another qualified plan (or TSA, as the case may be) at a future date, unless the
Code permits.
Under the conditions and limitations of the Code, you may elect for each
Traditional IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers and
can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other traditional individual retirement arrangements unless
the distribution was received under an inherited Traditional IRA. Tax-free
rollovers are also available to the surviving spouse beneficiary of a deceased
individual, or a spousal alternate payee of a qualified domestic relations order
applicable to a qualified plan. In some cases, Traditional IRAs can be
transferred on a tax-free basis between spouses or former spouses incidental to
a judicial decree of divorce or separation.
DISTRIBUTIONS FROM TRADITIONAL IRA CERTIFICATES
Income or gains on contributions under Traditional IRAs are not subject to
Federal income tax until benefits are distributed to you. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except as
discussed below, the amount of any distribution from a Traditional IRA is fully
includable as ordinary income by you in your gross income.
If you have made nondeductible IRA contributions to any Traditional IRA (whether
or not this particular arrangement), those contributions are recovered tax free
when distributions are received. You must keep records of all such nondeductible
contributions. At the end of each tax year in which you have received a
distribution from any traditional individual retirement arrangement, you
determine a ratio of the total nondeductible Traditional IRA contributions (less
any amounts previously withdrawn tax free) to the total account balances of all
Traditional IRAs held by you at the end of the tax year (including rollover
Traditional IRAs) plus all Traditional IRA distributions made during such tax
year. The resulting ratio is then multiplied by all distributions from the
Traditional IRA during that tax year to determine the nontaxable portion of each
distribution.
In addition, a distribution (other than a required minimum distribution received
after age 70 1/2) is not taxable if (1) the amount received is a return of
excess contributions which are withdrawn, as described under "Excess
Contributions" above, (2) the entire amount received is rolled over to another
traditional individual retirement arrangement (see "Rollovers and Transfers"
above) or (3) in certain limited circumstances, where the Traditional IRA acts
as a "conduit," the entire amount is paid into a qualified plan or TSA that
permits rollover contributions.
Distributions from a Traditional IRA are not entitled to the special favorable
five-year averaging method (or, in certain cases, favorable ten-year averaging
and long-term capital gain treatment) available in certain cases to
distributions from qualified plans.
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REQUIRED MINIMUM DISTRIBUTIONS
The minimum distribution rules require Traditional IRA owners to start taking
annual distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of your interest in the
IRA over your life expectancy. Whether the correct amount has been distributed
is calculated on a year-by-year basis; there are no provisions in the Code to
allow amounts taken in excess of the required amount to be carried over or
carried back and credited to other years.
Generally, you must take the first required minimum distribution with respect to
the calendar year in which you turn age 70 1/2. You have the choice to take the
first required minimum distribution during the calendar year you turn age 70
1/2, or to delay taking it until the three-month (January 1 - April 1) period in
the next calendar year. (Distributions must commence no later than the "Required
Beginning Date," which is the April 1st of the calendar year following the
calendar year in which you turn age 70 1/2.) If you choose to delay taking the
first annual minimum distribution, then you will have to take two minimum
distributions in that year -- the delayed one for the first year and the one
actually for that year. Once minimum distributions begin, they must be made at
some time every year.
There are two approaches to taking minimum distributions -- "account based" or
"annuity based" -- and there are a number of distribution options in both of
these categories. These choices are intended to give you a great deal of
flexibility to provide for yourself and your family.
An account-based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond your life
expectancy or the joint life expectancies of you and a designated beneficiary.
An annuity-based approach involves application of the Annuity Account Value to
an annuity for your life or the joint lives of you and a designated beneficiary,
or for a period certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options are
best for your own personal situation. Individuals who are participants in more
than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by taking
into account the required minimum distribution from each of your traditional
individual retirement arrangements. The IRS, however, does not require that you
make the required distribution from each traditional individual retirement
arrangement that you maintain. As long as the total amount distributed annually
satisfies your overall minimum distribution requirement, you may choose to take
your annual required distribution from any one or more traditional individual
retirement arrangements that you maintain.
You may recompute your minimum distribution amount each year based on your
current life expectancy as well as that of your spouse. No recomputation is
permitted, however, for a beneficiary other than a spouse.
If you have been computing minimum distributions with respect to Traditional IRA
funds on an account-based approach (discussed above) you may subsequently apply
such funds to a life annuity-based payout, provided that you have elected to
recalculate life expectancy annually (and your spouse's life expectancy if a
spousal joint annuity is selected). For example, if you anticipate exercising
your Guaranteed Minimum Income Benefit or selecting any other form of life
annuity payout after you are age 70 1/2, you must have elected to recalculate
life expectancies.
If there is an insufficient distribution in any year, a 50% tax may be imposed
on the amount by which the minimum required to be distributed exceeds the amount
actually distributed. The penalty tax may be waived by the Secretary of the
Treasury in certain limited circumstances. Failure to have distributions made as
the Code and Treasury regulations require may result in disqualification of your
Traditional IRA. See "Tax Penalty for Insufficient Distributions" below.
Except as described in the next sentence, if you die after distribution in the
form of an annuity has begun, or after the Required Beginning Date, payment of
the remaining interest must be made at least as rapidly as under the method used
prior to your death. (The IRS has indicated that an exception to the rule that
payment of the remaining interest must be made at least as rapidly as under the
method used prior to your death applies if the beneficiary of the Traditional
IRA is your surviving spouse. In some circumstances, your surviving spouse may
elect to "make the Traditional IRA his or her own" and halt distributions until
he or she reaches age 70 1/2.)
If you die before the Required Beginning Date and before distributions in the
form of an annuity begin, distributions of your entire interest under the
Certificate must be completed within five years after death, unless payments to
a designated beneficiary begin within one year of your death and are made over
the beneficiary's life or over a period certain which does not extend beyond the
beneficiary's life expectancy.
If your surviving spouse is the designated beneficiary, your spouse may delay
the commencement of such payments up until you would have attained 70 1/2. In
the alternative, a surviving spouse may elect to roll over the inherited
Traditional IRA into the surviving spouse's own Traditional IRA.
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TAXATION OF DEATH BENEFITS
Distributions received by a beneficiary are generally given the same tax
treatment you would have received if distribution had been made to you.
If your spouse is the sole primary beneficiary and elects to become the
successor Annuitant and Certificate Owner, no death benefit is payable until the
surviving spouse's death.
GUARANTEED MINIMUM DEATH BENEFIT
The Code provides that no part of an individual retirement account may be
invested in life insurance contracts. Treasury Regulations provide that an
individual retirement account may be invested in an annuity contract which
provides a death benefit of the greater of premiums paid or the contract's cash
value. Your Certificate provides a minimum death benefit guarantee that in
certain circumstances may be greater than either of contributions made or the
Annuity Account Value. Although there is no ruling regarding the type of minimum
death benefit guarantee provided by the Certificate, Equitable Life believes
that the Certificate's minimum death benefit guarantee should not adversely
affect the qualification of the Certificate as a Traditional IRA. Nevertheless,
it is possible that the IRS could disagree, or take the position that some
portion of the charge in the Certificate for the minimum death benefit guarantee
should be treated for Federal income tax purposes as a taxable partial
withdrawal from the Certificate. If this were so, such a deemed withdrawal would
also be subject to tax penalty for Certificate Owners under age 59 1/2.
PROHIBITED TRANSACTION
A Traditional IRA may not be borrowed against or used as collateral for a loan
or other obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which the
event occurred. If this happens, you must include in Federal gross income for
that year an amount equal to the fair market value of the Traditional IRA
Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if you have not reached age 59 1/2
before the first day of that tax year. See "Penalty Tax on Early Distributions"
below.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of Traditional IRA distributions will be subject to a 10%
penalty tax unless the distribution is made (1) on or after your death, (2)
because you have become disabled, (3) on or after the date when you reach age 59
1/2, or (4) in accordance with the exception outlined below if you are under 59
1/2. Also not subject to penalty tax are IRA distributions used to pay (5)
certain extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals, (6) qualified first-time home buyer expense payments, or
(7) higher educational expense payments, all as defined in the Code.
A payout over your life or life expectancy (or joint and survivor lives or life
expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. To permit
you to meet this exception, Equitable Life has two options: Substantially Equal
Payment Withdrawals and the Income Manager (Life Annuity with a Period Certain)
payout annuity certificates, both of which are described in Part 4. The version
of the Income Manager payout annuity certificates which would meet this
exception must provide level payments for life. If you are a Traditional IRA
Certificate Owner who will be under age 59 1/2 as of the date the first payment
is expected to be received and you choose either option, Equitable Life will
calculate the substantially equal annual payments under a method we will select
based on guidelines issued by the IRS (currently contained in IRS Notice 89-25,
Question and Answer 12). Although Substantially Equal Payment Withdrawals and
Income Manager payments are not subject to the 10% penalty tax, they are taxable
as discussed in "Distributions from Traditional IRA Certificates" above. Once
Substantially Equal Payment Withdrawals or Income Manager payments begin, the
distributions should not be stopped or changed until the later of your attaining
age 59 1/2 or five years after the date of the first distribution, or the
penalty tax, including an interest charge for the prior penalty avoidance, may
apply to all prior distributions under this option. Also, it is possible that
the IRS could view any additional withdrawal or payment you take from your
Certificate as changing your pattern of Substantially Equal Payment Withdrawals
or Income Manager payments for purposes of determining whether the penalty
applies.
Where a taxpayer under age 59 1/2 purchases a traditional individual retirement
annuity contract calling for substantially equal periodic payments during a
fixed period, continuing afterwards under a joint life contingent annuity with a
reduced payment to the survivor (e.g., a joint and 50% to survivor), the
question might be raised whether payments will not be substantially equal for
the joint lives of the taxpayer and survivor, as the payments will be reduced at
some point. In issuing our information returns, we code the substantially equal
periodic payments from such a contract as eligible for an exception from the
early distribution penalty. We believe that any change in payments to the
survivor would come within the statutory provision covering change of payments
on account of death. As there is no direct authority on this point, however, if
you are under age
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59 1/2, you should discuss this item with your own tax adviser when electing a
reduced survivorship option.
TAX PENALTY FOR INSUFFICIENT DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the Traditional IRA.
Disqualification may result in current taxation of your entire benefit. In
addition a 50% penalty tax may be imposed on the difference between the required
distribution amount and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the Annuity
Commencement Date unless a request has been made. It is your responsibility to
comply with the minimum distribution rules. We will notify you when our records
show that your age 70 1/2 is approaching. If you do not select a method, we will
assume you are taking your minimum distribution from another Traditional IRA
that you maintain. You should consult with your tax adviser concerning these
rules and their proper application to your situation.
ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS)
This section of Part 7 covers some of the special tax rules that apply to Roth
IRAs.
The Equitable Accumulator Roth IRA is designed to qualify as a Roth individual
retirement annuity under Sections 408A and 408(b) of the Code.
Cancellation
You can cancel a Certificate issued as a Roth IRA by following the directions in
Part 3 under "Free Look Period." In addition, you can cancel an Equitable
Accumulator Roth IRA Certificate issued as a result of a full conversion of an
Equitable Accumulator Traditional IRA Certificate by following the instructions
in the request for full conversion form available from our Processing Office or
your agent. Since there may be adverse tax consequences if a Certificate is
cancelled (and because we are required to report to the IRS certain
distributions from cancelled IRAs), you should consult with a tax adviser before
making any such decision.
Contributions to Roth IRAs
The following discussion relates to contributions to Roth IRAs. Contributions to
Traditional IRAs are discussed above.
Individuals may make four different types of contributions to purchase a Roth
IRA, or as later additions to an existing Roth IRA: (1) "regular" after-tax
contributions out of earnings, (2) taxable "rollover" contributions from
Traditional IRAs ("conversion" contributions), (3) tax-free rollover
contributions from other Roth IRAs, or (4) tax-free direct
custodian-to-custodian transfers from other Roth IRAs ("direct transfers"). See
"Contributions under the Certificates" in Part 3. Since only direct transfer and
rollover contributions are permitted under the Roth IRA Certificate, regular
after-tax contributions are not discussed here.
ROLLOVERS AND DIRECT TRANSFERS -- WHAT IS THE DIFFERENCE BETWEEN ROLLOVER AND
DIRECT TRANSFER TRANSACTIONS?
Rollover contributions may be made to a Roth IRA from only two sources: (i)
another Roth IRA ("tax-free rollover contribution"), or (ii) another Traditional
IRA in a taxable "conversion" rollover ("conversion contribution"). No
contribution may be made to a Roth IRA from a qualified plan under Section
401(a) of the Code, or a tax-sheltered arrangement under Section 403(b) of the
Code. We do not accept rollover contributions from SIMPLE-IRAs in 1998. The
rollover contribution must be applied to the new Roth IRA Certificate within 60
days of the date the proceeds from the other Roth IRA or the Traditional IRA was
received by you.
Direct transfer contributions may be made to a Roth IRA only from another Roth
IRA. The difference between a rollover transaction and a direct transfer
transaction is that in a rollover transaction the individual actually takes
possession of the funds rolled over, or constructively receives them in the case
of a change from one type of plan to another. In a direct transfer transaction,
the individual never takes possession of the funds, but directs the first Roth
IRA custodian, trustee or issuer to transfer the first Roth IRA funds directly
to Equitable Life, as the Roth IRA issuer. Direct transfer transactions can only
be made between identical plan types (for example, Roth IRA to Roth IRA);
rollover transactions may be made between identical plan types but must be made
between different plan types (for example, Traditional IRA to Roth IRA).
Although the economic effect of a Roth IRA to Roth IRA rollover transaction and
a Roth IRA to Roth IRA direct transfer transaction is the same -- both can be
accomplished on a completely tax-free basis -- Roth IRA to Roth IRA rollover
transactions are limited to once every 12-month period for the same funds.
Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover
transactions and can be made more frequently than once a year.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited Roth IRA to one or more other Roth IRAs. Also, in
some cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses incidental to a judicial decree of divorce or separation.
The IRS has recently proposed rules on "recharacterizations" of contributions
made to Roth IRAs as contributions to Traditional IRAs and vice versa. These
rules are proposed and not final and may
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be changed before they are finalized. You should consult your tax adviser
regarding the potential impact of these rules on your own situation.
CONVERSION CONTRIBUTIONS TO ROTH IRAS
In a conversion rollover transaction, you withdraw (or are deemed to withdraw)
all or a portion of funds from a Traditional IRA you maintain and convert it to
a Roth IRA within 60 days after you receive (or are deemed to receive) the
Traditional IRA proceeds. Unlike a rollover from a Traditional IRA to another
Traditional IRA, the conversion rollover transaction is not tax exempt; the
distribution from the Traditional IRA is generally fully taxable. (If you have
ever made nondeductible regular contributions to any Traditional IRA -- whether
or not it is the Traditional IRA you are converting -- a pro rata portion of the
distribution is tax exempt.) For this reason, Equitable Life is required to
withhold 10% Federal income tax from the amount converted unless you elect out
of such withholding. See "Federal and State Income Tax Withholding and
Information Reporting" below.
However, even if you are under age 59 1/2 there is no premature distribution
penalty on the Traditional IRA withdrawal that you are converting to a Roth IRA.
Also, a special rule applies to Traditional IRA funds converted to a Roth IRA in
calendar year 1998 only. For 1998 Roth IRA conversion rollover transactions, you
can elect to include the gross income from the Traditional IRA conversion
ratably over the four-year period 1998-2001. See discussion of the pre-age 59
1/2 withdrawal penalty and the special penalties that may apply to premature
withdrawals of converted funds under "Additional Taxes and Penalties" and
"Penalty Tax on Premature Distributions" below.
YOU CANNOT MAKE CONVERSION CONTRIBUTIONS TO A ROTH IRA FOR ANY TAXABLE YEAR IN
WHICH YOUR ADJUSTED GROSS INCOME EXCEEDS $100,000. (For this purpose, your
adjusted gross income is computed without the gross income stemming from the
Traditional IRA conversion.) You also cannot make conversion contributions to a
Roth IRA for any taxable year in which your Federal income tax filing status is
"married filing separately."
Finally, you cannot make conversion contributions to a Roth IRA to the extent
that the funds in your Traditional IRA are subject to the annual required
minimum distribution rule applicable to Traditional IRAs beginning at age 70
1/2. For the potential effects of violating these rules, see discussion of
"Additional Taxes and Penalties" and "Excess Contributions" below.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS
NO RESTRICTIONS ON WITHDRAWALS. You can withdraw any or all of your funds from a
Roth IRA at any time; you do not need to wait for a special event like
retirement. However, these withdrawals may be subject to a withdrawal charge as
stated in your Certificate. See discussion in Part 5. Also, the withdrawal may
be taxable to an extent and, even if not taxable, may be subject to tax penalty
in certain circumstances. See the discussion below under "Distributions from
Roth IRAs," "Additional Taxes and Penalties," and "Penalty Tax on Premature
Distributions."
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your Certificate, surrender of your
Certificate and annuity payments from your Certificate. Death benefits are also
distributions.
The following distributions from Roth IRAs are free of income tax:
(1) Rollovers from a Roth IRA to another Roth IRA.
(2) Direct transfers from a Roth IRA to another Roth IRA (see "Rollovers and
Direct Transfers" above).
(3) "Qualified Distributions" from Roth IRAs (see "Qualified Distributions from
Roth IRAs" below).
(4) Return of excess contributions (see "Additional Taxes and Penalties," and
"Excess Contributions" below).
Qualified Distributions from Roth IRAs
Distributions from Roth IRAs made because of one of the following four
qualifying events or reasons are not includable in income: (1) you attain age 59
1/2, (2) your death, (3) your disability (as defined in the Code), or (4) a
"qualified first-time homebuyer distribution" (as also defined in the Code).
Qualified first-time homebuyer distributions are limited to $10,000 lifetime in
the aggregate from all Roth and Traditional IRAs of the taxpayer.
You also have to meet a 5-year aging period. A qualified distribution is any
distribution made after the five-taxable year period beginning with the first
taxable year for which you made any contribution to any Roth IRA (whether or not
the one from which the distribution is being made).
Non-Qualified Distributions from Roth IRAs
Non-qualified distributions from Roth IRAs are any distributions which do not
meet the qualifying event and five-year aging period tests described above and
are potentially taxable as ordinary income. In contrast to Traditional IRA
distributions, which are assumed to be fully taxable, non-qualified
distributions receive return-of-investment-first treatment. That is, the
recipient is taxed only on the difference between the amount of the distribution
and the amount of Roth IRA contributions (less any distributions previously
recovered tax free).
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Like Traditional IRAs, taxable distributions from a Roth IRA are not entitled to
the special favorable five-year averaging method (or, in certain cases,
favorable ten-year averaging and long-term capital gain treatment) available in
certain cases to distributions from qualified plans.
Although the IRS has not yet issued complete guidance on all aspects of Roth
IRAs, it appears that you will be required to keep your own records of regular
and conversion contributions to all Roth IRAs in order to assure appropriate
taxation. An individual making contributions to a Roth IRA in any taxable year,
or receiving amounts from any Roth IRA may be required to file the information
with the IRS and retain all income tax returns and records pertaining to such
contributions until interests in Roth IRAs are fully distributed.
REQUIRED MINIMUM DISTRIBUTIONS AT DEATH
If you die before annuitization or before the entire amount of the Roth IRA has
been distributed to you, distributions of your entire interest under the Roth
IRA must be completed to your designated beneficiary by December 31 of the fifth
year after your death, unless payments to a designated beneficiary begin by
December 31 of the year after your death and are made over the beneficiary's
life or over a period which does not extend beyond the beneficiary's life
expectancy. If your surviving spouse is the designated beneficiary, no
distributions to a beneficiary are required until after the surviving spouse's
death.
TAXATION OF DEATH BENEFIT
Distributions received by a beneficiary are generally given the same tax
treatment you would have received if distribution had been made to you.
ADDITIONAL TAXES AND PENALTIES
You are subject to additional taxation for using your Roth IRA funds in
prohibited transactions (as described below). There are also additional taxes
for making excess contributions and making certain pre-age 59 1/2 distributions.
Prohibited Transactions
A Roth IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the Roth IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which the
event occurred. If this happens, you may be required to include in your Federal
gross income for that year an amount equal to the fair market value of your Roth
IRA Certificate as of the first day of that tax year. Also, an early
distribution penalty tax of 10% could apply if you have not reached age 59 1/2
before the first day of that tax year. See "Penalty Tax on Premature
Distributions" below.
EXCESS CONTRIBUTIONS
Excess contributions to a Roth IRA are subject to a 6% excise tax for the year
in which made and for each year thereafter until withdrawn. In the case of
rollover Roth IRA contributions, "excess contributions" are amounts which are
not eligible to be rolled over (for example, conversion contributions from a
Traditional IRA if your adjusted gross income is in excess of $100,000 in the
conversion year).
Although the impact of the proposed IRS rules is not clear, it appears that
rules similar to the rules applicable to Traditional IRAs generally apply to an
excess contribution ("regular" or rollover) which is withdrawn or
recharacterized before the time for filing your Federal income tax return for
the tax year (including extensions). It is not includable in income and is not
subject to the 10% penalty tax on early distributions (discussed below under
"Penalty Tax on Premature Distributions"), provided any earnings attributable to
the excess contribution are also withdrawn or recharacterized. Any withdrawn
earnings on the excess contribution, however, could be includable in your gross
income for the tax year in which the excess contribution from which they arose
was made and could be subject to the 10% penalty tax.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
The taxable portion of distributions from a Roth IRA made before you reach age
59 1/2 will be subject to an additional 10% Federal income tax penalty unless
one of the following exceptions applies. There are exceptions for:
o Your death,
o Your disability,
o Distributions used to pay certain extraordinary medical expenses,
o Distributions used to pay medical insurance premiums for certain unemployed
individuals,
o Substantially equal payments made at least annually over your life (or your
life expectancy), or over the lives of you and your beneficiary (or your
joint life expectancies) using an IRS-approved distribution method,
o "Qualified first-time homebuyer distributions" as defined in the Code, and
o Distributions used to pay specified higher education expenses as defined in
the Code.
Special penalty rules may apply to prematurely withdrawn amounts attributable to
1998 conversion rollovers. Please consult your tax adviser.
49
<PAGE>
Because Roth IRAs have only been recently approved, you should consult with your
tax adviser as to whether they are an appropriate investment vehicle for you.
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
Equitable Life is required to withhold Federal income tax from Traditional IRA
distributions and the taxable portion of payments from annuity contracts, unless
the recipient elects not to be subject to income tax withholding. For this
reason we are generally required to withhold on conversion rollovers of
Traditional IRAs to Roth IRAs, as the deemed withdrawal from the Traditional IRA
is taxable. Withholding may also apply to any taxable amounts paid under a free
look or cancellation. Generally, no withholding is required on distributions
which are not taxable (for example, a direct transfer from one Roth IRA to
another Roth IRA you own). In the case of distributions from a Roth IRA, we may
not be able to calculate the portion of the distribution (if any) subject to
tax. We may be required to withhold on the gross amount of the distribution
unless you elect out of withholding as described below. This may result in tax
being withheld even though the Roth IRA distribution is not taxable in whole or
in part.
The rate of withholding will depend on the type of distribution and, in certain
cases, the amount of the distribution. Special withholding rules apply to
foreign recipients and United States citizens residing outside the United
States. See your tax adviser if you think you may be affected by such rules.
Any income tax withheld is a credit against your income tax liability. If a
recipient does not have sufficient income tax withheld or does not make
sufficient estimated income tax payments, however, the recipient may incur
penalties under the estimated income tax rules. Recipients should consult their
tax advisers to determine whether they should elect out of withholding. Requests
not to withhold Federal income tax must be made in writing prior to receiving
benefits under the Certificate. Our Processing Office will provide forms for
this purpose. No election out of withholding is valid unless the recipient
provides us with the correct Taxpayer Identification Number and a United States
residence address.
Certain states have indicated that income tax withholding will apply to payments
from the Certificates made to residents. In some states, a recipient may elect
out of state withholding. Generally, an election out of Federal withholding will
also be considered an election out of state withholding. If you need more
information concerning a particular state or any required forms, call our
Processing Office at the toll-free number and consult your tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as if
such payments were payments of wages by an employer to an employee) unless the
recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and claiming
three withholding exemptions. There is an annual threshold of taxable income
from periodic annuity payments which is exempt from withholding based on this
assumption. For 1998, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,400 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies a
different choice of withholding exemption. A withholding election may be revoked
at any time and remains effective until revoked. If a recipient fails to provide
a correct Taxpayer Identification Number, withholding is made as if the
recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally be
subject to withholding at a flat 10% rate. A recipient who provides a United
States residence address and a correct Taxpayer Identification Number will
generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make withholding
elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be payable
with respect to the benefit at rates similar to the maximum estate tax rate in
effect at the time. The generation skipping tax provisions generally apply to
transfers which would also be subject to the gift and estate tax rules.
Individuals are generally allowed an aggregate generation skipping tax exemption
of $1 million. Because these rules are complex, you should consult with your tax
adviser for specific information, especially where benefits are passing to
younger generations, as opposed to a spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account for
taxes. Equitable Life can set up reserves for such taxes.
50
<PAGE>
- --------------------------------------------------------------------------------
PART 8: OTHER INFORMATION
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1997 and 1996 and for each of the
three years in the period ended December 31, 1997 included in Equitable Life's
Annual Report on Form 10-K, incorporated by reference in the prospectus, have
been examined by PricewaterhouseCoopers LLP, independent accountants, whose
reports thereon are incorporated herein by reference. Such consolidated
financial statements and consolidated financial statement schedules have been
incorporated herein by reference in reliance upon the reports of
PricewaterhouseCoopers LLP given upon their authority as experts in accounting
and auditing.
LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings, none
of which, in our view, are likely to have a material adverse effect upon the
Separate Account, our ability to meet our obligations under the Certificates or
the Certificates' distribution.
51
<PAGE>
- --------------------------------------------------------------------------------
PART 9: INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
This Part presents performance data for each of the Investment Funds included in
the tables below. The performance data were calculated by two methods. The first
method, presented in Tables 1 and 2, reflects all applicable fees and charges,
including the optional baseBUILDER benefits charge, but not the charges for any
applicable taxes such as premium taxes.
The second method, presented in Tables 3, 4 and 5, also reflects all applicable
fees and charges, but does not reflect the withdrawal charge, the optional
baseBUILDER benefits charge, or the charge for tax such as premium taxes. These
additional charges would effectively reduce the rates of return credited to a
particular Certificate.
The Certificates described in this prospectus are being offered for the first
time as of the date of this prospectus. Accordingly, the performance data for
the Investment Funds have been adjusted for the expenses, as described herein,
that would have been incurred had these Certificates been available prior to the
date of this prospectus. In addition, the investment results prior to October
1996, when HRT Class IB shares were not available, have been adjusted to reflect
12b-1 fees.
In all cases the results shown in the tables are based on the actual historical
investment experience of the corresponding Portfolios of HRT or EQAT, as the
case may be (see "HRT Portfolios," below). Certain of the Investment Funds began
operations on a date after the inception date of the corresponding Portfolio, as
indicated in Table 1. When we advertise the performance of an Investment Fund we
will separately include the historical performance of the Investment Fund,
determined in the manner shown in Table 1, since the Investment Fund's inception
date, as and to the extent required by regulatory authorities.
HRT Portfolios
The performance data for the Alliance Money Market and Alliance Common Stock
Funds that invest in corresponding HRT Portfolios, for periods prior to March
22, 1985, reflect the investment results of two open-end management separate
accounts (the "predecessor separate accounts") which were reorganized in unit
investment trust form. The "Since Inception" figures for these Investment Funds
are based on the date of inception of the predecessor separate accounts. These
performance data have been adjusted to reflect the maximum investment advisory
fee payable for the corresponding Portfolio of HRT, as well as an assumed charge
of 0.06% for direct operating expenses.
EQAT Portfolios
EQAT commenced operations on May 1, 1997. The Investment Funds of the Separate
Account that invest in Class IB shares of Portfolios of EQAT commenced
operations on May 1, September 2, and December 31, 1997.
See "Part 2: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
The performance data in Tables 1 and 2 (which reflect the first calculation
method described above) illustrate the average annual total return of the
Investment Funds, and the growth of an investment in the Investment Funds,
respectively, over the periods shown, assuming a single initial contribution of
$1,000 plus a $30 Credit, and the surrender of a Certificate, at the end of each
period on December 31, 1997. An Investment Fund's average annual total return is
the annual rate of growth of the Investment Fund that would be necessary to
achieve the ending value of a contribution kept in the Investment Fund for the
period specified.
Each calculation assumes that the $1,000 contribution plus the $30 Credit was
allocated to only one Investment Fund, no transfers or subsequent contributions
were made and no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of a
Certificate which is surrendered on December 31, 1997 by the $1,000 contribution
plus the $30 Credit made at the beginning of each period illustrated. The result
of that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value, taking
into account the effect of compounding.
52
<PAGE>
TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1997*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
------------------------------------------------------------------------------------
SINCE
INVESTMENT SINCE
ONE THREE FIVE TEN FUND PORTFOLIO
INVESTMENT FUND YEAR YEARS YEARS YEARS INCEPTION* INCEPTION**
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Alliance Conservative Investors
Alliance Growth Investors
Alliance Growth & Income
Alliance Common Stock
Alliance Global
Alliance International
Alliance Aggressive Stock
Alliance Small Cap Growth
Alliance Money Market
Alliance Intermediate Government
Securities [to be inserted by amendment]
Alliance High Yield
MFS Emerging Growth Companies
MFS Research
Merrill Lynch Basic Value Equity
Merrill Lynch World Strategy
Morgan Stanley Emerging Markets Equity
EQ/Putnam Balanced
EQ/Putnam Growth & Income Value
T. Rowe Price Equity Income
T. Rowe Price International Stock
Warburg Pincus Small Company Value
<FN>
- -------------------
See footnotes on page 63.
</FN>
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 2
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1997*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
------------------------------------------------------------------------------------
ONE THREE FIVE TEN SINCE
INVESTMENT FUND YEAR YEARS YEARS YEARS INCEPTION**
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Alliance Conservative Investors
Alliance Growth Investors
Alliance Growth & Income
Alliance Common Stock
Alliance Global
Alliance International [to be inserted by amendment]
Alliance Aggressive Stock
Alliance Small Cap Growth
Alliance Money Market
Alliance Intermediate Government
Securities
Alliance High Yield
</TABLE>
53
<PAGE>
TABLE 2 (CONTINUED)
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1997*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
------------------------------------------------------------------------------------
ONE THREE FIVE TEN SINCE
INVESTMENT FUND YEAR YEARS YEARS YEARS INCEPTION**
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
MFS Emerging Growth Companies
MFS Research
Merrill Lynch Basic Value Equity
Merrill Lynch World Strategy
Morgan Stanley Emerging Markets Equity
[to be inserted by amendment]
EQ/Putnam Balanced
EQ/Putnam Growth & Income Value
T. Rowe Price Equity Income
T. Rowe Price International Stock
Warburg Pincus Small Company Value
</TABLE>
- -------------------
* The "Since Inception" dates for the Investment Funds are as follows:
Alliance Conservative Investors, Alliance Growth Investors, Alliance Growth
& Income, Alliance Common Stock, Alliance Global, Alliance International,
Alliance Aggressive Stock, Alliance Money Market, and Alliance Intermediate
Government Securities (May 1, 1995); Alliance Small Cap Growth, Alliance
High Yield, MFS Emerging Growth Companies, MFS Research, Merrill Lynch Basic
Value Equity, Merrill Lynch World Strategy, EQ/Putnam Balanced, EQ/Putnam
Growth & Income Value, T. Rowe Price Equity Income, T. Rowe Price
International Stock, and Warburg Pincus Small Company Value (May 1, 1997);
and Morgan Stanley Emerging Markets Equity (September 2, 1997).
** The "Since Inception" dates for the Portfolios of HRT and EQAT are as
follows: Alliance Conservative Investors (October 2, 1989); Alliance Growth
Investors (October 2, 1989); Alliance Growth & Income (October 1, 1993);
Alliance Common Stock (January 13, 1976); Alliance Global (August 27, 1987);
Alliance International (April 3, 1995); Alliance Aggressive Stock (January
27, 1986); Alliance Small Cap Growth (May 1, 1997); Alliance Money Market
(July 13, 1981); Alliance Intermediate Government Securities (April 1, 1991);
Alliance High Yield (January 2, 1987); MFS Emerging Growth Companies (May 1,
1997); MFS Research (May 1, 1997); Merrill Lynch Basic Value Equity (May 1,
1997); Merrill Lynch World Strategy (May 1, 1997); Morgan Stanley Emerging
Markets Equity (August 20, 1997); EQ/Putnam Balanced (May 1, 1997); EQ/Putnam
Growth & Income Value (May 1, 1997); T. Rowe Price Equity Income (May 1,
1997); T. Rowe Price International Stock (May 1, 1997); and Warburg Pincus
Small Company Value (May 1, 1997).
- --------------------------------------------------------------------------------
Tables 3, 4 and 5 (which reflect the second calculation method described above)
provide you with information on rates of return on an annualized, cumulative and
year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same cumulative
return, if performance had been constant over the entire period.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality and
expense risks charge, administration charge, distribution charge or any
withdrawal or optional benefit charge, under the Certificates. Comparisons with
these benchmarks, therefore, are of limited use. We include them because they
are widely known and may help you to understand the universe of securities from
which each Portfolio is likely to select its holdings. Benchmark data reflect
the reinvestment of dividend income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
ALLIANCE CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond
Composite Index and 30% Standard & Poor's 500 Index.
ALLIANCE GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond
Index and 70% Standard & Poor's 500 Index.
ALLIANCE GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index and
25% Value Line Convertibles Index.
ALLIANCE COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
ALLIANCE INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International
Europe, Australia, Far East Index.
54
<PAGE>
ALLIANCE AGGRESSIVE STOCK: January 27, 1986; 50% Russell 2000 Small Stock Index
and 50% Standard & Poor's Mid-Cap Total Return Index.
ALLIANCE SMALL CAP GROWTH: May 1, 1997; Russell 2000 Growth Index.
ALLIANCE MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index.
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index.
MFS EMERGING GROWTH COMPANIES: May 1, 1997; Russell 2000 Index.
MFS RESEARCH: May 1, 1997; Standard & Poor's 500 Index.
MERRILL LYNCH BASIC VALUE EQUITY: May 1, 1997; Standard & Poor's 500 Index.
MERRILL LYNCH WORLD STRATEGY: May 1, 1997; 36% Standard & Poor's 500 Index/24%
Morgan Stanley Capital International Europe, Australia, Far East Index/21%
Salomon Brothers U.S. Treasury Bond 1 Year+/14% Salomon Brothers World
Government Bond (excluding U.S.)/and 5% Three-Month U.S. Treasury Bill.
MORGAN STANLEY EMERGING MARKETS EQUITY: August 20, 1997; Morgan Stanley Capital
International Emerging Markets Free Price Return Index.
EQ/PUTNAM BALANCED: May 1, 1997; 60% Standard & Poor's 500 Index and 40% Lehman
Government/ Corporate Bond Index.
EQ PUTNAM GROWTH & INCOME VALUE: May 1, 1997; Standard & Poor's 500 Index.
T. ROWE PRICE EQUITY INCOME: May 1, 1997; Standard & Poor's 500 Index.
T. ROWE PRICE INTERNATIONAL STOCK: May 1, 1997; Morgan Stanley Capital
International Europe, Australia, Far East Index.
WARBURG PINCUS SMALL COMPANY VALUE: May 1, 1997; Russell 2000 Index.
The Lipper Variable Insurance Products Performance Analysis Survey (LIPPER)
records the performance of a large group of variable annuity products, including
managed separate accounts of insurance companies. According to Lipper Analytical
Services, Inc., the data are presented net of investment management fees, direct
operating expenses and asset-based charges applicable under annuity contracts.
Lipper data provide a more accurate picture than market benchmarks of the
Equitable Accumulator performance relative to other variable annuity products.
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-----------------------------------------------------------------------------------------
<S> <C>
ALLIANCE CONSERVATIVE INVESTORS
Lipper Income
Benchmark
ALLIANCE GROWTH INVESTORS
Lipper Flexible Portfolio
Benchmark
ALLIANCE GROWTH & INCOME
Lipper Growth & Income
Benchmark [to be inserted by amendment]
ALLIANCE COMMON STOCK
Lipper Growth
Benchmark
ALLIANCE GLOBAL
Lipper Global
Benchmark
ALLIANCE INTERNATIONAL
Lipper International
Benchmark
</TABLE>
55
<PAGE>
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-----------------------------------------------------------------------------------------
<S> <C>
ALLIANCE AGGRESSIVE STOCK
Lipper Mid-Cap
Benchmark
ALLIANCE SMALL CAP
GROWTH
Lipper Small Cap
Benchmark
ALLIANCE MONEY MARKET
Lipper Money Market
Benchmark
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES
Lipper Gen. U.S. Government
Benchmark
ALLIANCE HIGH YIELD
Lipper High Yield
Benchmark
MFS EMERGING GROWTH
COMPANIES [to be inserted by amendment]
Lipper Mid-Cap
Benchmark
MFS RESEARCH
Lipper Growth
Benchmark
MERRILL LYNCH BASIC
VALUE EQUITY
Lipper Growth
Benchmark
MERRILL LYNCH WORLD STRATEGY
Lipper Global
Benchmark
MORGAN STANLEY
EMERGING MARKETS
EQUITY
Lipper Emerging Markets
Benchmark
EQ/PUTNAM BALANCED
Lipper Balanced
Benchmark
EQ/PUTNAM GROWTH &
INCOME VALUE
Lipper Growth & Income
Benchmark
</TABLE>
56
<PAGE>
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-----------------------------------------------------------------------------------------
<S> <C>
T. ROWE PRICE EQUITY
INCOME
Lipper Equity Income
Benchmark
T. ROWE PRICE
INTERNATIONAL [to be inserted by amendment]
STOCK
Lipper International
Benchmark
WARBURG PINCUS SMALL
COMPANY VALUE
Lipper Small Cap
Benchmark
<FN>
- ----------------------
See footnotes on page 68.
</FN>
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-----------------------------------------------------------------------------------------
<S> <C>
ALLIANCE CONSERVATIVE INVESTORS
Lipper Income
Benchmark
ALLIANCE GROWTH INVESTORS
Lipper Flexible Portfolio
Benchmark
ALLIANCE GROWTH & INCOME
Lipper Growth & Income
Benchmark
ALLIANCE COMMON STOCK
Lipper Growth
Benchmark
ALLIANCE GLOBAL [to be inserted by amendment]
Lipper Global
Benchmark
ALLIANCE INTERNATIONAL
Lipper International
Benchmark
ALLIANCE AGGRESSIVE STOCK
Lipper Mid-Cap
Benchmark
ALLIANCE SMALL CAP
GROWTH
Lipper Small Cap
Benchmark
ALLIANCE MONEY MARKET
Lipper Money Market
Benchmark
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES
Lipper Gen. U.S. Government
Benchmark
</TABLE>
57
<PAGE>
TABLE 4 (CONTINUED)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-----------------------------------------------------------------------------------------
<S> <C>
ALLIANCE HIGH YIELD
Lipper High Yield
Benchmark
MFS EMERGING GROWTH
COMPANIES
Lipper Mid-Cap
Benchmark
MFS RESEARCH
Lipper Growth
Benchmark
MERRILL LYNCH BASIC
VALUE EQUITY
Lipper Growth
Benchmark
MERRILL LYNCH WORLD
STRATEGY [to be inserted by amendment]
Lipper Global
Benchmark
MORGAN STANLEY
EMERGING MARKETS
EQUITY
Lipper Emerging Markets
Benchmark
EQ/PUTNAM BALANCED
Lipper Balanced
Benchmark
EQ/PUTNAM GROWTH &
INCOME VALUE
Lipper Growth & Income
Benchmark
T.ROWE PRICE EQUITY
INCOME
Lipper Equity Income
Benchmark
T. ROWE PRICE
INTERNATIONAL
STOCK
Lipper International
Benchmark
WARBURG PINCUS SMALL
COMPANY VALUE
Lipper Small Cap
Benchmark
<FN>
- ----------------------
See footnotes on page 68.
</FN>
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
TABLE 5
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
---------------------------------------------------------------------------------------------------------------------
<S> <C>
ALLIANCE
CONSERVATIVE
INVESTORS
ALLIANCE
GROWTH
INVESTORS
ALLIANCE
GROWTH &
INCOME
ALLIANCE
COMMON
STOCK***
ALLIANCE GLOBAL [TO BE INSERTED BY AMENDMENT]
ALLIANCE
INTERNATIONAL
ALLIANCE
AGGRESSIVE
STOCK
ALLIANCE MONEY
MARKET***
ALLIANCE
INTERMEDIATE
GOVERNMENT
SECURITIES
ALLIANCE HIGH
YIELD
</TABLE>
- ----------------
*Returns do not reflect the withdrawal charge, the optional baseBUILDER benefits
charge, and any charge for tax such as premium taxes. There are no returns
shown in Table 5 for the Alliance Small Cap Growth Fund and the Investment
Funds investing in EQAT as such Funds have less than one year of performance.
**Unannualized.
***Prior to 1984 the Year-by-Year Rates of
<TABLE>
<CAPTION>
Return were: 1976 1977 1978 1979 1980 1981 1982 1983
------------------------------------------------------------------------------
<S> <C>
ALLIANCE COMMON STOCK [TO BE INSERTED BY AMENDMENT]
----------------------------------------
ALLIANCE MONEY MARKET
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may describe
general economic and market conditions affecting the Separate Account and each
respective trust and may present the performance of the Investment Funds or
compare it with (1) that of other insurance company separate accounts or mutual
funds included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS or similar investment services that monitor the
performance of insurance company separate accounts or mutual funds, (2) other
appropriate indices of investment securities and averages for peer universes of
funds which are shown under "Benchmarks" and "Portfolio Inception Dates and
Comparative Benchmarks" in this Part 9, or (3) data developed by us derived from
such indices or averages. The Morningstar Variable Annuity/Life Report consists
of nearly 700 variable life and annuity funds, all of which report their data
net of investment management fees, direct operating expenses and separate
account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to present
or prospective Certificate Owners may also include evaluations of an Investment
Fund or Portfolio by financial publications that are nationally recognized such
as Barron's, Morningstar's Variable Annuity Sourcebook, Business Week, Chicago
Tribune, Forbes, Fortune, Institutional Investor, Investment Adviser, Investment
Dealer's Digest, Investment Management Weekly, Los Angeles Times, Money, Money
Management Letter, Kiplinger's Personal Finance, Financial Planning, National
Underwriter, Pension & Investments, USA Today, Investor's Business Daily, The
New York Times, and The Wall Street Journal.
59
<PAGE>
ALLIANCE MONEY MARKET FUND, ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND AND
ALLIANCE HIGH YIELD FUND YIELD INFORMATION
The current yield and effective yield of the Alliance Money Market Fund,
Alliance Intermediate Government Securities Fund and Alliance High Yield Fund
may appear in reports and promotional material to current or prospective
Certificate Owners.
Current yield for the Alliance Money Market Fund will be based on net changes in
a hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). Current yields for the Alliance Intermediate
Government Securities Fund and Alliance High Yield Fund will be based on net
changes in a hypothetical investment over a given 30-day period, exclusive of
capital changes, and then "annualized" (assuming that the same 30-day result
would occur each month for 12 months). "Effective yield" is calculated in a
manner similar to that used to calculate current yield, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings are
compounded weekly for the Alliance Money Market Fund and monthly for the
Alliance Intermediate Government Securities Fund and Alliance High Yield Fund.
Alliance Money Market Fund, Alliance Intermediate Government Securities Fund and
Alliance High Yield Fund yields and effective yields assume the deduction of all
Certificate charges and expenses other than the withdrawal charge, the optional
baseBUILDER benefits charge, and any charge for tax such as premium tax. See
"Part 5: Alliance Money Market Fund, Alliance Intermediate Government Securities
Fund and Alliance High Yield Fund Yield Information" in the SAI.
60
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- --------------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined and
how it would be applied to a withdrawal, assuming that $100,000 was allocated on
February 15, 1999 to a GIRO with an Expiration Date of February 15, 2008 at a
Guaranteed Rate of 7.00% resulting in a Maturity Value at the Expiration Date of
$183,846, and further assuming that a withdrawal of $50,000 was made on February
15, 2003.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON FEBRUARY 15, 2003
5.00% 9.00%
-----------------------------------------------------------
As of February 15, 2003 (Before Withdrawal)
- -------------------------------------------
<S> <C> <C>
(1) Present Value of Maturity Value,
also Annuity Account Value.................................. $ 144,048 $ 119,487
(2) Guaranteed Period Amount.................................... 131,080 131,080
(3) Market Value Adjustment: (1) - (2).......................... 12,968 (11,593)
On February 15, 2003 (After Withdrawal)
- ---------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000/(1)]........................ $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000 - (4)].............................. 45,499 54,851
(6) Guaranteed Period Amount: (2) - (5)......................... 85,581 76,229
(7) Maturity Value.............................................. 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value....................................... 94,048 69,487
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
You should note that under this example if a withdrawal is made when rates have
increased (from 7.00% to 9.00% in the example), a portion of a negative market
value adjustment is realized. On the other hand, if a withdrawal is made when
rates have decreased (from 7.00% to 5.00% in the example), a portion of a
positive market value adjustment is realized.
61
<PAGE>
APPENDIX II: PURCHASE CONSIDERATIONS FOR QP CERTIFICATES
- --------------------------------------------------------------------------------
Any trustee considering a purchase of a QP Certificate should discuss with its
tax adviser whether this is an appropriate investment vehicle for the employer's
plan. Trustees should consider whether the plan provisions permit the investment
of plan assets in the QP Certificate, the distribution of such an annuity, the
purchase of the Guaranteed Minimum Income Benefit, and the payment of death
benefits in accordance with the requirements of the Code. The form of
Certificate and this prospectus should be reviewed in full, and the following
factors, among others, should be noted. This QP Certificate accepts transfer
contributions only and not regular, ongoing payroll contributions. For 401(k)
plans under defined contribution plans, no employee after-tax contributions are
accepted. Under defined benefit plans, we will not accept rollovers from a
defined contribution plan to a defined benefit plan. We will only accept
transfers from a defined benefit plan or a change of investment vehicles in the
plan.
For defined benefit plans, the maximum percentage of actuarial value of the plan
Participant/Employee's "Normal Retirement Benefit" which can be funded by a QP
Certificate is 80%. The Annuity Account Value under a QP Certificate may at any
time be more or less than the lump sum actuarial equivalent of the "Accrued
Benefit" for a defined benefit plan Participant/Employee. Equitable Life does
not guarantee that the Annuity Account Value under a QP Certificate will at any
time equal the actuarial value of 80% of a Participant/Employee's Accrued
Benefit. If overfunding of a plan occurs, withdrawals from the QP Certificate
may be required. A withdrawal charge and/or market value adjustment may apply.
Further, Equitable will not perform or provide any plan recordkeeping services
with respect to the QP Certificates. The plan's administrator will be solely
responsible for performing or providing for all such services. There is no loan
feature offered under the QP Certificates, so if the plan provides for loans and
a Participant/Employee takes a loan from the plan, other plan assets must be
used as the source of the loan and any loan repayments must be credited to other
investment vehicles and/or accounts available under the plan.
Finally, because the method of purchasing the QP Certificates and the features
of the QP Certificates may appeal more to plan Participants/Employees who are
older and tend to be highly paid, and because certain features of the QP
Certificates are available only to plan Participants/Employees who meet certain
minimum and/or maximum age requirements, plan trustees should discuss with their
advisers whether the purchase of the QP Certificates would cause the plan to
engage in prohibited discrimination in contributions, benefits or otherwise.
62
<PAGE>
APPENDIX III: GUARANTEED MINIMUM DEATH BENEFIT EXAMPLE
- --------------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the Annuity Account Value
or, if greater, the Guaranteed Minimum Death Benefit (see "Guaranteed Minimum
Death Benefit" in Part 3).
The following is an example illustrating the calculation of the Guaranteed
Minimum Death Benefit. Assuming $100,000 is allocated to the Investment Funds
(with no allocation to the Alliance Money Market and Alliance Intermediate
Government Securities Funds or the GIROs), no subsequent contributions, no
transfers and no withdrawals, the Guaranteed Minimum Death Benefit for an
Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
END OF 6% ROLL UP TO AGE 80 ANNUAL RATCHET TO AGE 80
CONTRACT ANNUITY GUARANTEED MINIMUM GUARANTEED MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $115,500 $112,360 $115,500(2)
3 $132,825 $119,102 $132,825(2)
4 $106,260 $126,248 $132,825(3)
5 $116,886 $133,823 $132,825(3)
6 $140,263 $141,852 $140,263(2)
7 $140,263 $150,363 $140,263(3)
----------------------------------------------------------------------------------------------------------------------
</TABLE>
The Annuity Account Values for Contract Years 1 through 7 are determined based
on hypothetical rates of return of 5.00%, 10.00%, 15.00%, (20.00)%, 10.00%,
20.00% and 0.00%, respectively.
6% ROLL UP TO AGE 80
(1) For Contract Years 1 through 7, the Guaranteed Minimum Death Benefit equals
the amount allocated increased by 6%.
ANNUAL RATCHET TO AGE 80
(2) At the end of Contract Years 1, 2 and 3, and again at the end of Contract
Year 6, the Guaranteed Minimum Death Benefit is equal to the current
Annuity Account Value.
(3) At the end of Contract Years 4, 5 and 7, the Guaranteed Minimum Death
Benefit is equal to the Guaranteed Minimum Death Benefit at the end of the
prior year since it is equal to or higher than the current Annuity Account
Value.
63
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Part 1: Minimum Distribution Withdrawals-- Traditional
IRA Certificates 2
- --------------------------------------------------------------------------------
Part 2: Accumulation Unit Values 2
- --------------------------------------------------------------------------------
Part 3: Annuity Unit Values 2
- --------------------------------------------------------------------------------
Part 4: Custodian and Independent Accountants 3
- --------------------------------------------------------------------------------
Part 5: Alliance Money Market Fund, Alliance Intermediate
Government Securities Fund and Alliance High
Yield Fund Yield Information 3
- --------------------------------------------------------------------------------
Part 6: Long-Term Market Trends 4
- --------------------------------------------------------------------------------
Part 7: Key Factors in Retirement Planning 6
- --------------------------------------------------------------------------------
Part 8: Financial Statements 10
- --------------------------------------------------------------------------------
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Life
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Equitable Accumulator SAI dated ______,
1998:
---------------------------------------------------------------------
Name
---------------------------------------------------------------------
Address
---------------------------------------------------------------------
City State Zip
(IMSAI 9/98)
<PAGE>
____________, 1998
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PROFILE OF THE EQUITABLE ACCUMULATOR(SM) (IRA, NQ AND QP)
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
This Profile is a summary of some of the more important points that you should
know and consider before purchasing a Certificate. The Certificate is more fully
described in the prospectus which accompanies this Profile. Please read the
prospectus carefully.
1. THE ANNUITY CERTIFICATE. The Equitable Accumulator Certificate is a
combination variable and fixed deferred annuity issued by Equitable Life.
Certificates can be issued as individual retirement annuities (IRAS, which can
be either TRADITIONAL IRAS or ROTH IRAS) or as non-qualified annuities (NQ) for
after-tax contributions only. NQ Certificates may also be used as an investment
vehicle for certain types of qualified plans (QP) (in states where approved).
The Equitable Accumulator Certificate is designed to provide for the
accumulation of retirement savings and for income through the investment, during
an accumulation phase, of (a) rollover contributions, direct transfers from
other individual retirement arrangements and additional IRA contributions or (b)
after-tax money.
You may allocate amounts to Investment Funds where your Certificate's value may
vary up or down depending upon investment performance. You may also allocate
amounts to Guarantee Periods (also called GUARANTEED FIXED INTEREST ACCOUNTS)
that when held to maturity provide guaranteed interest rates that we have set
for your class of Certificate and a guarantee of principal. We allocate an
amount (CREDIT) to your Investment Funds and Guaranteed Fixed Interest Accounts
based on the amount you put into the Certificate's value. If you make any
transfers or withdrawals, the Guaranteed Fixed Interest Accounts' investment
value may increase or decrease until maturity due to interest rate changes.
Earnings accumulate under your Certificate on a tax-deferred basis until amounts
are distributed. Amounts distributed under the Equitable Accumulator Certificate
may be subject to income tax.
The Investment Funds offer the potential for better returns than the interest
rates guaranteed under the Guaranteed Fixed Interest Accounts, but the
Investment Funds involve risk and you can lose money. You may make transfers
among the Investment Funds and Guaranteed Fixed Interest Accounts. The value of
Guaranteed Fixed Interest Accounts prior to their maturity fluctuates and you
can lose money on premature transfers or withdrawals.
--------------
Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104.
Accumulator is a service mark, and baseBUILDER and Income Manager
are registered service marks of
The Equitable Life Assurance Society of the United States.
1
<PAGE>
The Certificate provides a number of distribution methods during the
accumulation phase and for converting to annuity income. The amount accumulated
under your Certificate during the accumulation phase will affect the amount of
distribution or annuity benefits you receive.
You can elect the baseBUILDER(R) at issue of the Certificate for an additional
charge. The baseBUILDER provides a combined Guaranteed Minimum Income Benefit
and Guaranteed Minimum Death Benefit. The Guaranteed Minimum Income Benefit
provides a minimum amount of guaranteed lifetime income regardless of investment
performance when converting, at specific times, to the Income Manager(R) (Life
Annuity with a Period Certain) payout annuity certificate.
2. ANNUITY PAYMENTS. When you are ready to start receiving income, annuity
income is available by applying your Certificate's value to an Income Manager
payout annuity certificate. You can also have your IRA or NQ Certificate's value
applied to any of the following ANNUITY BENEFITS: (1) Life Annuity - payments
for the annuitant's life, (2) Life Annuity - Period Certain - payments for the
annuitant's life, but with payments continuing to the beneficiary for the
balance of the selected years if the annuitant dies before the end of the
selected period; (3) Life Annuity - Refund Certain - payments for the
annuitant's life, with payments continuing to the beneficiary after the
annuitant's death until any remaining amount applied to this option runs out;
and (4) Period Certain Annuity - payments for a specified period of time,
usually 5, 10, 15 or 20 years, with no life contingencies. Options (2) and (3)
are also available as a Joint and Survivor Annuity - payments for the
annuitant's life, and after the annuitant's death, continuation of payments to
the survivor for life. Under QP Certificates the only Annuity Benefit available
is Option (2) as a Life Annuity with a 10 Year Period Certain, or a Joint and
Survivor Life Annuity with a 10 Year Period Certain. Annuity Benefits (other
than the Life Annuity in New York, the Refund Certain and the Period Certain
which are only available on a fixed basis) are available as a fixed annuity, or
as a variable annuity, where the dollar amount of your payments will depend upon
the investment performance of the Investment Funds. Any Credits allocated to
your Certificate's value within the prior three years, will be deducted before
amounts are applied to your Annuity Benefit. Once you begin receiving annuity
payments, you cannot change your Annuity Benefit.
3. PURCHASE. You can purchase an Equitable Accumulator IRA Certificate by
rolling over or transferring at least $25,000 or more from one or more
individual retirement arrangements. Under a Traditional IRA Certificate you may
add additional amounts of $1,000 or more at any time (subject to certain
restrictions). Additional amounts under a Traditional IRA Certificate are
limited to $2,000 per year, but additional rollover or IRA transfer amounts are
unlimited. In certain cases, additional amounts may not be added to a Roth IRA
Certificate.
An Equitable Accumulator NQ or QP Certificate can be purchased with $25,000 or
more. Additional amounts of $1,000 or more can be made at anytime (subject to
certain restrictions). Certain restrictions also apply to the type of
contributions we will accept under Equitable Accumulator QP Certificates.
A Credit will be added to your Certificate's value with each amount we receive
from you. The Credit is equal to 3% of the amount you initially put in and each
additional amount. The Credit will be allocated to the Investment Funds and/or
Guaranteed Fixed Interest Accounts in the same way that you allocate the amounts
you put in.
2
<PAGE>
4. INVESTMENT OPTIONS. You may invest in any or all of the following Investment
Funds, which invest in shares of corresponding portfolios of The Hudson River
Trust (HRT) and EQ Advisors Trust (EQAT). The portfolios are described in the
prospectuses for HRT and EQAT.
<TABLE>
<CAPTION>
HRT INVESTMENT FUNDS EQAT INVESTMENT FUNDS
-------------------- ---------------------------------------------------------------------------
<S> <C> <C>
o Alliance Money Market o BT Equity 500 Index o Merrill Lynch Basic Value Equity
o Alliance High Yield o BT Small Company Index o Merrill Lynch World Strategy
o Alliance Common Stock o BT International Equity Index o Morgan Stanley Emerging
o Alliance Aggressive Stock o JPM Core Bond Markets Equity
o Alliance Small Cap Growth o Lazard Large Cap Value o EQ/Putnam Growth & Income Value
o Lazard Small Cap Value o EQ/Putnam Investors Growth
o MFS Research o EQ/Putnam International Equity
o MFS Emerging Growth Companies
</TABLE>
You may also invest in one or more Guaranteed Fixed Interest Accounts currently
maturing in years 1999 through 2008.
5. EXPENSES. The Certificates have expenses as follows: As a percentage of net
assets in the Investment Funds, a daily charge is deducted for mortality and
expense risks (including the Guaranteed Minimum Death Benefit discussed below)
at an annual rate of 1.10%, a daily charge is deducted for administration
expenses at an annual rate of 0.25%, and a daily distribution charge is deducted
for sales expenses at an annual rate of 0.25%. If baseBUILDER is elected, there
is an annual charge of 0.30% expressed as a percentage of the Guaranteed Minimum
Income Benefit benefit base. The baseBUILDER charge is deducted from your
Certificate's value.
The charges for the portfolios of HRT range from 0.64% to 1.20% of the average
daily net assets of HRT portfolios, depending upon the HRT portfolios selected.
The charges for the portfolios of EQAT range from 0.55% to 1.75% of the average
daily net assets of EQAT portfolios, depending upon the EQAT portfolios
selected. The amounts for HRT are based on average portfolio assets for the year
ended December 31, 1997 and have been restated to reflect the fees that would
have been paid if a new advisory agreement that Alliance, HRT's manager, and HRT
entered into (which went into effect on May 1, 1997) were in effect since
January 1, 1997. The amounts for EQAT are based on current expense caps. The
12b-1 fee (reflected in the "Total Annual Portfolio Charges" column in the chart
below) for the portfolios of HRT (other than the Alliance Small Cap Growth
portfolio) and EQAT are 0.25% of the average daily net assets of HRT and EQAT,
respectively. For the Alliance Small Cap Growth portfolio the 12b-1 fee may be
less than 0.25% under certain circumstances. Charges for state premium and other
applicable taxes may also apply at the time you elect to start receiving annuity
payments.
A withdrawal charge is imposed as a percentage of each contribution withdrawn in
excess of a free corridor amount, or if the Certificate is surrendered. The free
corridor amount for withdrawals is 15% of the Certificate's value at the
beginning of the year. The withdrawal charge does not apply under certain of the
distribution methods available under the Equitable Accumulator IRA Certificate.
When applicable, the withdrawal charge is determined in accordance with the
table below, based on the year a contribution is withdrawn. The year in which we
receive your contribution is "Year 1."
3
<PAGE>
<TABLE>
<CAPTION>
Year of Contribution Withdrawal
1 2 3 4 5 6 7 8 9 10+
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Contribution 8.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
</TABLE>
The following chart is designed to help you understand the charges in the
Certificate. The "Total Annual Charges" column shows the combined total of the
Certificate charges deducted as a percentage of net assets in the Investment
Funds and the portfolio charges, as shown in the first two columns. The last two
columns show you two examples of the charges, in dollars, that you would pay
under a Certificate, and include the benefit based charge for the baseBUILDER
benefits. The examples assume that you invested $1,000 in a Certificate and we
add a $30 Credit, the total of which earns 5% annually and that you withdraw
your money: (1) at the end of year 1, and (2) at the end of year 10. For year 1,
the Total Annual Charges are assessed as well as the withdrawal charge. For year
10, the example shows the aggregate of all the annual charges assessed for the
10 years, but there is no withdrawal charge. No charges for state premium and
other applicable taxes are assumed in the examples.
<TABLE>
<CAPTION>
TOTAL TOTAL EXAMPLES
ANNUAL ANNUAL TOTAL Total Annual
CERTIFICATE PORTFOLIO ANNUAL Expenses at End of:
CHARGES CHARGES CHARGES (1) (2)
INVESTMENT FUND 1 Year 10 Years
<S> <C> <C> <C> <C> <C>
Alliance Money Market 1.60% 0.64% 2.24%
Alliance High Yield 1.60% 0.89% 2.49%
Alliance Common Stock 1.60% 0.65% 2.25%
Alliance Aggressive Stock 1.60% 0.82% 2.42%
Alliance Small Cap Growth 1.60% 1.20% 2.80%
BT Equity 500 Index 1.60% 0.55% 2.15% [To be inserted by
BT Small Company Index 1.60% 0.60% 2.20% amendment]
BT International Equity Index 1.60% 0.80% 2.40%
JPM Core Bond 1.60% 0.80% 2.40%
Lazard Large Cap Value 1.60% 0.90% 2.50%
Lazard Small Cap Value 1.60% 1.20% 2.80%
MFS Research 1.60% 0.85% 2.45%
MFS Emerging Growth Companies 1.60% 0.85% 2.45%
Merrill Lynch Basic Value Equity 1.60% 0.85% 2.45%
Merrill Lynch World Strategy 1.60% 1.20% 2.80%
Morgan Stanley Emerging Markets 1.60% 1.75% 3.35%
Equity
EQ/Putnam Growth & Income Value 1.60% 0.85% 2.45%
EQ/Putnam Investors Growth 1.60% 0.85% 2.45%
EQ/Putnam International Equity 1.60% 1.20% 2.80%
</TABLE>
Total annual portfolio charges may vary from year to year. For Investment Funds
investing in portfolios with less than 10 years of operations, charges have been
estimated. The charges reflect any waiver or limitation. For more detailed
information, see the Fee Table in the prospectus.
4
<PAGE>
6. TAXES. In most cases, your earnings are not taxed until distributions are
made from your Certificate. If you are younger than age 59 1/2 when you receive
any distributions, in addition to income tax you may be charged a 10% Federal
tax penalty on the taxable amount received. This tax discussion does not apply
to Roth IRA or QP Certificates. Please consult your tax adviser.
7. ACCESS TO YOUR MONEY. During the accumulation phase, you may receive
distributions under a Certificate through the following WITHDRAWAL OPTIONS.
Under IRA, NQ and QP Certificates: (1) Lump Sum Withdrawals of at least $1,000
taken at any time; and (2) Systematic Withdrawals paid monthly, quarterly or
annually, subject to certain restrictions, including a maximum percentage of
your Certificate's value. Under both the Traditional IRA and Roth IRA
Certificates only: (1) Substantially Equal Payment Withdrawals (if you are less
than age 59 1/2), paid monthly, quarterly or annually based on life expectancy;
and under Traditional IRA Certificates only (2) Minimum Distribution Withdrawals
(after you are age 70 1/2), which pay the minimum amount necessary to meet
minimum distribution requirements in the Internal Revenue Code.
You also have access to your Certificate's value by surrendering the
Certificate. All or a portion of certain withdrawals may be subject to a
withdrawal charge to the extent that the withdrawal exceeds the free corridor
amount. A free corridor amount does not apply to a surrender. Withdrawals and
surrenders may be subject to income tax and a tax penalty. Withdrawals from
Guaranteed Fixed Interest Accounts prior to their maturity may result in a
market value adjustment.
8. PERFORMANCE. During the accumulation phase, your Certificate's value in the
Investment Funds may vary up or down depending upon the investment performance
of the Investment Funds you have selected. Past performance is not a guarantee
of future results.
9. DEATH BENEFIT. If the annuitant dies before amounts are applied under an
annuity benefit, the named beneficiary will be paid a death benefit. The death
benefit is equal to your Certificate's value in the Investment Funds and the
Guaranteed Fixed Interest Accounts, or if greater, the Guaranteed Minimum Death
Benefit.
For Traditional IRA and Roth IRA Certificates if the annuitant is between the
ages of 20 through 78 at issue of the Certificate; for NQ Certificates for
annuitant ages 0 through 79 at issue of the Certificate; and for QP Certificates
for annuitant ages 20 through 70 at issue of the Certificate, you may choose one
of two types of Guaranteed Minimum Death Benefit available under the
Certificates: a "6% Roll Up to Age 80" or an "Annual Ratchet to Age 80." Both
types are described below. For NQ Certificates, for annuitant age 80 at issue of
the Certificate, a return of the contributions you have invested under the
Certificate plus any Credits will be the Guaranteed Minimum Death Benefit. The
benefits are based on the amount you initially put in and are adjusted for
additional contributions, Credits and withdrawals.
5
<PAGE>
6% Roll Up to Age 80 (Not available in New York) -- We add interest to the
initial amount at 6% (4% for amounts in the Alliance Money Market Fund and
Guaranteed Fixed Interest Accounts) through the annuitant's age 80 (or at the
annuitant's death, if earlier).
Annual Ratchet to Age 80 --The Guaranteed Minimum Death Benefit is reset each
year through the annuitant's age 80 to the Certificate's value, if it is higher
than the prior year's Guaranteed Minimum Death Benefit. In New York, the
Guaranteed Minimum Death Benefit at the death of the annuitant will never be
less than the amounts in the Investment Funds, plus amounts (not reflecting any
increase due to interest rate changes) in the Guaranteed Fixed Interest Accounts
reflecting guaranteed interest.
10. OTHER INFORMATION.
QUALIFIED PLANS. If the QP Certificates will be purchased by certain types of
plans qualified under Section 401(a), or 401(k) of the Internal Revenue Code,
please consult your tax adviser first. Any discussion of taxes in this profile
does not apply.
BASEBUILDER BENEFITS. The baseBUILDER (available for annuitant ages 20 through
75 at issue of the Certificates) is an optional benefit that combines the
Guaranteed Minimum Income Benefit and the Guaranteed Minimum Death Benefit.
baseBUILDER benefits are not currently available in New York.
Income Benefit - The Guaranteed Minimum Income Benefit, as part of the
baseBUILDER, provides a minimum amount of guaranteed lifetime income
for your future. When you are ready to convert (at specified future
times) your Certificate's value to the Income Manager (Life Annuity
with a Period Certain) payout annuity certificate the amount of
lifetime income that will be provided will be the greater of (i) your
Guaranteed Minimum Income Benefit or (ii) your Certificate's current
value applied at current annuity purchase factors.
Death Benefit - As part of the baseBUILDER you have the choice, at
issue of the Certificate, of two Guaranteed Minimum Death Benefit
options: (i) the 6% Roll Up to Age 80 or (ii) the Annual Ratchet to Age
80. These options are described in "Death Benefit" above.
FREE LOOK. You can examine the Certificate for a period of 10 days after you
receive it, and return it to us for a refund. The free look period is longer in
some states.
6
<PAGE>
Your refund will equal your Certificate's value, reflecting any investment gain
or loss in the Investment Funds, any increase or decrease in the value of any
amounts held in the Guaranteed Fixed Interest Accounts, through the date we
receive your Certificate minus the amount as of the date applied of any Credits.
Some states or Federal income tax regulations may require that we calculate the
refund differently. In the case of a complete conversion of an existing
Traditional IRA Certificate to a Roth IRA, you may cancel your Roth IRA and
return to a Traditional IRA by following the instructions in the request for
full conversion form available from the Processing Office or your registered
representative.
AUTOMATIC INVESTMENT PROGRAM (AIP). AIP provides for a specified amount to be
automatically deducted from a checking account, money market account or credit
union checking account and to be applied as additional amounts under NQ and
Traditional IRA Certificates. AIP is not available for Roth IRA and QP
Certificates.
PRINCIPAL ASSURANCE. This option is designed to assure the return of your
original amount invested on a Guaranteed Fixed Interest Account maturity date,
by putting a portion of your money in a particular Guaranteed Fixed Interest
Account, and the balance in the Investment Funds in any way you choose. Assuming
that you make no transfers or withdrawals of the portion in the Guaranteed Fixed
Interest Account, such amount will grow to your original investment upon
maturity.
DOLLAR COST AVERAGING. You can elect at any time to put money into the Alliance
Money Market Fund and have a dollar amount or percentage transferred from the
Alliance Money Market Fund into the other Investment Funds on a periodic basis.
Dollar Cost Averaging does not assure a profit or protect against a loss should
market prices decline.
REBALANCING. You can have your money automatically readjusted among the
Investment Funds quarterly, semiannually or annually as you select. The amounts
you have in each selected Investment Fund will grow or decline in value at
different rates during each time period. Rebalancing is intended to transfer
amounts among the chosen Investment Funds in order to retain the allocation
percentages you specify. Rebalancing does not assure a profit or protect against
a loss should market prices decline and should be reviewed periodically, as your
needs may change.
REPORTS. We will provide you with an annual statement of your Certificate's
values as of the last day of each year, and three additional reports of your
Certificate's values each year. You also will be provided with written
confirmations of each financial transaction, and copies of annual and semiannual
statements of HRT and EQAT.
You may call toll-free at 1-800-789-7771 for a recording of daily Investment
Fund values and guaranteed rates applicable to Guaranteed Fixed Interest
Accounts.
7
<PAGE>
11. INQUIRIES. If you need more information, please contact your registered
representative. You may also contact us at:
The Equitable Life Assurance Society of the United States
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
Telephone 1-800-789-7771 and Fax 1-201-583-2224
8
<PAGE>
EQUITABLE ACCUMULATOR(SM)
(IRA, NQ AND QP)
PROSPECTUS DATED _______, 1998
-----------------------
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
- --------------------------------------------------------------------------------
This prospectus describes certificates The Equitable Life Assurance Society of
the United States (EQUITABLE LIFE, WE, OUR AND US) offers under a combination
variable and fixed deferred annuity contract issued on a group basis or as
individual contracts. Enrollment under a group contract is evidenced by issuance
of a certificate. Certificates and individual contracts are each referred to as
"Certificates." Certificates can be issued as individual retirement annuities
(IRAS, which can be either TRADITIONAL IRAS or ROTH IRAS), or non-qualified
annuities for after-tax contributions only (NQ). NQ Certificates may also be
used as an investment vehicle for a defined contribution plan or defined benefit
plan (QP). Under IRA Certificates we accept only initial contributions that are
rollover contributions or that are direct transfers from other individual
retirement arrangements, as described in this prospectus. Under QP Certificates
we will only accept employer contributions from a trust under a plan qualified
under Section 401(a) or 401(k) of the Code. A minimum initial contribution of
$25,000 is required to put a Certificate into effect. We add an amount (CREDIT)
to your Certificate with each contribution received.
The Certificates are designed to provide for the accumulation of retirement
savings and for income. Contributions accumulate on a tax-deferred basis and can
be distributed under a number of different methods which are designed to be
responsive to the owner's (CERTIFICATE OWNER, YOU and YOUR) objectives.
The Certificates offer investment options (INVESTMENT OPTIONS) that permit you
to create your own strategies. These Investment Options include 19 variable
investment funds (INVESTMENT FUNDS) and each GUARANTEE PERIOD in the GUARANTEED
PERIOD ACCOUNT.
We invest each Investment Fund in Class IB shares of a corresponding portfolio
(PORTFOLIO) of The Hudson River Trust (HRT) and EQ Advisors Trust (EQAT), mutual
funds whose shares are purchased by separate accounts of insurance companies.
The prospectuses for HRT (in which the Alliance Funds invest) and EQAT (in which
the other Investment Funds invest), both of which accompany this prospectus,
describe the investment objectives, policies and risks, of the Portfolios.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
o ALLIANCE MONEY MARKET o BT INTERNATIONAL EQUITY INDEX o MERRILL LYNCH BASIC VALUE EQUITY
o ALLIANCE HIGH YIELD o JPM CORE BOND o MERRILL LYNCH WORLD STRATEGY
o ALLIANCE COMMON STOCK o LAZARD LARGE CAP VALUE o MORGAN STANLEY EMERGING MARKETS EQUITY
o ALLIANCE AGGRESSIVE STOCK o LAZARD SMALL CAP VALUE o EQ/PUTNAM GROWTH & INCOME VALUE
o ALLIANCE SMALL CAP GROWTH o MFS RESEARCH o EQ/PUTNAM INVESTORS GROWTH
o BT EQUITY 500 INDEX o MFS EMERGING GROWTH COMPANIES o EQ/PUTNAM INTERNATIONAL EQUITY
o BT SMALL COMPANY INDEX
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts allocated to a Guarantee Period accumulate on a fixed basis and are
credited with interest at a rate we set (GUARANTEED RATE) for your class of
Certificate for the entire period. On each business day (BUSINESS DAY) we will
determine the Guaranteed Rates available for amounts newly allocated to
Guarantee Periods. A market value adjustment (positive or negative) will be made
for withdrawals, transfers, surrender and certain other transactions from a
Guarantee Period before its expiration date (EXPIRATION DATE). Each Guarantee
Period has its own Guaranteed Rates. The Guarantee Periods currently available
have Expiration Dates of February 15, in years 1999 through 2008.
This prospectus provides information about IRA, NQ and QP Certificates that
prospective investors should know before investing. You should read it carefully
and retain it for future reference. The prospectus is not valid unless
accompanied by current prospectuses for HRT and EQAT, both of which you should
also read carefully.
Registration statements relating to Separate Account No. 49 (SEPARATE ACCOUNT)
and interests under the Guarantee Periods have been filed with the Securities
and Exchange Commission (SEC). The statement of additional information (SAI),
dated ______, 1998, which is part of the registration statement for the Separate
Account, is available free of charge upon request by writing to our Processing
Office or calling 1-800-789-7771, our toll-free number. The SAI has been
incorporated by reference into this prospectus. The Table of Contents for the
SAI appears at the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE CERTIFICATES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE
SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- --------------------------------------------------------------------------------
Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104. All rights reserved. Accumulator is a service mark,
and baseBUILDER and Income Manager are registered service marks of
The Equitable Life Assurance Society of the United States.
PROS 1AML (9/98)
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1997, its Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1998, and its current report on Form 8-K dated April
7, 1998 are incorporated herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(EXCHANGE ACT) after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference in this prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
and superseded, to constitute a part of this prospectus. Equitable Life files
its Exchange Act documents and reports, including its annual and quarterly
reports on Form 10-K and Form 10-Q, electronically pursuant to EDGAR under CIK
No. 0000727920. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. The address of the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits not specifically incorporated by reference into the text of such
documents). Requests for such documents should be directed to The Equitable Life
Assurance Society of the United States, 1290 Avenue of the Americas, New York,
New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234).
2
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL TERMS PAGE 5
FEE TABLE PAGE 7
PART 1: EQUITABLE LIFE, THE SEPARATE
ACCOUNT AND THE
INVESTMENT FUNDS PAGE 10
Equitable Life 10
Separate Account No. 49 10
The Trusts 10
HRT's Manager and Adviser 11
EQAT's Manager 11
EQAT's Investment Advisers 11
Investment Policies and Objectives of HRT's
Portfolios and EQAT's Portfolios 13
PART 2: THE GUARANTEED PERIOD
ACCOUNT PAGE 15
Guarantee Periods 15
Market Value Adjustment for Transfers,
Withdrawals or Surrender Prior to the
Expiration Date 16
Investments 16
PART 3: PROVISIONS OF THE CERTIFICATES
AND SERVICES WE PROVIDE PAGE 18
What Is the Equitable Accumulator? 18
Joint Ownership 18
Contributions under the Certificates 18
Methods of Payment 19
Allocation of Contributions 20
Free Look Period 20
Annuity Account Value 21
Transfers among Investment Options 21
Dollar Cost Averaging 21
Rebalancing 22
baseBUILDER Benefits 22
Guaranteed Minimum Income Benefit 22
Death Benefit 24
How Death Benefit Payment Is Made 24
When an NQ Certificate Owner Dies
before the Annuitant 25
Cash Value 25
Surrendering the Certificates to
Receive the Cash Value 25
When Payments Are Made 25
Assignment 26
Services We Provide 26
Distribution of the Certificates 26
PART 4: DISTRIBUTION METHODS UNDER
THE CERTIFICATES PAGE 28
Withdrawal Options 28
How Withdrawals Affect Your
Guaranteed Minimum Income Benefit
and Guaranteed Minimum Death Benefit 30
Annuity Benefits and Payout Annuity
Options 30
PART 5: DEDUCTIONS AND CHARGES PAGE 33
Charges Deducted from the Annuity
Account Value 33
Charges Deducted from the Investment
Funds 33
HRT Charges to Portfolios 34
EQAT Charges to Portfolios 34
Group or Sponsored Arrangements 35
Other Distribution Arrangements 35
PART 6: VOTING RIGHTS PAGE 36
The Trusts' Voting Rights 36
Voting Rights of Others 36
Separate Account Voting Rights 36
Changes in Applicable Law 36
PART 7: TAX ASPECTS OF THE
CERTIFICATES PAGE 37
Tax Changes 37
Taxation of Non-Qualified Annuities 37
Special Rules for NQ Certificates Issued
in Puerto Rico 38
IRA Tax Information 38
Traditional Individual Retirement Annuities
(Traditional IRAs) 39
Roth Individual Retirement Annuities
(Roth IRAs) 44
Federal and State Income Tax Withholding
and Information Reporting 47
Other Withholding 47
Impact of Taxes to Equitable Life 47
PART 8: OTHER INFORMATION PAGE 48
Independent Accountants 48
Legal Proceedings 48
PART 9: INVESTMENT PERFORMANCE PAGE 49
Communicating Performance Data 54
Alliance Money Market Fund and Alliance
High Yield Fund Yield Information 54
3
<PAGE>
APPENDIX I: MARKET VALUE
ADJUSTMENT EXAMPLE PAGE 55
APPENDIX II: PURCHASE CONSIDERATIONS
FOR QP CERTIFICATES PAGE 56
APPENDIX III: GUARANTEED MINIMUM
DEATH BENEFIT EXAMPLE PAGE 57
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS PAGE 58
4
<PAGE>
- --------------------------------------------------------------------------------
GENERAL TERMS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT -- Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund.
ACCUMULATION UNIT VALUE -- The dollar value of each Accumulation Unit in an
Investment Fund on a given date.
ANNUITANT -- The individual who is the measuring life for determining benefits
under the Certificate. Under NQ Certificates, the Annuitant can be different
from the Certificate Owner; under both Traditional and Roth IRA Certificates,
the Annuitant and Certificate Owner must be the same individual. Under QP
Certificates, the Annuitant must be the Participant/Employee.
ANNUITY ACCOUNT VALUE -- The sum of the amounts in the Investment Options under
the Certificate. See "Annuity Account Value" in Part 3.
ANNUITY COMMENCEMENT DATE -- The date on which Annuity Benefit payments are to
commence.
BASEBUILDER(R) -- Optional protection benefit, consisting of the Guaranteed
Minimum Income Benefit and the Guaranteed Minimum Death Benefit.
BUSINESS DAY -- Generally, any day on which the New York Stock Exchange is open
for trading. For the purpose of determining the Transaction Date, our Business
Day ends at 4:00 p.m. Eastern Time.
CASH VALUE -- The Annuity Account Value minus any withdrawal charges.
CERTIFICATE -- The Certificate issued under the terms of a group annuity
contract and any individual contract, including any endorsements.
CERTIFICATE OWNER -- The person who owns a Certificate and has the right to
exercise all rights under the Certificate. Under NQ Certificates, the
Certificate Owner can be different from the Annuitant; under both Traditional
and Roth IRA Certificates, the Certificate Owner must be the same individual as
the Annuitant. Under QP Certificates, the Certificate Owner must be the trustee
of a trust for a qualified plan maintained by an employer.
CODE -- The Internal Revenue Code of 1986, as amended.
CONTRACT DATE -- The effective date of the Certificates. This is usually the
Business Day we receive the initial contribution at our Processing Office.
CONTRACT YEAR -- The 12-month period beginning on your Contract Date and each
anniversary of that date.
CREDIT -- An amount allocated to your Annuity Account Value at the time a
contribution is received. Credits are not considered "contributions" for
purposes of any disucssion in this prospectus.
EQAT -- EQ Advisors Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. EQ Financial Consultants, Inc. (EQ
FINANCIAL) is the manager of EQAT and has appointed advisers for each of the
Portfolios.
EXPIRATION DATE -- The date on which a Guarantee Period ends.
GUARANTEED MINIMUM DEATH BENEFIT -- The minimum amount payable upon death of the
Annuitant.
GUARANTEED MINIMUM INCOME BENEFIT -- The minimum amount of future guaranteed
lifetime income.
GUARANTEE PERIOD -- Any of the periods of time ending on an Expiration Date that
are available for investment under the Certificates. Guarantee Periods may also
be referred to as Guaranteed Fixed Interest Accounts.
GUARANTEED PERIOD ACCOUNT -- The Account that contains the Guarantee Periods.
GUARANTEED RATE -- The annual interest rate established for each allocation to a
Guarantee Period.
HRT -- The Hudson River Trust, a mutual fund in which the assets of separate
accounts of insurance companies are invested. Alliance Capital Management L.P.
(ALLIANCE) is the manager and adviser to HRT.
INVESTMENT FUNDS -- The funds of the Separate Account that are available under
the Certificates.
INVESTMENT OPTIONS -- The choices for investment: the Investment Funds and each
available Guarantee Period.
IRA -- An individual retirement annuity, as defined in Section 408(b) of the
Code. There are two types of IRAs, a Traditional IRA and a Roth IRA. A Roth IRA
must also meet the requirements of Section 408A of the Code.
JOINT OWNERS -- Two individuals who own undivided interests in the entire
Certificate. If Joint Owners are named, reference to "Certificate Owner," "you"
or "your" will apply to both Joint Owners or either of them. Joint Owners may be
selected only for NQ Certificates.
MATURITY VALUE -- The amount in a Guarantee Period on its Expiration Date.
5
<PAGE>
NQ -- An annuity contract which may be purchased only with after-tax
contributions, but is not a Roth IRA.
PARTICIPANT/EMPLOYEE -- An individual who participates in an employer's plan
funded by an Equitable Accumulator QP Certificate.
PORTFOLIOS -- The portfolios of HRT and EQAT that correspond to the Investment
Funds of the Separate Account.
PROCESSING DATE -- The day when we deduct certain charges from the Annuity
Account Value. If the Processing Date is not a Business Day, it will be on the
next succeeding Business Day. The Processing Date will be once each year on each
anniversary of the Contract Date.
PROCESSING OFFICE -- The address to which all contributions, written requests
(e.g., transfers, withdrawals, etc.) or other written communications must be
sent. See "Services We Provide" in Part 3.
QP -- When issued with the appropriate endorsement, an NQ Certificate which is
used as an investment vehicle for a defined contribution plan within the meaning
of Section 401(a) and 401(k) of the Code, or a defined benefit plan within the
meaning of Section 401(a) of the Code.
ROTH IRA -- An IRA which must be funded on an after-tax basis, the distributions
from which may be tax free under specified circumstances.
SAI -- The statement of additional information for the Separate Account under
the Certificates.
SEPARATE ACCOUNT -- Equitable Life's Separate Account No. 49.
TRADITIONAL IRA -- An IRA which is generally purchased with pre-tax
contributions, the distributions from which are treated as taxable.
TRANSACTION DATE -- The Business Day we receive a contribution or a transaction
request providing all the information we need at our Processing Office. If your
contribution or request reaches our Processing Office on a non-Business Day, or
after the close of the Business Day, the Transaction Date will be the next
following Business Day. Transaction requests must be made in a form acceptable
to us.
TRUSTS -- HRT and EQAT.
VALUATION PERIOD -- Each Business Day together with any preceding non-business
days.
6
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE
- --------------------------------------------------------------------------------
The purpose of this fee table is to assist you in understanding the various
costs and expenses you may bear directly or indirectly under the Certificates so
that you may compare them with other similar products. The table reflects both
the charges of the Separate Account and the expenses of HRT and EQAT. Charges
for applicable taxes such as state or local premium taxes may also apply. For a
complete description of the charges under the Certificates, see "Part 5:
Deductions and Charges." For a complete description of the Trusts' charges and
expenses, see the prospectuses for HRT and EQAT.
As explained in Part 2, the Guarantee Periods are not a part of the Separate
Account and are not covered by the fee table and examples. The only charge shown
in the Table that will be deducted from amounts allocated to the Guarantee
Periods is the withdrawal charge. A market value adjustment (either positive or
negative) also may be applicable as a result of a withdrawal, transfer or
surrender of amounts from a Guarantee Period. See "Part 2: The Guaranteed Period
Account."
OWNER TRANSACTION EXPENSES (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted upon surrender or for CONTRACT
certain withdrawals. The applicable withdrawal charge percentage is determined by the YEAR
----
<S> <C> <C>
Contract Year in which the withdrawal is made or the Certificate is surrendered 1.......................8.00%
beginning with Contract Year 1 with respect to each contribution withdrawn or 2.......................8.00
surrendered. For each contribution, the Contract Year in which we receive that 3.......................7.00
contribution is "Contract Year 1").(1) 4.......................6.00
5.......................5.00
6.......................4.00
7.......................3.00
8.......................2.00
9.......................1.00
10+......................0.00
</TABLE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF NET ASSETS IN EACH INVESTMENT FUND)
- ----------------------------------------------------------------------------------------
<S> <C>
MORTALITY AND EXPENSE RISKS(2).............................................................................. 1.10%
ADMINISTRATION(3)........................................................................................... 0.25%
DISTRIBUTION(4)............................................................................................. 0.25%
-----
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES................................................................... 1.60%
=====
<CAPTION>
OPTIONAL BENEFIT EXPENSE (DEDUCTED FROM ANNUITY ACCOUNT VALUE)
- --------------------------------------------------------------
BASEBUILDER BENEFITS EXPENSE (calculated as a percentage of the Guaranteed Minimum Income
<S> <C>
Benefit benefit base)(5) ................................................................................ 0.30%
</TABLE>
- -------------------------
See footnotes on next page.
7
<PAGE>
HRT AND EQAT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN
EACH PORTFOLIO)
<TABLE>
<CAPTION>
INVESTMENT TOTAL
MANAGEMENT & OTHER ANNUAL
PORTFOLIOS ADVISORY FEES 12B-1 FEE (6) EXPENSES EXPENSES
---------- ------------- --------- -------- --------
HRT
<S> <C> <C> <C> <C>
Alliance Money Market(7) 0.35% 0.25% 0.04% 0.64%
Alliance High Yield(7) 0.60% 0.25% 0.04% 0.89%
Alliance Common Stock(7) 0.37% 0.25% 0.03% 0.65%
Alliance Aggressive Stock (7) 0.54% 0.25% 0.03% 0.82%
Alliance Small Cap Growth(7) 0.90% 0.25% 0.05% 1.20%
EQAT
BT Equity 500 Index(8) 0.25% 0.25% 0.05% 0.55%
BT Small Company Index(8) 0.25% 0.25% 0.10% 0.60%
BT International Equity Index(8) 0.35% 0.25% 0.20% 0.80%
JPM Core Bond(8) 0.45% 0.25% 0.10% 0.80%
Lazard Large Cap Value(8) 0.55% 0.25% 0.10% 0.90%
Lazard Small Cap Value(8) 0.80% 0.25% 0.15% 1.20%
MFS Research(8) 0.55% 0.25% 0.05% 0.85%
MFS Emerging Growth Companies(8) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch Basic Value Equity 0.55% 0.25% 0.05% 0.85%
Merrill Lynch World Strategy 0.70% 0.25% 0.25% 1.20%
Morgan Stanley Emerging Markets Equity(8) 1.15% 0.25% 0.35% 1.75%
EQ/Putnam Growth & Income Value(8) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Investors Growth(8) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam International Equity(8) 0.70% 0.25% 0.25% 1.20%
</TABLE>
- -------------------
Notes:
(1)Deducted upon a withdrawal with respect to amounts in excess of the 15% free
corridor amount, and upon surrender of a Certificate. See "Withdrawal Charge"
in Part 5.
(2)A portion of this charge is for providing the Guaranteed Minimum Death
Benefit. See "Mortality and Expense Risks Charge" in Part 5.
(3)We reserve the right to increase this charge to an annual rate of 0.35%, the
maximum permitted under the Certificates.
(4)The deduction of this charge is subject to regulatory limits. See
"Distribution Charge" in Part 5.
(5)If the baseBUILDER is elected, this charge is deducted annually on each
Processing Date. See "baseBUILDER Benefits Charge" in Part 6. For the
description of the Guaranteed Minimum Income Benefit benefit base, see
"Guaranteed Minimum Income Benefit Benefit Base" in Part 4.
(6)The Class IB shares of HRT and EQAT are subject to fees imposed under
distribution plans (herein, the "Rule 12b-1 Plans" ) adopted by HRT and EQAT
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended.
The Rule 12b-1 Plans provide that HRT and EQAT, on behalf of each Portfolio
(other than the Alliance Small Cap Growth Portfolio of HRT), may pay annually
up to 0.25% of the average daily net assets of a Portfolio attributable to
its Class IB shares in respect of activities primarily intended to result in
the sale of the Class IB shares. The 12b-1 fee will not be increased for the
life of the Certificates. The Rule 12b-1 Plan for the Alliance Small Cap
Growth Portfolio of HRT provides that Equitable Distributors Inc. ("EDI")
will receive an annual fee not to exceed the lesser of (a) 0.25% of the
average daily net assets of the Portfolio attributable to Class IB shares and
(b) an amount that, when added to certain other expenses of the Class IB
shares, would result in the ratio of expenses to average daily net assets
attributable to Class IB shares equalling 1.20%.
(7)Effective May 1, 1997, a new Investment Advisory Agreement was entered into
between HRT and Alliance Capital Management L.P. ("Alliance"), HRT's
Investment Adviser, which effected changes in HRT's management fee and
expense structure. See HRT's prospectus for more information. The amounts
shown for the Portfolios of HRT are based on average daily net assets for the
year ended December 31, 1997 and have been restated to reflect (i) the fees
that would have been paid to Alliance if the current Investment Advisory
Agreement had been in effect as of January 1, 1997 and (ii) estimated
accounting expenses for the year ending December 31, 1997. The investment
management and advisory fees for each Portfolio may vary from year to year
depending upon the average daily net assets of the respective Portfolio of
HRT. The maximum investment management and advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other direct
operating expenses will also fluctuate from year to year depending on actual
expenses. See "HRT Charges to Portfolios" in Part 5.
(8)All EQAT Portfolios commenced operations on May 1, 1997, except the Morgan
Stanley Emerging Markets Equity Portfolio, which commenced operations on
August 20, 1997, and the following Portfolios, which had initial seed capital
invested on December 31, 1997: BT Equity 500 Index, BT Small Company Index,
BT International Equity Index, JPM Core Bond, Lazard Large Cap Value, and
Lazard Small Cap Value.
The maximum investment management and advisory fees for each EQAT Portfolio
cannot be increased without a vote of that Portfolio's shareholders. The
amounts shown as "Other Expenses" will fluctuate from year to year depending
on actual expenses, however, EQ Financial Consultants, Inc. ("EQ Financial"),
EQAT's manager, has entered into an expense limitation agreement with respect
to each Portfolio ("Expense Limitation Agreement"), pursuant to which EQ
Financial has agreed to waive or limit its fees and assume other expenses.
Under the Expense Limitation Agreement, total annual operating expenses of
each Portfolio (other than interest, taxes, brokerage commissions,
capitalized expenditures, extraordinary expenses, and 12b-1 fees) are limited
for the respective average daily net assets of each Portfolio as follows: BT
Equity 500 Index - 0.30%; BT Small Company Index - 0.35%; JPM Core Bond and
BT International Equity - 0.55%; MFS Research, MFS Emerging Growth Companies,
Merrill Lynch Basic Value Equity, EQ/Putnam Growth & Income Value, and
EQ/Putnam Investors Growth - 0.60%; Lazard Large Cap Value - 0.65%; Merrill
Lynch World Strategy, EQ/Putnam International Equity and Lazard Small Cap
Value - 0.95%; Morgan Stanley Emerging Markets Equity - 1.50%.
Absent the expense limitation, the "Other Expenses" for 1997 on an annualized
basis for each of the following Portfolios would have been as follows:
EQ/Putnam Growth & Income Value - 0.95%; MFS Research - 0.98%; MFS Emerging
Growth Companies - 1.02%; Merrill Lynch Basic Value Equity - 1.09%; Merrill
Lynch World Strategy - 2.10%; Morgan Stanley Emerging Markets Equity - 1.21%;
EQ/Putnam Investors Growth - 1.33%; and EQ/Putnam International Equity -
1.58%. For EQAT Portfolios which had initial seed capital invested on
December 31, 1997, the "Other Expenses" for 1998 are estimated to be as
follows (absent the expense limitation): BT Equity 500 Index - 0.29%; BT
Small Company Index - 0.23%; BT International Equity Index - 0.47%; JPM Core
Bond - 0.41%; Lazard Large Cap Value - 0.29%; and Lazard Small Cap Value -
0.23%. See "EQAT Charges to Portfolios" in Part 5.
Each Portfolio may at a later date make a reimbursement to EQ Financial for
any of the management fees waived or limited and other expenses assumed and
paid by EQ Financial pursuant to the Expense Limitation Agreement provided
that, among other things, such Portfolio has reached sufficient size to
permit such reimbursement to be made and provided that the Portfolio's
current annual operating expenses do not exceed the operating expense limit
determined for such Portfolio. See the EQAT prospectus for more information.
8
<PAGE>
EXAMPLES
- --------
The examples below show the expenses that a hypothetical Certificate Owner (who
has elected the baseBUILDER) would pay in the two situations noted below
assuming a $1,000 contribution plus a $30 Credit invested in one of the
Investment Funds listed, and a 5% annual return on assets.(1)
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CERTIFICATE AT THE IF YOU DO NOT SURRENDER YOUR CERTIFICATE AT
END OF EACH PERIOD SHOWN, THE EXPENSES THE END OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE: WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
HRT
- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Money
Market
Alliance High Yield
Alliance Common
Stock
Alliance Aggressive
Stock
Alliance Small Cap
Growth
[TO BE INSERTED BY AMENDMENT]
EQAT
- ----
BT Equity 500 Index
BT Small Company Index
BT International Equity Index
JPM Core Bond
Lazard Large Cap Value
Lazard Small Cap Value
MFS Research
MFS Emerging
Growth Companies
Merrill Lynch Basic Value
Equity
Merrill Lynch World Strategy
Morgan Stanley Emerging
Markets Equity
EQ/Putnam Growth
& Income Value
EQ/Putnam
Investors Growth
EQ/Putnam International
Equity
</TABLE>
- -------------------
Note:
(1)The amount accumulated from the $1,000 contribution plus $30 Credit could
not be paid in the form of an annuity at the end of any of the periods shown
in the examples. If the amount applied to purchase an annuity is less than
$2,000, or the initial payment is less than $20, we may pay the amount to the
payee in a single sum instead of as payments under an annuity form. See
"Annuity Benefits and Payout Annuity Options" in Part 4. The examples do not
reflect charges for applicable taxes such as state or local premium taxes
that may also be deducted in certain jurisdictions.
9
<PAGE>
- --------------------------------------------------------------------------------
PART 1: EQUITABLE LIFE, THE SEPARATE ACCOUNT
AND THE INVESTMENT FUNDS
- --------------------------------------------------------------------------------
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest life
insurance companies in the United States. Our home office is located at 1290
Avenue of the Americas, New York, New York 10104. We are authorized to sell life
insurance and annuities in all fifty states, the District of Columbia, Puerto
Rico and the U.S. Virgin Islands. We maintain local offices throughout the
United States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (THE HOLDING COMPANY). The largest shareholder of the Holding
Company is AXA-UAP (AXA). As of December 31, 1997, AXA beneficially owned
approximately 58.7% of the outstanding common stock of the Holding Company.
Under its investment arrangements with Equitable Life and the Holding Company,
AXA is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable Life.
AXA, a French company, is the holding company for an international group of
insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed approximately
$274.1 billion of assets as of December 31, 1997.
SEPARATE ACCOUNT NO. 49
Separate Account No. 49 is organized as a unit investment trust, a type of
investment company, and is registered with the SEC under the Investment Company
Act of 1940, as amended (1940 ACT). This registration does not involve any
supervision by the SEC of the management or investment policies of the Separate
Account. The Separate Account has several Investment Funds, each of which
invests in shares of a corresponding Portfolio of HRT and EQAT. Because amounts
allocated to the Investment Funds are invested in a mutual fund, investment
return and principal will fluctuate and the Certificate Owner's Accumulation
Units may be worth more or less than the original cost when redeemed.
Under the New York Insurance Law, the portion of the Separate Account's assets
equal to the reserves and other liabilities relating to the Certificates are not
chargeable with liabilities arising out of any other business we may conduct.
Income, gains or losses, whether or not realized, from assets of the Separate
Account are credited to or charged against the Separate Account without regard
to our other income gains or losses. This means that assets supporting Annuity
Account Value in the Separate Account are not subject to claims of Equitable
Life's creditors. We are the issuer of the Certificates, and the obligations set
forth in the Certificates (other than those of Annuitants or Certificate Owners)
are our obligations.
In addition to contributions made under the Certificates, we may allocate to the
Separate Account monies received under other contracts, certificates, or
agreements. Owners of all such contracts, certificates or agreements will
participate in the Separate Account in proportion to the amounts they have in
the Investment Funds that relate to their contracts, certificates or agreements.
We may retain in the Separate Account assets that are in excess of the reserves
and other liabilities relating to the Certificates or to other contracts,
certificates or agreements, or we may transfer the excess to our General
Account.
We reserve the right, subject to compliance with applicable law: (1) to add
Investment Funds (or sub-funds of Investment Funds) to, or to remove Investment
Funds (or sub-funds) from, the Separate Account, or to add other separate
accounts; (2) to combine any two or more Investment Funds or sub-funds thereof;
(3) to transfer the assets we determine to be the share of the class of
contracts to which the Certificates belong from any Investment Fund to another
Investment Fund; (4) to operate the Separate Account or any Investment Fund as a
management investment company under the 1940 Act, in which case charges and
expenses that otherwise would be assessed against an underlying mutual fund
would be assessed against the Separate Account; (5) to deregister the Separate
Account under the 1940 Act, provided that such action conforms with the
requirements of applicable law; (6) to restrict or eliminate any voting rights
as to the Separate Account; and (7) to cause one or more Investment Funds to
invest some or all of their assets in one or more other trusts or investment
companies. If any changes are made that result in a material change in the
underlying investment policy of an Investment Fund, you will be notified as
required by law.
THE TRUSTS
The Trusts are open-end management investment companies registered under the
1940 Act, more commonly called mutual funds. As a "series" type of mutual
10
<PAGE>
fund, each Trust issues several different series of stock, each of which relates
to a different Portfolio of that Trust. HRT commenced operations in January 1976
with a predecessor of its Alliance Common Stock Portfolio. EQAT commenced
operations on May 1, 1997. The Trusts do not impose sales charges or "loads" for
buying and selling their shares. All dividends and other distributions on a
Portfolio's shares are reinvested in full and fractional shares of the Portfolio
to which they relate. Each Investment Fund invests in Class IB shares of a
corresponding Portfolio. All of the Portfolios, except for the Morgan Stanley
Emerging Markets Equity and the Lazard Small Cap Value Portfolios, are
diversified for 1940 Act purposes. The Board of Trustees of HRT and EQAT may
establish additional Portfolios or eliminate existing Portfolios at any time.
More detailed information about the Trusts, their investment objectives,
policies, restrictions, risks, expenses, their respective Rule 12b-1 Plans
relating to their respective Class IB shares, and other aspects of their
operations, appears in the HRT prospectus (beginning after this prospectus), the
EQAT prospectus (beginning after the HRT prospectus), or in their respective
Statements of Additional Information, which are available upon request.
HRT'S MANAGER AND ADVISER
HRT is managed and its Portfolios are advised by Alliance Capital Management
L.P. (ALLIANCE), which is registered with the SEC as an investment adviser under
the Investment Advisers Act of 1940, as amended (ADVISERS ACT).
In its role as manager of HRT, Alliance has overall responsibility for the
general management and administration of HRT, including selecting the portfolio
managers for HRT's Portfolios, monitoring their investment programs and results,
reviewing brokerage matters, performing fund accounting, overseeing compliance
by HRT with various Federal and state statutes, and carrying out the directives
of its Board of Trustees. With the approval of HRT's Trustees, Alliance may
enter into agreements with other companies to assist with its administrative and
management responsibilities to HRT.
As adviser for all HRT Portfolios, Alliance is responsible for developing the
Portfolios' investment programs, making investment decisions for the Portfolios,
placing all orders for the purchase and sale of those investments and performing
certain limited related administrative functions.
ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance, a leading international investment adviser, provides investment
management and consulting services to mutual funds, endowment funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and tax-exempt
organizations.
Alliance is a publicly traded limited partnership incorporated in Delaware. On
December 31, 1997, Alliance was managing approximately $218.7 billion in assets.
Alliance employs 223 investment professionals, including 83 research analysts.
Portfolio managers have average investment experience of more than 14 years.
Alliance is an indirect, majority-owned subsidiary of Equitable Life, and its
main office is located at 1345 Avenue of the Americas, New York, NY 10105.
Additional information regarding Alliance is located in the HRT prospectus which
directly follows this prospectus.
EQAT'S MANAGER
EQ Financial Consultants, Inc. (EQ FINANCIAL), subject to the supervision and
direction of the Board of Trustees of EQAT, has overall responsibility for the
general management and administration of EQAT. EQ Financial is an investment
adviser registered under the Advisers Act, and a broker-dealer registered under
the Exchange Act. EQ Financial currently furnishes specialized investment advice
to other clients, including individuals, pension and profit-sharing plans,
trusts, charitable organizations, corporations, and other business entities. EQ
Financial is a Delaware corporation and an indirect, wholly owned subsidiary of
Equitable Life.
EQ Financial is responsible for providing management and administrative services
to EQAT and selects the investment advisers for EQAT's Portfolios, monitors the
EQAT advisers' investment programs and results, reviews brokerage matters,
oversees compliance by EQAT with various Federal and state statutes, and carries
out the directives of its Board of Trustees. EQ Financial Consultants, Inc.'s
main office is located at 1290 Avenue of the Americas, New York, NY 10104.
Pursuant to a service agreement, Chase Global Funds Services Company assists EQ
Financial in the performance of its administrative responsibilities to EQAT with
other necessary administrative, fund accounting and compliance services.
EQAT'S INVESTMENT ADVISERS
Bankers Trust Company, J.P. Morgan Investment Management Inc., Lazard Asset
Management, Massachusetts Financial Services Company, Morgan Stanley Asset
Management Inc., and Putnam Investment Management, Inc. serve as EQAT advisers
only for their respective EQAT Portfolios.
Each EQAT adviser furnishes EQAT's manager, EQ Financial, with an investment
program (updated periodically) for each of its Portfolios, makes investment
decisions on behalf of its EQAT Portfolios, places all orders for the purchase
and sale of investments for the
11
<PAGE>
Portfolio's account with brokers or dealers selected by such adviser and may
perform certain limited related administrative functions.
The assets of each Portfolio are allocated currently among the EQAT advisers. If
an EQAT Portfolio shall at any time have more than one EQAT adviser, the
allocation of an EQAT Portfolio's assets among EQAT advisers may be changed at
any time by EQ Financial.
BANKERS TRUST COMPANY
Bankers Trust Company (BANKERS TRUST) is a wholly owned subsidiary of Bankers
Trust New York Corporation which was founded in 1903. Bankers Trust conducts a
variety of general banking and trust activities and is a major wholesale
supplier of financial services to the international and domestic institutional
markets. Bankers Trust advises BT Equity 500 Index, a domestic equity portfolio,
BT Small Company Index, an aggressive equity portfolio, and BT International
Equity Index, an international equity portfolio. As of December 31, 1997,
Bankers Trust had approximately $317.8 billion in assets under management
worldwide. The executive offices of Bankers Trust are located at 130 Liberty
Street (One Bankers Trust Plaza), New York, NY 10006.
J.P. MORGAN INVESTMENT MANAGEMENT INC.
J.P. Morgan Investment Management Inc. (J.P. MORGAN) advises JPM Core Bond, a
high-quality bond portfolio. It is a wholly owned subsidiary of J.P. Morgan &
Co. Incorporated (JPM & CO.). JPM & Co., through J.P. Morgan and other
subsidiaries, offers a wide range of services to governmental, institutional,
corporate and individual customers and acts as investment adviser to individual
and institutional clients. Its combined assets under management totaled over
$255 billion as of December 31, 1997. J.P. Morgan is located at 522 Fifth
Avenue, New York, NY 10036.
LAZARD ASSET MANAGEMENT
Lazard Asset Management (LAM) is a division of Lazard Freres & Co. LLC, which
was founded in 1848. LAM and its affiliates provide investment management
services to client discretionary accounts with assets totaling approximately $53
billion as of December 31, 1997. LAM advises Lazard Large Cap Value, a domestic
equity portfolio, and Lazard Small Cap Value, an aggressive equity portfolio.
LAM's global headquarters are located at 30 Rockefeller Plaza, New York, NY
10112.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
Massachusetts Financial Services Company (MFS) is America's oldest mutual fund
organization, whose assets under management as of December 31, 1997 were
approximately $70.2 billion on behalf of more than 2.7 million investors. MFS
advises MFS Research, a domestic equity portfolio, and MFS Emerging Growth
Companies, an aggressive equity portfolio. MFS is an indirect subsidiary of Sun
Life Assurance Company of Canada and is located at 500 Boylston Street, Boston,
MA 02116.
MERRILL LYNCH ASSET MANAGEMENT, L.P.
Founded in 1976, Merrill Lynch Asset Management, L.P. (MLAM) is a dedicated
asset management affiliate of Merrill Lynch & Co., Inc., a financial management
and advisory company with more than a century of experience. As of December 31,
1997, MLAM, along with its advisory affiliates held approximately $278 billion
in investment company and other portfolio assets under management. MLAM advises
Merrill Lynch Basic Value Equity, a domestic equity portfolio with a value
approach to investing, and Merrill Lynch World Strategy, a global flexible asset
allocation portfolio that invests in equities and fixed income securities
worldwide. The company is located at 800 Scudders Mill Road, Plainsboro, NJ
08543-9011.
MORGAN STANLEY ASSET MANAGEMENT INC.
Morgan Stanley Asset Management Inc. (MSAM) provides a broad range of portfolio
management services to customers in the United States and abroad and serves as
an investment adviser to numerous open-end and closed-end investment companies.
MSAM, together with its affiliated institutional investment management
companies, had approximately $146 billion in assets under management and
fiduciary care as of December 31, 1997. MSAM advises Morgan Stanley Emerging
Markets Equity, an international equity portfolio. MSAM is a subsidiary of
Morgan Stanley, Dean Witter & Co. and is located at 1221 Avenue of the Americas,
New York, NY 10020.
PUTNAM INVESTMENT MANAGEMENT, INC.
Putnam Investment Management, Inc. (PUTNAM) has been managing mutual funds since
1937. As of December 31, 1997, Putnam and its affiliates managed more than $235
billion in assets. Putnam advises EQ/Putnam Growth & Income Value, a domestic
equity portfolio, EQ/Putnam Investors Growth, a domestic equity portfolio, and
EQ/Putnam International Equity, an international equity portfolio. Putnam is an
indirect subsidiary of Marsh & McLennan Companies, Inc. and is located at One
Post Office Square, Boston, MA 02109.
Additional information regarding each of the companies which serve as an EQAT
adviser appears in the EQAT prospectus beginning after the HRT prospectus.
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<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF HRT'S PORTFOLIOS AND EQAT'S PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve by
following separate investment policies. The policies and objectives of each
Portfolio will affect its return and its risks. There is no guarantee that these
objectives will be achieved. Set forth below is a summary of the investment
policies and objectives of each Portfolio. This summary is qualified in its
entirety by reference to the prospectuses for HRT and EQAT, both of which
accompany this prospectus. Please read the prospectuses for each of the trusts
carefully before investing.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
HRT PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Money Market Primarily high-quality U.S. dollar-denominated High level of current income
money market instruments. while preserving assets and
maintaining liquidity
- -------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield Primarily a diversified mix of high-yield, High return by maximizing current
fixed-income securities which generally involve income and, to the extent
greater volatility of price and risk of consistent with that objective,
principal and income than higher-quality capital appreciation
fixed-income securities. Lower-quality debt
securities are commonly known as "junk bonds."
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock Primarily common stock and other equity-type Long-term growth of capital and
instruments. increasing income
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock Primarily common stocks and other equity-type Long-term growth of capital
securities issued by quality small- and
intermediate-sized companies with strong growth
prospects and in covered options on those
securities.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Primarily U.S. common stocks and other Long-term growth of capital
equity-type securities issued by smaller
companies that, in the opinion of the adviser,
have favorable growth prospects.
- -------------------------------------------------------------------------------------------------------------------------------
EQAT PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Invest in a statistically selected sample Replicate as closely as possible
of the 500 stocks included in the Standard & (before the deduction of
Poor's 500 Composite Stock Price Index ("S&P Portfolio expenses) the total
500"). return of the S&P 500
- -------------------------------------------------------------------------------------------------------------------------------
BT Small Company Index Invest in a statistically selected sample of Replicate as closely as possible
the 2,000 stocks included in the Russell 2000 (before the deduction of
Index ("Russell 2000"). Portfolio expenses) the total
return of the Russell 2000
- -------------------------------------------------------------------------------------------------------------------------------
BT International Equity Index Invest in a statistically selected sample of Replicate as closely as possible
the securities of companies included in the (before the deduction of
Morgan Stanley Capital International Europe, Portfolio expenses) the total
Australia, Far East Index ("EAFE"), although return of the EAFE
not all companies within a country will be
represented in the Portfolio at the same time.
- -------------------------------------------------------------------------------------------------------------------------------
JPM Core Bond Under normal circumstances, all of the High total return consistent with
Portfolio's assets will, at the time of moderate risk of capital and
purchase, consist of investment grade maintenance of liquidity
fixed-income securities rated BBB or better by
Standard and Poor's Rating Service or Baa or
better by Moody's Investors Service, Inc. or
unrated securities of comparable quality.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
EQAT PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lazard Large Cap Value Primarily equity securities of United States Capital appreciation
companies with relatively large market
capitalizations (i.e., companies having market
capitalizations of greater than $1 billion)
that appear to the adviser to be inexpensively
priced relative to the return on total capital
or equity.
- -------------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value Primarily equity securities of United States Capital appreciation
companies with small market capitalizations
(i.e., companies represented in the range of
companies in the Russell 2000 Index) that the
adviser considers inexpensively priced relative
to the return on total capital or equity.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Research A substantial portion of assets invested in Long-term growth of capital and
common stock or securities convertible into future income
common stock of companies believed by the
adviser to possess better than average
prospects for long-term growth.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Primarily (i.e., at least 80% of its assets Long-term growth of capital
Companies under normal circumstances) in common stocks of
emerging growth companies that the adviser
believes are early in their life cycle but
which have the potential to become major
enterprises.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Investment in securities, primarily equities, Capital appreciation and,
Equity that the adviser believes are undervalued secondarily, income
and therefore represent basic investment
value.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy Investment primarily in a portfolio of equity High total investment return
and fixed-income securities, including
convertible securities, of U.S. and foreign
issuers.
- -------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Primarily equity securities of emerging market Long-term capital appreciation
Equity country issuers with a focus on those in which
the adviser believes the economies are
developing strongly and in which the
markets are becoming more sophisticated.
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth Primarily common stocks that offer potential Capital growth and, secondarily,
& Income Value for capital growth and may, consistent with the current income
Portfolio's investment objective, invest in
common stocks that offer potential for current
income.
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth Primarily common stocks that the adviser Long-term growth of capital and
believes afford the best opportunity for any increased income that results
long-term capital growth. from this growth
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Primarily a diversified portfolio of equity Capital appreciation
Equity securities of companies organized under laws of
countries other than the United States.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
PART 2: THE GUARANTEED PERIOD ACCOUNT
- --------------------------------------------------------------------------------
GUARANTEE PERIODS
Each amount allocated to a Guarantee Period and held to the Period's Expiration
Date accumulates interest at a Guaranteed Rate. The Guaranteed Rate for each
allocation is the annual interest rate applicable under your class of
Certificate to new allocations to that Guarantee Period, which was in effect on
the Transaction Date for the allocation. We may establish different Guaranteed
Rates under other classes of Certificates. We use the term GUARANTEED PERIOD
AMOUNT to refer to the amount allocated to and accumulated in each Guarantee
Period. The Guaranteed Period Amount is reduced or increased by any market value
adjustment as a result of withdrawals, transfers or charges (see below).
Your Guaranteed Period Account contains the Guarantee Periods to which you have
allocated Annuity Account Value. On the Expiration Date of a Guarantee Period,
its Guaranteed Period Amount and its value in the Guaranteed Period Account are
equal. We call the Guaranteed Period Amount on an Expiration Date the Guarantee
Period's Maturity Value. We report the Annuity Account Value in your Guaranteed
Period Account to reflect any market value adjustment that would apply if all
Guaranteed Period Amounts were withdrawn as of the calculation date. The Annuity
Account Value in the Guaranteed Period Account with respect to the Guarantee
Periods on any Business Day, therefore, will be the sum of the present value of
the Maturity Value in each Guarantee Period, using the Guaranteed Rate in effect
for new allocations to each such Guarantee Period on such date.
Guarantee Periods and Expiration Dates
We currently offer Guarantee Periods ending on February 15th for each of the
maturity years 1999 through 2008. Not all of these Guarantee Periods will be
available for Annuitant ages 76 and above. See "Allocation of Contributions" in
Part 3. Also, the Guarantee Periods may not be available for investment in all
states. As Guarantee Periods expire we expect to add maturity years so that
generally 10 are available at any time.
We will not accept allocations to a Guarantee Period if, on the Transaction
Date:
o Such Transaction Date and the Expiration Date for such Guarantee Period fall
within the same calendar year.
o The Guaranteed Rate is 3%.
o The Guarantee Period has an Expiration Date beyond the February 15th
immediately following the Annuity Commencement Date.
Guaranteed Rates and Price Per $100 of Maturity Value
Because the Maturity Value of a contribution allocated to a Guarantee Period can
be determined at the time it is made, you can determine the amount required to
be allocated to a Guarantee Period in order to produce a target Maturity Value
(assuming no transfers or withdrawals are made and no charges are allocated to
the Guarantee Period). The required amount is the present value of that Maturity
Value at the Guaranteed Rate on the Transaction Date for the contribution, which
may also be expressed as the price per $100 of Maturity Value on such
Transaction Date.
Guaranteed Rates for new allocations as ______, 1998 and the related price per
$100 of Maturity Value for each currently available Guarantee Period were as
follows:
- -------------------------------------------------------------
GUARANTEE
PERIODS WITH
EXPIRATION DATE GUARANTEED PRICE
FEBRUARY 15TH OF RATE AS OF PER $100 OF
MATURITY YEAR _______, 1998 MATURITY VALUE
- -------------------------------------------------------------
1999 x.xx% $xx.xx
2000 x.xx xx.xx
2001 x.xx xx.xx
2002 x.xx xx.xx
2003 x.xx xx.xx
2004 x.xx xx.xx
2005 x.xx xx.xx
2006 x.xx xx.xx
2007 x.xx xx.xx
2008 x.xx xx.xx
- -------------------------------------------------------------
Allocation among Guarantee Periods
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Guarantee Period in order to create a
series of constant Maturity Values for two or more years.
For example, if you wish to have $100 mature on February 15th of each of years
1999 through 2003, then according to the above table the lump sum contribution
you would have to make as of _________, 1998 would be $XXX.XX (the sum of the
prices per $100 of Maturity Value for each maturity year from 1999 through
2003).
The above example is provided to illustrate the use of present value
calculations. It does not take into account the potential for charges to be
deducted, withdrawals or
15
<PAGE>
transfers to be made from Guarantee Periods or for the market value adjustment
that would apply to such transactions. Actual calculations will be based on
Guaranteed Rates on each actual Transaction Date, which may differ.
Options at Expiration Date
We will notify you on or before December 31st prior to the Expiration Date of
each Guarantee Period in which you have any Guaranteed Period Amount. You may
elect one of the following options to be effective at the Expiration Date,
subject to the restrictions set forth on the prior page and under "Allocation of
Contributions" in Part 3:
(a) to transfer the Maturity Value into any Guarantee Period we are then
offering, or into any of our Investment Funds; or
(b) to withdraw the Maturity Value (subject to any withdrawal charges which
may apply).
If we have not received your election as of the Expiration Date, the Maturity
Value in the expired Guarantee Period will be transferred into the Guarantee
Period with the earliest Expiration Date.
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR SURRENDER PRIOR TO THE
EXPIRATION DATE
Any withdrawal (including transfers, surrender and deductions) from a Guarantee
Period prior to its Expiration Date will cause any remaining Guaranteed Period
Amount for that Guarantee Period to be increased or decreased by a market value
adjustment. The amount of the adjustment will depend on two factors: (a) the
difference between the Guaranteed Rate applicable to the amount being withdrawn
and the Guaranteed Rate on the Transaction Date for new allocations to a
Guarantee Period with the same Expiration Date, and (b) the length of time
remaining until the Expiration Date. In general, if interest rates have risen
between the time when an amount was originally allocated to a Guarantee Period
and the time it is withdrawn, the market value adjustment will be negative, and
vice versa; and the longer the period of time remaining until the Expiration
Date, the greater the impact of the interest rate difference. Therefore, it is
possible that a significant rise in interest rates could result in a substantial
reduction in your Annuity Account Value in the Guaranteed Period Account related
to longer-term Guarantee Periods.
The market value adjustment (positive or negative) resulting from a withdrawal
of all funds from a Guarantee Period will be determined for each contribution
allocated to that Period as follows:
(1) We determine the present value of the Maturity Value on the Transaction Date
as follows:
(a) We determine the Guaranteed Period Amount that would be payable on the
Expiration Date, using the applicable Guaranteed Rate.
(b) We determine the period remaining in your Guarantee Period (based on
the Transaction Date) and convert it to fractional years based on a
365-day year. For example, three years and 12 days becomes 3.0329.
(c) We determine the current Guaranteed Rate which applies on the
Transaction Date to new allocations to the same Guarantee Period.
(d) We determine the present value of the Guaranteed Period Amount payable
at the Expiration Date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the Guaranteed Period Amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market value
adjustment applicable to such Guarantee Period, which may be positive or
negative.
The market value adjustment (positive or negative) resulting from a withdrawal
(including any withdrawal charges) of a portion of the amount in a Guarantee
Period will be a percentage of the market value adjustment that would be
applicable upon a withdrawal of all funds from a Guarantee Period. This
percentage is determined by (i) dividing the amount of the withdrawal or
transfer from the Guarantee Period by (ii) the Annuity Account Value in such
Guarantee Period prior to the withdrawal or transfer. See Appendix I for an
example.
The Guaranteed Rate for new allocations to a Guarantee Period is the rate we
have in effect for this purpose even if new allocations to that Guarantee Period
would not be accepted at the time. This rate will not be less than 3%. If we do
not have a Guaranteed Rate in effect for a Guarantee Period to which the
"current Guaranteed Rate" in (1)(c) would apply, we will use the rate at the
next closest Expiration Date. If we are no longer offering new Guarantee
Periods, the "current Guaranteed Rate" will be determined in accordance with our
procedures then in effect. For purposes of calculating the market value
adjustment only, we reserve the right to add up to 0.25% to the current rate in
(1)(c) above.
INVESTMENTS
Amounts allocated to Guarantee Periods will be held in a "nonunitized" separate
account established by Equitable Life under the laws of New York. This separate
account provides an additional measure of assurance that full payment of amounts
due under the Guarantee Periods will be made. Under the New York Insurance Law,
the portion of the separate account's
16
<PAGE>
assets equal to the reserves and other contract liabilities relating to the
Certificates are not chargeable with liabilities arising out of any other
business we may conduct.
Investments purchased with amounts allocated to the Guaranteed Period Account
(and any earnings on those amounts) are the property of Equitable Life. Any
favorable investment performance on the assets held in the separate account
accrues solely to Equitable Life's benefit. Certificate Owners do not
participate in the performance of the assets held in this separate account.
Equitable Life may, subject to applicable state law, transfer all assets
allocated to the separate account to its general account. Regardless of whether
assets supporting Guaranteed Period Accounts are held in a separate account or
our general account, all benefits relating to the Annuity Account Value in the
Guaranteed Period Account are guaranteed by Equitable Life.
Equitable Life has no specific formula for establishing the Guaranteed Rates for
the Guarantee Periods. Equitable Life expects the rates to be influenced by, but
not necessarily correspond to, among other things, the yields on the
fixed-income securities to be acquired with amounts that are allocated to the
Guarantee Periods at the time that the Guaranteed Rates are established. Our
current plans are to invest such amounts in fixed-income obligations, including
corporate bonds, mortgage-backed and asset-backed securities and government and
agency issues having durations in the aggregate consistent with those of the
Guarantee Periods.
Although the foregoing generally describes Equitable Life's plans for investing
the assets supporting Equitable Life's obligations under the fixed portion of
the Certificates, Equitable Life is not obligated to invest those assets
according to any particular plan except as may be required by state insurance
laws, nor will the Guaranteed Rates Equitable Life establishes be determined by
the performance of the nonunitized separate account.
General Account
Our general account supports all of our policy and contract guarantees,
including those applicable to the Guaranteed Period Account, as well as our
general obligations. Credits allocated to your Annuity Account Value are funded
from our general account.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations of
all jurisdictions where we are authorized to do business. Because of applicable
exemptions and exclusionary provisions, interests in the general account have
not been registered under the Securities Act of 1933, as amended (1933 ACT), nor
is the general account an investment company under the 1940 Act. Accordingly,
the general account is not subject to regulation under the 1933 Act or the 1940
Act. However, the market value adjustment interests under the Certificates are
registered under the 1933 Act.
We have been advised that the staff of the SEC has not made a review of the
disclosure that is included in the prospectus for your information that relates
to the general account (other than market value adjustment interests). The
disclosure, however, may be subject to certain generally applicable provisions
of the Federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
17
<PAGE>
- --------------------------------------------------------------------------------
PART 3: PROVISIONS OF THE CERTIFICATES AND SERVICES WE PROVIDE
- --------------------------------------------------------------------------------
WHAT IS THE EQUITABLE ACCUMULATOR?
The Equitable Accumulator is a deferred annuity designed to provide for the
accumulation of retirement savings, and for income at a future date. Investment
Options available are Investment Funds providing variable returns and Guarantee
Periods providing guaranteed interest when held to maturity. Equitable
Accumulator Certificates can be issued as two different types of individual
retirement annuities (IRAS), TRADITIONAL IRAS and ROTH IRAS, or non-qualified
annuities (NQ). NQ Certificates may also be used as an investment vehicle for
qualified plans (QP). The provisions of your Certificate may be restricted by
applicable laws or regulations. Roth IRA Certificates may not currently be
available in your state. Your registered representative can provide information
about state availability, or you may contact our Processing Office.
Earnings generally accumulate on a tax-deferred basis until withdrawn or when
distributions become payable. Withdrawals made prior to 59 1/2 may also be
subject to tax penalty.
IRA CERTIFICATES
IRA Certificates are available for Annuitant issue ages 20 through 78. IRA
Certificates are not available in Puerto Rico.
NQ CERTIFICATES
NQ Certificates are available for Annuitant issue ages 0 through 80.
QP CERTIFICATES
When issued with the appropriate endorsement, an NQ Certificate may be purchased
by a plan qualified under Section 401(a) or 401(k) of the Code. Such purchases
may not be available in all states. QP Certificates are available for Annuitant
issue ages 20 through 70. Plan fiduciaries considering purchase of a Certificate
should read the important information in "Appendix II: Purchase Considerations
for QP Certificates."
JOINT OWNERSHIP
If Joint Owners are named under an NQ Certificate, both Owners must be of legal
age, and joint ownership with non-natural persons is not permitted. Unless
otherwise provided in writing, the exercise of any ownership right in the
Certificate must be in a written form satisfactory to us and signed by both
Owners. A Joint Owner designation supersedes any beneficiary designation (see
"Death Benefit" below). This feature may not currently be available in your
state. Your registered representative can provide information about state
availability, or you may contact our Processing Office.
CONTRIBUTIONS UNDER THE CERTIFICATES
The minimum initial contribution under all Certificates is $25,000. We may
refuse to accept any contribution if the sum of all contributions under all
accumulation Certificates with the same Annuitant would then total more than
$1,500,000. We reserve the right to limit aggregate contributions made after the
first Contract Year to 150% of first-year contributions. We may also refuse to
accept any contribution if the sum of all contributions under all Equitable Life
annuity accumulation certificates/contracts that you own would then total more
than $2,500,000.
Contributions are credited as of the Transaction Date.
IRA CERTIFICATES
Under Traditional IRA Certificates, we will only accept initial contributions
which are either rollover contributions under Sections 402(c), 403(a)(4),
403(b)(8), or 408(d)(3) of the Code, or direct custodian-to-custodian transfers
from other traditional individual retirement arrangements. Under Roth IRA
Certificates, we will only accept rollover contributions from Traditional IRAs,
or Roth IRAs, or direct custodian-to-custodian transfers from other Roth IRAs.
See "Part 7: Tax Aspects of the Certificates."
Under IRA Certificates, you may make subsequent contributions of at least
$1,000. Subsequent Traditional IRA Certificate contributions may be "regular"
IRA contributions (limited to a maximum of $2,000 a year), or rollover
contributions or direct transfers as described above.
"Regular" contributions to Traditional IRAs may not be made for the taxable year
in which you attain age 70 1/2 or thereafter. Rollover and direct transfer
contributions may be made until you attain age 79. However, under the Code, any
amount contributed after you attain age 70 1/2 must be net of your required
minimum distribution for the year in which the rollover or direct transfer
contribution is made. See "Traditional Individual Retirement Annuities
(Traditional IRAs)" in Part 7. For the consequences of making a "regular" IRA
contribution to your IRA Certificate, also see Part 7.
We will not accept "regular" IRA contributions to Roth IRAs. Rollover and direct
custodian-to-custodian transfer contributions can be made any time until you
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attain age 79, provided you meet certain requirements. See "Roth Individual
Retirement Annuities (Roth IRAs)" in Part 7.
NQ CERTIFICATES
Under NQ Certificates, you may make subsequent contributions of at least $1,000
at any time until the Annuitant attains age 81.
QP CERTIFICATES
Under QP Certificates, we will only accept contributions which are employer
contributions from a trust under a plan qualified under Section 401(a) of the
Code. If a defined contribution plan is qualified under Section 401(k) of the
Code, contributions may include employee pre-tax and employer matching
contributions, but not employee after-tax contributions to the plan. For defined
benefit plans, contributions may not be made by employees. The employer shall
contribute to the Certificates such amounts as shall be determined by the plan
trustee.
Under QP Certificates, you may make subsequent contributions of at least $1,000
once per Contract Year at any time during the Contract Year until the Annuitant
attains age 71.
METHODS OF PAYMENT
Except as indicated under "Wire Transmittals" and "Automatic Investment Plan"
below, all contributions must be made by check drawn on a bank in the U.S.
clearing through the Federal Reserve System, in U.S. dollars and payable to
Equitable Life. Third party checks endorsed to Equitable Life are not acceptable
forms of payment except in cases of a rollover from a qualified plan, a tax-free
exchange under the Code or a trustee check that involves no refund. All checks
are accepted subject to collection. Equitable Life reserves the right to reject
a payment if an unacceptable form of payment is received.
Contributions must be sent to Equitable Life at our Processing Office address
designated for contributions. Your initial contribution must be accompanied by a
completed application which is acceptable to us. In the event the application
information is incomplete or the application is otherwise not acceptable, we may
retain your contribution for a period not exceeding five Business Days while an
attempt is made to obtain the required information. If the required information
cannot be obtained within those five Business Days, the Processing Office will
inform the broker-dealer, on behalf of the applicant, of the reasons for the
delay or non-acceptability and return the contribution immediately to the
applicant, unless the applicant specifically consents to our retaining the
contribution until the required information is received by the Processing
Office.
Wire Transmittals
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial contributions by wire order from the broker-dealer to the
Processing Office. Such transmittals must be accompanied by essential
information we require to allocate the contribution.
Contributions accepted by wire order will be invested at the value next
determined following receipt for contributions allocated to the Investment
Funds. Contributions allocated to the Guaranteed Period Account will receive the
Guaranteed Rate(s) in effect for the applicable Guarantee Period(s) in effect on
the Business Day contributions are received. Wire orders not accompanied by
complete information may be retained as described above.
Notwithstanding the acceptance by us of the wire order and the essential
information, however, a Certificate generally will not be issued until the
receipt and acceptance of a properly completed application. In certain cases we
may issue a Certificate based on information forwarded electronically. In these
cases, you must sign our Acknowledgment of Receipt form.
Where a signed application is required, no financial transactions will be
permitted until such time as we receive such signed application and have issued
the Certificate. Where an Acknowledgment of Receipt is required, financial
transactions will only be permitted if requested in writing, signed by the
Certificate Owner and signature guaranteed until we receive such signed
Acknowledgment of Receipt.
After your Certificate has been issued, subsequent contributions may be
transmitted by wire.
Section 1035 Exchanges
You may apply the values of an existing NQ life insurance or deferred annuity
contract to purchase an Equitable Accumulator NQ Certificate in a tax-deferred
exchange, if you follow certain procedures. For further information, consult
your tax adviser. See also "Taxation of Non-Qualified Annuities: Withdrawals" in
Part 7. In the case of joint ownership, 1035 exchanges will not be permitted
unless both owners authorize the exchange.
Automatic Investment Program
Our Automatic Investment Program (AIP) provides for a specified amount to be
automatically deducted from a checking account, money market account, or credit
union checking account and to be contributed as a subsequent contribution into
an NQ or a Traditional IRA Certificate on a monthly or quarterly basis. AIP is
not available for Roth IRA and QP Certificates.
The minimum amount that will be deducted is $100 monthly and $300 quarterly
(subject to the maximum
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$2,000 annually for Traditional IRAs). AIP subsequent contributions may be
allocated to any of the Investment Funds and available Guarantee Periods. You
may elect AIP by properly completing the appropriate form, which is available
from your registered representative, and returning it to our Processing Office.
You elect which day of the month (other than the 29th, 30th, or 31st) you wish
to have your account debited. That date, or the next Business Day if that day is
a non-Business Day, will be the Transaction Date.
You may cancel AIP at any time by notifying our Processing Office in writing at
least two business days prior to the next scheduled transaction. Equitable Life
is not responsible for any debits made to your account prior to the time written
notice of revocation is received at our Processing Office.
ALLOCATION OF CONTRIBUTIONS
You may choose Self-Directed or Principal Assurance allocations.
A contribution allocated to an Investment Fund purchases Accumulation Units in
that Investment Fund based on the Accumulation Unit Value for that Investment
Fund computed for the Transaction Date. A contribution allocated to the
Guaranteed Period Account will have the Guaranteed Rate for the specified
Guarantee Period offered on the Transaction Date.
A Credit will be allocated to your Annuity Account Value when we receive a
contribution from you. The Credit is equal to 3% of the amount of each
contribution. Credits are allocated pro rata to the Investment Options in the
same proportion as your contributions are allocated. If you annuitize your
Certificate within three years of making a subsequent contribution, we will
recover the amount of any Credit applicable to such contribution.
Credits are not considered to be investment or basis in the Certificates for
income tax purposes. See "Part 7: Tax Aspects of the Certificates."
Self-Directed Allocation
You allocate your contributions to one or up to all of the available Investment
Funds and Guarantee Periods. Allocations among the available Investment Options
must be in whole percentages. Allocation percentages can be changed at any time
by writing to our Processing Office, or by telephone. The change will be
effective on the Transaction Date and will remain in effect for future
contributions unless another change is requested.
At Annuitant ages 76 and above, allocations to Guarantee Periods must be limited
to those with maturities of five years or less and with maturity dates no later
than the February 15th immediately following the Annuity Commencement Date.
Principal Assurance Allocation
This option (for Annuitant issue ages up through age 75) assures that your
Maturity Value in a specified Guarantee Period will equal your initial
contribution on the Guarantee Period's Expiration Date, while at the same time
allowing you to invest in the Investment Funds. It may be elected only at issue
of your Certificate and assumes no withdrawals or transfers from the Guarantee
Period. The maturity year generally may not be later than 10 years nor earlier
than seven years from the Contract Date. In order to accomplish this strategy,
we will allocate a portion of your initial contribution to the selected
Guarantee Period. See "Guaranteed Rates and Price Per $100 of Maturity Value" in
Part 2. The balance of your initial contribution and all subsequent
contributions must be allocated under "Self-Directed Allocation" as described
above.
If you are applying for a Traditional IRA Certificate, before you select a
maturity year that would extend beyond the year in which you will attain age 70
1/2, you should consider your ability to take minimum distributions from other
Traditional IRA funds that you may have or from the Investment Funds to the
extent possible. See "Traditional Individual Retirement Annuities (Traditional
IRAs): Required Minimum Distributions" in Part 7.
FREE LOOK PERIOD
You have the right to examine your Certificate for a period of 10 days after you
receive it, and to return it to us for a refund. You cancel it by sending it to
our Processing Office. The free look period is extended if your state requires a
refund period of longer than 10 days.
Your refund will equal the Annuity Account Value, reflecting any investment gain
or loss, and any positive or negative market value adjustment, through the date
we receive your Certificate at our Processing Office, minus the amount of any
Credits as of the date applied. Some states or Federal income tax regulations
may require that we calculate the refund differently. If you cancel your
Certificate during the free look period, we may require that you wait six months
before you may apply for a Certificate with us again.
We follow these same procedures if you change your mind before you receive your
Certificate, but after a contribution has been made. See "Part 7: Tax Aspects of
the Certificates" for possible consequences of cancelling your Certificate
during the free look period.
In the case of a complete conversion of an existing Equitable Accumulator
Traditional IRA Certificate to an Equitable Accumulator Roth IRA Certificate,
you may cancel your Equitable Accumulator Roth IRA Certificate and return to an
Equitable Accumulator Traditional IRA Certificate by following the instructions
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in the request for full conversion form available from our Processing Office or
your registered representative.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value is the sum of the amounts in the Investment Options.
Annuity Account Value in Investment Funds
The Annuity Account Value in an Investment Fund on any Business Day is equal to
the number of Accumulation Units in that Investment Fund times the Accumulation
Unit Value for the Investment Fund for that date. The number of Accumulation
Units in an Investment Fund at any time is equal to the sum of Accumulation
Units purchased by contributions, Credits and transfers less the sum of
Accumulation Units redeemed for withdrawals, transfers or deductions for
charges.
The number of Accumulation Units purchased or sold in any Investment Fund equals
the dollar amount of the transaction divided by the Accumulation Unit Value for
that Investment Fund for the applicable Transaction Date.
The number of Accumulation Units will not vary because of any later change in
the Accumulation Unit Value. The Accumulation Unit Value varies with the
investment performance of the corresponding Portfolios of each respective trust,
which in turn reflects the investment income and realized and unrealized capital
gains and losses of the Portfolios, as well as each respective trust's fees and
expenses. The Accumulation Unit Value is also stated after deduction of the
Separate Account asset charges relating to the Certificates. A description of
the computation of the Accumulation Unit Value is found in the SAI.
Annuity Account Value in Guaranteed Period Account
The Annuity Account Value in the Guaranteed Period Account on any Business Day
will be the sum of the present value of the Maturity Value in each Guarantee
Period, using the Guaranteed Rate in effect for new allocations to such
Guarantee Period on such date. (This is equivalent to the Guaranteed Period
Amount increased or decreased by the full market value adjustment.) The Annuity
Account Value, therefore, may be higher or lower than the contributions (less
withdrawals) accumulated at the Guaranteed Rate. At the Expiration Date the
Annuity Account Value in the Guaranteed Period Account will equal the Maturity
Value. See "Part 2: The Guaranteed Period Account."
TRANSFERS AMONG INVESTMENT OPTIONS
At any time prior to the Annuity Commencement Date, you may transfer all or
portions of your Annuity Account Value among the Investment Options, subject to
the following:
o Transfers out of a Guarantee Period other than at the Expiration Date will
result in a market value adjustment. See "Part 2: The Guaranteed Period
Account."
o At Annuitant age 76 and above, transfers to Guarantee Periods must be limited
to those with maturities of five years or less and with maturity dates no
later than the February 15th immediately following the Annuity Commencement
Date.
o Transfers may not be made to a Guarantee Period with an Expiration Date in
the current calendar year, or if the Guaranteed Rate is 3%.
Transfer requests must be made directly to our Processing Office. Your request
for a transfer should specify your Certificate number, the amounts or
percentages to be transferred and the Investment Options to and from which the
amounts are to be transferred. Your transfer request may be in writing or by
telephone.
For telephone transfer requests, procedures have been established by Equitable
Life that are considered to be reasonable and are designed to confirm that
instructions communicated by telephone are genuine. Such procedures include
requiring certain personal identification information prior to acting on
telephone instructions and providing written confirmation. In light of the
procedures established, Equitable Life will not be liable for following
telephone instructions that it reasonably believes to be genuine.
We may restrict, in our sole discretion, the use of an agent acting under a
power of attorney, such as a market timer, on behalf of more than one
Certificate Owner to effect transfers. Any agreements to use market timing
services to effect transfers are subject to our rules then in effect and must be
on a form satisfactory to us.
A transfer request will be effective on the Transaction Date and the transfer to
or from Investment Funds will be made at the Accumulation Unit Value next
computed after the Transaction Date. All transfers will be confirmed in writing.
DOLLAR COST AVERAGING
If you have at least $25,000 of Annuity Account Value in the Alliance Money
Market Fund, you may choose to have a specified dollar amount or percentage of
your Annuity Account Value transferred from the Alliance Money Market Fund to
other Investment Funds on a monthly, quarterly or annual basis. The main
objective of Dollar Cost Averaging is to attempt to shield your investment from
short-term price fluctuations. Since approximately the same dollar amounts are
transferred from the Alliance Money Market Fund to the other Investment Funds
periodically, more Accumulation Units are purchased in an Investment Fund if the
value per Accumulation Unit is low and fewer Accumulation
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Units are purchased if the value per Accumulation Unit is high. Therefore, a
lower average value per Accumulation Unit may be achieved over the long term.
This plan of investing allows you to take advantage of market fluctuations but
does not assure a profit or protect against a loss in declining markets. You may
not have Annuity Account Value transferred to the Guarantee Periods. This
program may be elected at any time.
The dollar cost averaging option may be elected at the time you apply for the
Certificate or at a later date. The minimum amount that may be transferred on
each Transaction Date is $250. The maximum amount which may be transferred is
equal to the Annuity Account Value in the Alliance Money Market Fund at the time
the program is elected, divided by the number of transfers scheduled to be made
each Contract Year.
The transfer date will be the same calendar day each month as the Contract Date.
If, on any transfer date, the Annuity Account Value in the Alliance Money Market
Fund is equal to or less than the amount you have elected to have transferred,
the entire amount will be transferred and the Dollar Cost Averaging program will
end. You may change the transfer amount once each Contract Year, or cancel this
program by sending us satisfactory notice to our Processing Office at least
seven calendar days before the next transfer date.
REBALANCING
We currently offer a rebalancing program under which you authorize us to
automatically transfer your Annuity Account Value among the Investment Funds
selected by you in order to maintain a particular percentage allocation (which
you specify) in such Investment Funds. Such percentages must be in whole
numbers. You select the period of time at the end of which the transfers will
take place. The period of time may be quarterly, semiannually, or annually on a
Contract Year basis on the same day of the month as the Contract Date (other
than the 29th, 30th or 31st). Rebalancing automatically reallocates the Annuity
Account Value in the chosen Investment Funds at the end of each period to the
specified allocation percentages. The transfers to and from each chosen
Investment Fund will be made at the Accumulation Unit Value next computed after
the Transaction Date. Rebalancing is not available for amounts in the Guaranteed
Period Account.
Rebalancing does not assure a profit or protect against a loss in declining
markets and should be periodically reviewed as your needs may change. You may
want to discuss the rebalancing program with your financial adviser before
electing such program.
You may elect the rebalancing program at any time by properly completing the
appropriate form, which is available from your registered representative or our
Processing Office.
You may change your rebalancing allocation percentages or cancel this program at
any time by submitting a request in a form satisfactory to us. Such request must
be received at our Processing Office at least seven days before the next
scheduled rebalancing date. A transfer request from you while the rebalancing
program is in effect, will cancel the rebalancing program.
Rebalancing may not be elected if the Dollar Cost Averaging program (discussed
above) is in effect.
BASEBUILDER BENEFITS
The baseBUILDER option provides guaranteed benefits in the form of a Combined
Guaranteed Minimum Income Benefit and Guaranteed Minimum Death Benefit. The
combined benefit is available for Annuitant issue ages 20 through 75 and is
subject to an additional charge (see "baseBUILDER Benefits Charge" in Part 5).
The baseBUILDER provides a degree of protection while you live (Income Benefit),
as well as for your beneficiary should you die. As part of the baseBUILDER you
will have a choice of two Guaranteed Minimum Death Benefit options for Annuitant
issue ages 20 through 75: (i) a 6% Roll Up to Age 80 or (ii) an Annual Ratchet
to Age 80. If you do not elect the baseBUILDER, and for Annuitant issue ages 0
through 19 under NQ Certificates, the Guaranteed Minimum Death Benefit choices
are still provided under the Certificate. The baseBUILDER is not currently
available in New York.
The main advantages of the Guaranteed Minimum Income Benefit relate to amounts
allocated to the Investment Funds. Before electing the baseBUILDER, you should
consider the extent to which you expect to utilize the Investment Funds. You
elect the baseBUILDER guaranteed benefits when you apply for a Certificate and
once elected, it may not be changed or cancelled.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit provides a minimum amount of guaranteed
lifetime income when you apply the Annuity Account Value under your Equitable
Accumulator Certificate to an Income Manager(R) (Life Annuity with a Period
Certain) payout annuity certificate during the periods of time indicated below.
This Income Manager payout annuity certificate provides payments during a period
certain with payments continuing for life thereafter. This means that payments
will be made for the rest of the Annuitant's life. In addition, if the Annuitant
dies before a specified period of time (period certain) has ended,
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payments will continue to the beneficiary for the balance of the period certain.
On the Transaction Date that you exercise the Guaranteed Minimum Income Benefit,
the annual lifetime income that will be provided under the Income Manager (Life
Annuity with a Period Certain) payout annuity certificate will be the greater of
(i) your Guaranteed Minimum Income Benefit, and (ii) the income provided by
application of your Annuity Account Value at our then current annuity purchase
factors. The Guaranteed Minimum Income Benefit does not provide an Annuity
Account Value or guarantee performance of your Investment Options. Because this
benefit is based on conservative actuarial factors, the level of lifetime income
that it guarantees may often be less than the level that would be provided by
application of your Annuity Account Value at current annuity purchase factors.
It should therefore be regarded as a safety net.
Illustrated below are Guaranteed Minimum Income Benefit amounts per $100,000
allocated, for a male Annuitant age 60 (at issue) on Contract Date anniversaries
as indicated below, assuming no subsequent contributions or withdrawals and
assuming there were no allocations to the Alliance Money Market Fund or the
Guaranteed Period Account.
- -------------------------------------------------------------
GUARANTEED MINIMUM
CONTRACT DATE INCOME BENEFIT -- ANNUAL INCOME
ANNIVERSARY AT ELECTION PAYABLE FOR LIFE WITH
10 YEAR PERIOD CERTAIN
- -------------------------------------------------------------
7 $ 8,992
10 12,160
15 18,358
- -------------------------------------------------------------
Withdrawals will reduce your Guaranteed Minimum Income Benefit, see "How
Withdrawals Affect Your Guaranteed Minimum Income Benefit and Guaranteed Minimum
Death Benefit" in Part 4.
Under Traditional IRA, Roth IRA and NQ Certificates, the Guaranteed Minimum
Income Benefit may be exercised only within 30 days following the seventh or
later Contract Date anniversary under your Equitable Accumulator Certificate.
However, it may not be exercised earlier than the Annuitant's age 60, nor later
than the Annuitant's age 83; except that for Annuitant issue ages 20 through 44,
it may be exercised following the 15th or later Contract Date anniversary.
For information on when the Guaranteed Minimum Income Benefit may be exercised
under QP Certificates, see "Exercise of the Guaranteed Minimum Income Benefit
under QP Certificates" below.
When you exercise the Guaranteed Minimum Income Benefit, you will receive an
Income Manager (Life Annuity with a Period Certain) payout annuity certificate
and extinguish your rights in your Equitable Accumulator Certificate, with at
least the minimum annual income specified and a period certain based on the
Annuitant's age at the time the benefit is exercised as follows:
- -------------------------------------------------------------
LEVEL PAYMENTS*
PERIOD CERTAIN YEARS
ANNUITANT'S TRADITIONAL AND
AGE AT ELECTION ROTH IRA NQ
- -------------------------------------------------------------
60 to 75 10 10
76 9 10
77 8 10
78 7 10
79 7 10
80 7 10
81 7 9
82 7 8
83 7 7
- ----------------
* Other forms and periods certain may also be available.
For Traditional IRA Certificates, please see
"Traditional Individual Retirement Annuities
(Traditional IRAs): Required Minimum Distributions" in
Part 7 to see how this option may be affected if
exercised after age 70 1/2.
- ------------------------------------------------------------
Payments will start one payment mode from the Contract Date of the Income
Manager payout annuity certificate.
Each year on your Contract Date anniversary, if you are eligible to exercise the
Guaranteed Minimum Income Benefit, we will send you an eligibility notice
illustrating how much income could be provided on the Contract Date anniversary.
You may then notify us within 30 days following the Contract Date anniversary if
you want to exercise the Guaranteed Minimum Income Benefit by submitting the
proper form and returning your Equitable Accumulator Certificate. The amount of
income you actually receive will be determined on the Transaction Date that we
receive your properly completed exercise notice.
You may also apply your Cash Value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity certificate, and after five years
you may always apply your Annuity Account Value to any of our life annuity
benefits. The annuity benefits are discussed in Part 4. These benefits differ
from the Income Manager payout annuity certificates and may provide higher or
lower income levels, but do not have all the features of the Income Manager
payout annuity certificates. You may request an illustration from your
registered representative.
The Income Manager (Life Annuity with a Period Certain) payout annuity
certificates are offered through our prospectus for the Income Manager payout
annuities. A copy of the most current version may be obtained from your
registered representative. You should read it carefully before you decide to
exercise your Guaranteed Minimum Income Benefit.
Successor Annuitant/Certificate Owner
If the successor Annuitant/Certificate Owner (discussed below) elects to
continue the Certificate after your
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death, the Guaranteed Minimum Income Benefit will continue to be available on
Contract Date anniversaries specified above based on the Contract Date of your
Equitable Accumulator Certificate, provided the Guaranteed Minimum Income
Benefit is exercised as specified above based on the age of the successor
Annuitant/Certificate Owner.
Exercise of the Guaranteed Minimum Income Benefit under QP Certificates
Under QP Certificates, the Guaranteed Minimum Income Benefit may be exercised,
on Contract Date anniversaries as indicated above, only after the trustee of the
qualified plan changes ownership of the QP Certificate to the Annuitant and the
Annuitant, as the new Certificate Owner, converts such QP Certificate in a
direct rollover to a Traditional IRA Certificate according to our rules at the
time of the change. The change of ownership and rollover to a Traditional IRA
Certificate may only occur when the Annuitant will no longer be a participant in
the qualified plan.
DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of proof satisfactory to us of the Annuitant's death
prior to the Annuity Commencement Date, we will pay the death benefit to the
beneficiary named in your Certificate. You designate the beneficiary at the time
you apply for the Certificate. While the Certificate is in effect, you may
change your beneficiary by writing to our Processing Office. The change will be
effective on the date the written submission was signed. If the Certificate is
jointly owned, the surviving Owner will be deemed the beneficiary, superseding
any other beneficiary designations. (The joint ownership feature may not
currently be available in your state.) The death benefit payable will be
determined as of the date we receive such proof of death and any required
instructions as to the method of payment.
The death benefit is equal to the Annuity Account Value or, if greater, the
Guaranteed Minimum Death Benefit described below.
GUARANTEED MINIMUM DEATH BENEFIT
Applicable for Annuitant Issue Ages 0 through 79 under NQ Certificates; 20
through 78 under Traditional IRA and Roth IRA Certificates; and 20 through 70
under QP Certificates.
You elect either the "6% Roll Up to Age 80" or the "Annual Ratchet to Age 80"
Guaranteed Minimum Death Benefit when you apply for a Certificate. Once elected,
the benefit may not be changed.
6% Roll Up to Age 80 -- On the Contract Date the Guaranteed Minimum Death
Benefit is equal to the initial contribution plus any Credit which applies.
Thereafter, the Guaranteed Minimum Death Benefit is credited with interest at 6%
(4% for amounts in the Alliance Money Market Fund and the Guarantee Periods) on
each Contract Date anniversary through the Annuitant's age 80 (or at the
Annuitant's death, if earlier), and 0% thereafter, and is adjusted for any
subsequent contributions, Credits, and withdrawals. The 6% Roll Up to Age 80 is
not available in New York.
Annual Ratchet to Age 80 -- On the Contract Date, the Guaranteed Minimum Death
Benefit is equal to the initial contribution plus any Credit which applies.
Thereafter, the Guaranteed Minimum Death Benefit is reset through the
Annuitant's age 80, to the Annuity Account Value on a Contract Date anniversary
if higher than the then current Guaranteed Minimum Death Benefit, and is
adjusted for any subsequent contributions, Credits, and withdrawals.
Under NQ Certificates Applicable for Annuitant Issue Age 80
On the Contract Date, the Guaranteed Minimum Death Benefit is equal to the
initial contribution plus any Credit which applies. Thereafter, the initial
contribution is adjusted for any subsequent contributions, Credits, and
withdrawals.
Withdrawals will reduce your Guaranteed Minimum Death Benefit. See "How
Withdrawals Affect Your Guaranteed Minimum Income Benefit and Guaranteed Minimum
Death Benefit" in Part 4. For Certificates issued in New York, the Guaranteed
Minimum Death Benefit at the Annuitant's death will not be less than the Annuity
Account Value in the Investment Funds plus the sum of the Guaranteed Period
Amounts in each Guarantee Period. See "Guarantee Periods" in Part 2.
See Appendix III for an example of the calculation of the Guaranteed Minimum
Death Benefit.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
benefit you have chosen under your Certificate. If no annuity benefit has been
chosen at the time of the Annuitant's death, the beneficiary will receive the
death benefit in a lump sum. However, subject to any exceptions in the
Certificate, Equitable Life's rules then in effect and any other applicable
requirements under the Code, the beneficiary may elect to apply the death
benefit to one or more annuity benefits offered by Equitable Life. See "Annuity
Benefits and Payout Annuity Options" in Part 4. Note that if you are both the
Certificate Owner and the Annuitant, only a life annuity or an annuity that does
not extend beyond the life expectancy of the beneficiary may be elected.
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Successor Annuitant/Certificate Owner
If you are both the Certificate Owner and the Annuitant, and if your spouse is
the sole primary beneficiary or the Joint Owner under the Certificate, then upon
your death your spouse beneficiary may elect to receive the death benefit, or to
continue the Certificate and become the successor Annuitant/Certificate Owner by
completing the appropriate form and sending it to our Processing Office.
If the successor Annuitant/Certificate Owner elects to continue the Certificate,
then on the Contract Date anniversary following your death, the Annuity Account
Value will be reset to the then current Guaranteed Minimum Death Benefit if it
is higher than the Annuity Account Value as of such date. In determining whether
the Guaranteed Minimum Death Benefit will continue to grow, we will use the age
(as of the Contract Date anniversary) of the successor Annuitant/Certificate
Owner.
WHEN AN NQ CERTIFICATE OWNER DIES BEFORE THE ANNUITANT
When you are not the Annuitant under an NQ Certificate and you die before the
Annuity Commencement Date, the beneficiary named to receive the death benefit
upon the Annuitant's death will automatically succeed as Certificate Owner
(unless you name a different person as a successor Owner in a written form
acceptable to us and send it to our Processing Office). If the Certificate is
jointly owned and the first Owner to die is not the Annuitant, the surviving
Owner becomes the sole Certificate Owner and will be deemed the "beneficiary"
for purposes of the distribution rules described in this section, automatically
superseding any other beneficiary designation.
Unless the surviving spouse of the deceased Owner (or in the case of a joint
ownership situation, the surviving spouse of the first Owner to die) is the
designated beneficiary for this purpose, the entire interest in the Certificate
must be distributed under these rules.
The Cash Value in the Certificate must be fully paid to the designated
beneficiary (new Owner) by December 31st of the fifth calendar year after your
death (or in a joint ownership situation, the death of the first Owner to die).
A permissible alternative is for the new Owner to elect to receive such amounts
as a life annuity (or payments for a period certain of not longer than the new
Owner's life expectancy), with payments beginning no later than December 31st
following the calendar year of the non-Annuitant Owner's death. If such an
annuity benefit or payments for a period certain is not elected, we will pay any
Cash Value in the Certificate on December 31st of the fifth calendar year
following the year of your death (or the death of the first Owner to die).
Where a surviving spouse is designated beneficiary or Joint Owner, the spouse
may elect to continue the Certificate. No distributions are required as long as
the surviving spouse and Annuitant are living.
CASH VALUE
The Cash Value under the Certificate fluctuates daily with the investment
performance of the Investment Funds you have selected and reflects any upward or
downward market value adjustment. We do not guarantee any minimum Cash Value
except for amounts in a Guarantee Period held to the Expiration Date. See "Part
2: The Guaranteed Period Account." On any date before the Annuity Commencement
Date while the Certificate is in effect, the Cash Value is equal to the Annuity
Account Value, less any withdrawal charge. The free corridor amount will not
apply when calculating the withdrawal charge applicable upon a surrender. See
"Part 5: Deductions and Charges."
SURRENDERING THE CERTIFICATES TO RECEIVE THE CASH VALUE
You may surrender a Certificate to receive the Cash Value at any time while the
Annuitant is living and before the Annuity Commencement Date. For a surrender to
be effective, we must receive your written request and the Certificate at our
Processing Office. The Cash Value will be determined on the Transaction Date.
All benefits under the Certificate will be terminated as of that date.
You may receive the Cash Value in a single sum payment or apply it under one or
more of the annuity benefits. See "Annuity Benefits and Payout Annuity Options"
in Part 4. We will usually pay the Cash Value within seven calendar days, but we
may delay payment as described in "When Payments Are Made" below.
For the tax consequences of surrenders, see "Part 7: Tax Aspects of the
Certificates."
WHEN PAYMENTS ARE MADE
Under applicable law, application of proceeds from the Investment Funds to a
variable annuity, payment of a death benefit from the Investment Funds, payment
of any portion of the Annuity Account Value (less any applicable withdrawal
charge) from the Investment Funds, and, upon surrender, payment of the Cash
Value from the Investment Funds will be made within seven calendar days after
the Transaction Date. Payments or application of proceeds from the Investment
Funds can be deferred for any period during which (1) the New York Stock
Exchange is closed or trading on it is restricted, (2) sales of securities or
determination of the fair value of an Investment Fund's assets is not reasonably
practicable because of an emergency, or (3) the SEC, by order, permits us to
defer
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payment in order to protect persons with interest in the Investment Funds.
We can defer payment of any portion of the Annuity Account Value in the
Guaranteed Period (other than for death benefits) for up to six months while you
are living. We may also defer payments for any amount attributable to a
contribution made in the form of a check for a reasonable amount of time (not to
exceed 15 days) to permit the check to clear.
ASSIGNMENT
Traditional IRA and Roth IRA Certificates are not assignable or transferable
except through surrender to us. They may not be borrowed against or used as
collateral for a loan or other obligation.
QP Certificates may not be assigned.
The NQ Certificates may be assigned at any time before the Annuity Commencement
Date and for any purpose other than as collateral or security for a loan.
Equitable Life will not be bound by an assignment unless it is in writing and we
have received it at our Processing Office. In some cases, an assignment may have
adverse tax consequences. See "Part 7: Tax Aspects of the Certificates."
SERVICES WE PROVIDE
o REGULAR REPORTS
o Statement of your Certificate values as of the last day of the calendar
year;
o Three additional reports of your Certificate values each year;
o Annual and semiannual statements of each trust; and
o Written confirmation of financial transactions.
o TOLL-FREE TELEPHONE SERVICES
o Call 1-800-789-7771 for a recording of daily Accumulation Unit Values and
Guaranteed Rates applicable to the Guarantee Periods. Also call during our
regular business hours to speak to one of our customer service
representatives.
o PROCESSING OFFICE
o FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
Equitable Life
Equitable Accumulator
P.O. Box 13014
Newark, NJ 07188-0014
o FOR CONTRIBUTIONS SENT BY EXPRESS MAIL:
Equitable Life
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY REGULAR MAIL:
Equitable Life
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS)
SENT BY EXPRESS MAIL:
Equitable Life
Equitable Accumulator
200 Plaza Drive, 4th Floor
Secaucus, NJ 07096
YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
Certificate and operate the Investment Options. Some of these systems belong to
service providers who are not affiliated with Equitable Life.
In 1995, Equitable Life began addressing the question of whether its computer
systems would recognize the year 2000 before, on or after January 1, 2000, and
Equitable Life believes it has identified those of its systems critical to
business operations that are not Year 2000 compliant. By year end 1998,
Equitable Life expects that the work of modifying or replacing non-compliant
systems will substantially be completed and expects a comprehensive test of its
Year 2000 compliance will be performed in the first half of 1999. Equitable Life
is in the process of seeking assurances from third party service providers that
they are acting to address the Year 2000 issue with the goal of avoiding any
material adverse effect on services provided to Certificate Owners and on
operations of the Investment Options. Any significant unresolved difficulty
related to the Year 2000 compliance initiatives could have a material adverse
effect on the ability to administer your Certificate and operate the Investment
Options. Assuming the timely completion of computer modifications by Equitable
Life and third party service providers, there should be no material adverse
effect on the ability to perform these functions.
DISTRIBUTION OF THE CERTIFICATES
As the distributor of the Certificates, Equitable Distributors, Inc. (EDI), an
indirect, wholly owned subsidiary of Equitable Life, has responsibility for
sales and marketing functions for the Certificates. EDI also serves as the
principal underwriter of the Separate Account under the 1940 Act. EDI also acts
as distributor for other Equitable Life annuity products with different
features, expenses and fees. EDI is registered with the SEC as a broker-dealer
under the Exchange Act and is a member of the National Association of Securities
Dealers, Inc. EDI's principal business address is 1290 Avenue of the Americas,
New York,
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New York 10104. Pursuant to a "Distribution Agreement" between Equitable Life,
certain of Equitable Life's separate accounts, including the Separate Account,
and EDI, Equitable Life paid EDI distribution fees of $9,566,343 for 1997,
$87,157 for 1996 and $0 for 1995 as the distributor of certain certificates,
including the Certificates, and as the principal underwriter of the Separate
Account.
The Certificates will be sold by registered representatives of EDI, as well as
by unaffiliated broker-dealers with which EDI has entered into selling
agreements. Broker-dealer sales compensation will generally not exceed 7.0% of
total contributions made under the Certificates. EDI may also receive
compensation and reimbursement for its marketing services under the terms of its
distribution agreement with Equitable Life. Broker-dealers receiving sales
compensation will generally pay a portion thereof to their registered
representatives as commissions related to sales of the Certificates. The
offering of the Certificates is intended to be continuous.
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- --------------------------------------------------------------------------------
PART 4: DISTRIBUTION METHODS UNDER THE CERTIFICATES
- --------------------------------------------------------------------------------
The Certificates offer several distribution methods specifically designed to
provide retirement income. Traditional IRA and Roth IRA Certificates permit Lump
Sum Withdrawals, Substantially Equal Payment Withdrawals, and Systematic
Withdrawals. Minimum Distribution Withdrawals are available only under
Traditional IRA Certificates. NQ Certificates permit Lump Sum Withdrawals and
Systematic Withdrawals. The Certificates also offer fixed and variable annuity
benefits and Income Manager payout annuity options. Traditional IRA Certificate
Owners should consider how the distribution method selected may affect the
ability to comply with the minimum distribution rules discussed in "Part 7: Tax
Aspects of the Certificates."
For Traditional IRA retirement benefits subject to minimum distribution
requirements, we will send a form outlining the distribution options available
before you reach age 70 1/2 (if you have not begun your annuity payments before
that time).
WITHDRAWAL OPTIONS
The Certificates are annuity contracts, even though you may elect to receive
your benefits in a non-annuity form. You may take withdrawals from your
Certificate before the Annuity Commencement Date and while you are alive.
Amounts withdrawn from the Guaranteed Period Account, other than at the
Expiration Date, will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration Date"
in Part 2. Withdrawals may be taxable and subject to tax penalty. See "Part 7:
Tax Aspects of the Certificates."
As a deterrent to early withdrawal (generally prior to age 59 1/2), the Code
provides certain penalties. We may also be required to withhold income taxes
from the amount distributed. These rules are outlined in "Part 7: Tax Aspects of
the Certificates."
LUMP SUM WITHDRAWALS
(Available under Traditional IRA, Roth IRA and NQ Certificates)
You may take Lump Sum Withdrawals at any time subject to a minimum withdrawal
amount of $1,000. A request to withdraw more than 90% of the Cash Value as of
the Transaction Date will result in the termination of the Certificate and will
be treated as a surrender of the Certificate for its Cash Value. See
"Surrendering the Certificates to Receive the Cash Value" in Part 3.
To make a Lump Sum Withdrawal, you must submit a request satisfactory to us
which specifies the Investment Options from which the Lump Sum Withdrawal will
be taken. If we have received the information we require, the requested
withdrawal will become effective on the Transaction Date and proceeds will
usually be mailed within seven calendar days thereafter, but we may delay
payment as described in "When Payments Are Made" in Part 3. If we receive only
partially completed information, our Processing Office will contact you for
specific instructions before your request can be processed.
Lump Sum Withdrawals in excess of the 15% free corridor amount may be subject to
a withdrawal charge. See "Withdrawal Charge" in Part 5.
SYSTEMATIC WITHDRAWALS
(Available under Traditional IRA, Roth IRA and NQ Certificates)
Under Traditional IRA and Roth IRA Certificates this option may be elected only
if you are between age 59 1/2 to 70 1/2.
Systematic Withdrawals provide level percentage or level amount payouts. You may
choose to receive Systematic Withdrawals on a monthly, quarterly or annual
basis. You select a dollar amount or percentage of the Annuity Account Value to
be withdrawn, subject to a maximum of 1.2% monthly, 3.6% quarterly and 15.0%
annually, but in no event may any payment be less than $250. If at the time a
Systematic Withdrawal is to be made, the withdrawal amount would be less than
$250, no payment will be made and your Systematic Withdrawal election will
terminate.
You select the date of the month when the withdrawals will be made, but you may
not choose a date later than the 28th day of the month. If no date is selected,
withdrawals will be made on the same calendar day of the month as the Contract
Date. The commencement of payments under the Systematic Withdrawal option may
not be elected to start sooner than 28 days after issue of the Certificate.
You may elect Systematic Withdrawals at any time by completing the proper form
and sending it to our Processing Office. You may change the payment frequency of
your Systematic Withdrawals once each Contract Year or cancel this withdrawal
option at any time by sending notice in a form satisfactory to us. The notice
must be received at our Processing Office at least seven calendar days prior to
the next scheduled withdrawal date. You may also change the amount or percentage
of your Systematic Withdrawals once in each Contract Year. However, you may not
change the amount or percentage in any Contract Year where you
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have previously taken another withdrawal under the Lump Sum Withdrawal option
described above.
Unless you specify otherwise, Systematic Withdrawals will be withdrawn on a pro
rata basis from your Annuity Account Value in the Investment Funds. If there is
insufficient value or no value in the Investment Funds, any additional amount of
the withdrawal required or the total amount of the withdrawal, as applicable,
will be withdrawn from the Guarantee Periods in order of the earliest Expiration
Date(s) first (a market value adjustment may apply).
Systematic Withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a Lump Sum Withdrawal previously taken in the same
Contract Year, the Systematic Withdrawal exceeds the 15% free corridor amount.
See "Withdrawal Charge" in Part 5.
SUBSTANTIALLY EQUAL PAYMENT WITHDRAWALS
(Available under Traditional IRA and Roth IRA Certificates)
Substantially Equal Payment Withdrawals provide distributions from the Annuity
Account Value of the amounts necessary so that the 10% penalty tax, normally
applicable to distributions made prior to age 59 1/2, does not apply. See "Part
7: Tax Aspects of the Certificates." Once distributions begin, they should not
be changed or stopped until the later of age 59 1/2 or five years from the date
of the first distribution. If you change or stop the distributions or take a
Lump Sum Withdrawal, you may be liable for the 10% penalty tax that would have
otherwise been due on all prior distributions made under this option and for any
interest thereon.
Substantially Equal Payment Withdrawals may be elected at any time if you are
below age 59 1/2. You can elect this option by submitting the proper election
form. You select the day and the month when the first withdrawal will be made,
but it may not be sooner than 28 days after the issue of the Certificate. In no
event may you elect to receive the first payment in the same Contract Year in
which a Lump Sum Withdrawal was taken. We will calculate the amount of the
distribution under a method we select and payments will be made monthly,
quarterly or annually as you select. These payments will continue to be made
until we receive written notice from you to cancel this option. Such notice must
be received at our Processing Office at least seven calendar days prior to the
next scheduled withdrawal date. A Lump Sum Withdrawal taken while Substantially
Equal Payment Withdrawals are in effect will cancel such withdrawals. You may
elect to start receiving Substantially Equal Payment Withdrawals again, but in
no event can the payments start in the same Contract Year in which a Lump Sum
Withdrawal was taken. We will calculate a new distribution amount. As indicated
in the preceding paragraph, you may be liable for the 10% penalty tax on
Substantially Equal Payment Withdrawals made before cancellation.
Unless you specify otherwise, Substantially Equal Payment Withdrawals will be
withdrawn on a pro rata basis from your Annuity Account Value in the Investment
Funds. If there is insufficient value or no value in the Investment Funds, any
additional amount of the withdrawal or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first (a market value adjustment may apply).
Substantially Equal Payment Withdrawals are not subject to a withdrawal charge.
MINIMUM DISTRIBUTION WITHDRAWALS
(Available under Traditional IRA Certificates)
Minimum Distribution Withdrawals provide distributions from the Annuity Account
Value of the amounts necessary to meet minimum distribution requirements set
forth in the Code. This option may be elected in the year in which you attain
age 70 1/2. You can elect Minimum Distribution Withdrawals by submitting the
proper election form. The minimum amount we will pay out is $250. You may elect
Minimum Distribution Withdrawals for each Traditional IRA Certificate you own,
subject to our rules then in effect. Currently, Minimum Distribution Withdrawal
payments will be made annually.
Unless you specify otherwise, Minimum Distribution Withdrawals will be withdrawn
on a pro rata basis from your Annuity Account Value in the Investment Funds. If
there is insufficient value or no value in the Investment Funds, any additional
amount of the withdrawal required or the total amount of the withdrawal, as
applicable, will be withdrawn from the Guarantee Periods in order of the
earliest Expiration Date(s) first (a market value adjustment may apply).
Minimum Distribution Withdrawals are not subject to a withdrawal charge, except
to the extent that, when added to a Lump Sum Withdrawal previously taken in the
same Contract Year, the Minimum Distribution Withdrawal exceeds the 15% free
corridor amount. See "Withdrawal Charge" in Part 5.
Example
- -------
The chart below illustrates the pattern of payments, under Minimum Distribution
Withdrawals for a male who purchases a Traditional IRA Certificate at age 70
with a single contribution of $100,000 and we add a $3,000 Credit, with payments
commencing at the end of the first Contract Year.
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PATTERN OF MINIMUM DISTRIBUTION WITHDRAWALS
$100,000 SINGLE CONTRIBUTION PLUS A $3,000 CREDIT FOR A
SINGLE LIFE -- MALE AGE 70
[TO BE INSERTED BY AMENDMENT]
Payments are calculated each year based on the Annuity Account Value at the end
of each year, using the recalculation method of determining payments. (See "Part
1 -- Minimum Distribution Withdrawals -- Traditional IRA Certificates" in the
SAI.) Payments are made annually, and it is further assumed that no Lump Sum
Withdrawals are taken.
This example assumes an annual rate of return of 6.0% compounded annually for
both the Investment Funds and the Guaranteed Period Account. This rate of return
is for illustrative purposes only and is not intended to represent an expected
or guaranteed rate of return. Your investment results will vary. In addition,
this example does not reflect any charges that may be applicable under the
Traditional IRA. Such charges would effectively reduce the actual return.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME
BENEFIT AND GUARANTEED MINIMUM DEATH BENEFIT
Except as described in the next sentence, each withdrawal will cause a reduction
in your current Guaranteed Minimum Death Benefit and Guaranteed Minimum Income
Benefit benefit base (described below) on a pro rata basis. Your current
Guaranteed Minimum Death Benefit if based on the 6% Roll Up to Age 80, and your
Guaranteed Minimum Income Benefit benefit base, will be reduced on a
dollar-for-dollar basis as long as the sum of your withdrawals in any Contract
Year is 6% or less of the beginning of Contract Year Guaranteed Minimum Death
Benefit. Once a withdrawal is made that causes cumulative withdrawals in a
Contract Year to exceed 6% of the beginning of Contract Year Guaranteed Minimum
Death Benefit, that withdrawal and any subsequent withdrawals in that Contract
Year will cause a pro rata reduction to occur.
Reduction on a dollar-for-dollar basis means your current Guaranteed Minimum
Death Benefit and Guaranteed Minimum Income Benefit benefit base are reduced by
the dollar amount of the withdrawal. Reduction on a pro rata basis means that we
calculate the percentage of the Annuity Account Value as of the Transaction Date
that is being withdrawn and we reduce your current Guaranteed Minimum Death
Benefit and Guaranteed Minimum Income Benefit benefit base by that same
percentage. For example, if your Annuity Account Value is $30,000 and you
withdraw $12,000, you have withdrawn 40% ($12,000/ $30,000) of your Annuity
Account Value. If your Guaranteed Minimum Death Benefit was $40,000 prior to the
withdrawal, it would be reduced by $16,000 ($40,000 x .40) and your new
Guaranteed Minimum Death Benefit after the withdrawal would be $24,000 ($40,000
- - $16,000).
The timing of your withdrawals and whether they exceed the 6% threshold
described above can have a significant impact on your Guaranteed Minimum Death
Benefit or Guaranteed Minimum Income Benefit.
GUARANTEED MINIMUM INCOME BENEFIT
BENEFIT BASE
The Guaranteed Minimum Income Benefit benefit base is equal to the initial
contribution on the Contract Date plus any Credit which applies. Thereafter, the
Guaranteed Minimum Income Benefit benefit base is credited with interest at 6%
(4% for amounts in the Alliance Money Market Fund and the Guarantee Periods) on
each Contract Date anniversary through the Annuitant's age 80, and 0%
thereafter, and is adjusted for any subsequent contributions, Credits, and
withdrawals. The Guaranteed Minimum Income Benefit benefit base will also be
reduced by any withdrawal charge remaining on the Transaction Date that you
exercise your Guaranteed Minimum Income Benefit.
Your Guaranteed Minimum Income Benefit benefit base is applied to guaranteed
minimum annuity purchase factors to determine the Guaranteed Minimum Income
Benefit. The guaranteed minimum annuity purchase factors are based on (i)
interest at 2.5% if the Guaranteed Minimum Income Benefit is exercised within 30
days following a Contract Date anniversary in years 7 through 9 and at 3% if
exercised within 30 days following the 10th or later Contract Date anniversary,
and (ii) mortality tables that assume increasing longevity. These interest and
mortality factors are generally more conservative than the basis underlying
current annuity purchase factors, which means that they would produce less
periodic income for an equal amount applied.
Your Guaranteed Minimum Income Benefit benefit base does not create an Annuity
Account Value or a Cash Value and is used solely for purposes of calculating
your Guaranteed Minimum Income Benefit.
ANNUITY BENEFITS AND PAYOUT ANNUITY OPTIONS
The Equitable Accumulator Certificates offer annuity benefits and Income Manager
payout annuity options, described below, for providing retirement income.
ANNUITY BENEFITS
Annuity benefits under the Equitable Accumulator provide periodic payments over
a specified period of time which may be fixed or may be based on the Annuitant's
life. Annuity forms of payment are calculated as of the Annuity Commencement
Date, which is on file with our Processing Office. You can change the
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Annuity Commencement Date by writing to our Processing Office anytime before the
Annuity Commencement Date. The Annuity Commencement Date may not be earlier than
five years from the Contract Date and the date chosen may not be later than the
28th day of any month. Also, based on the issue age of the Annuitant, the
Annuity Commencement Date may not be later than the Processing Date which
follows the Annuitant's 90th birthday (may be different in some states).
Before the Annuity Commencement Date, we will send a letter advising that
annuity benefits are available. Unless you otherwise elect, we will pay fixed
annuity benefits on the "normal form" indicated for your Certificate as of the
Annuity Commencement Date. The amount applied to provide the annuity benefit
will be (1) the Annuity Account Value for any life annuity form or (2) the Cash
Value for any period certain only annuity form except that if the period certain
is more than five years, the amount applied will be no less than 95% of the
Annuity Account Value. Any Credits applicable to subsequent contributions made
during the last three years will be deducted from the Annuity Account Value
before it is applied to the annuity benefit.
Amounts in the Guarantee Periods that are applied to an annuity benefit prior to
an Expiration Date will result in a market value adjustment. See "Market Value
Adjustment for Transfers, Withdrawals or Surrender Prior to the Expiration Date"
in Part 2.
Annuity Forms
o Life Annuity: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with this
annuity form, it provides the highest monthly payment of any of the life
income annuity options, so long as the Annuitant is living.
o Life Annuity -- Period Certain: This annuity form also guarantees payments
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before the end of a selected period of time (the "certain period"), payments
will continue to the beneficiary for the balance of the certain period. A
life annuity with a certain period of 10 years is the normal form of annuity
under the Certificates.
o Life Annuity -- Refund Certain: This annuity form guarantees payments to you
for the rest of the Annuitant's life. In addition, if the Annuitant dies
before the amount applied to purchase this annuity option has been recovered,
payments will continue to your beneficiary until that amount has been
recovered. This option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years, and does not involve life
contingencies. Currently, this annuity option is available only as a fixed
annuity.
o Joint and Survivor Life Annuity: This annuity form guarantees payments for
the rest of the Annuitant's life and, after the Annuitant's death,
continuation of payments to the survivor.
The life annuity -- period certain and the life annuity -- refund certain are
available on either a single life or joint and survivor life basis.
We offer the annuity distribution options outlined above in fixed form. In
variable form, only the following options are available: Life Annuity (except in
New York), Life Annuity -- Period Certain, Joint and Survivor Life Annuity and
Life Period Certain Annuity (100% to Survivor). Fixed annuity payments are
guaranteed by us and will be based either on the tables of guaranteed annuity
payments in your Certificate or on our then current annuity rates, whichever is
more favorable for the Annuitant. Variable income annuities may be funded
through your choice of Investment Funds of HRT through the purchase of annuity
units. The amount of each variable annuity payment may fluctuate, depending upon
the performance of the Investment Funds. That is because the annuity unit value
rises and falls depending on whether the actual rate of net investment return
(after deduction of charges) is higher or lower than the assumed base rate. See
"Annuity Unit Values" in the SAI. Variable income annuities may also be
available by separate prospectus through the Funds of other separate accounts we
offer.
Under QP Certificates, the only annuity forms available are a Life Annuity 10
Year Period Certain, or a Joint and Survivor Life Annuity 10 Year Period
Certain.
For all Annuitants under Traditional IRA, Roth IRA and NQ Certificates, the
normal form of annuity provides for fixed payments. We may offer other forms not
outlined here. Your registered representative can provide details.
For each annuity benefit, we will issue a separate written agreement putting the
benefit into effect. Before we pay any annuity benefit, we require the return of
the Certificate.
The amount of the annuity payments will depend on the amount applied to purchase
the annuity, the type of annuity chosen and, in the case of a life annuity form,
the Annuitant's age (or the Annuitant's and joint Annuitant's ages) and in
certain instances, the sex of the Annuitant(s). Once an income annuity form is
chosen and payments have commenced, no change can be made.
If, at the time you elect an annuity form, the amount to be applied is less than
$2,000 or the initial payment
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under the form elected is less than $20 monthly, we reserve the right to pay the
Annuity Account Value in a single sum rather than as payments under the annuity
form chosen.
INCOME MANAGER PAYOUT ANNUITY OPTIONS
Under Traditional IRA, Roth IRA and NQ Certificates, you may apply your Annuity
Account Value to an Income Manager (Life Annuity with a Period Certain) payout
annuity certificate, or an Income Manager (Period Certain) payout annuity
certificate.
Under QP Certificates, Income Manager payout annuity certificates are available
only after the trustee of the qualified plan changes ownership of the QP
Certificate to the Annuitant, and the Annuitant, as the new Certificate Owner,
converts such QP Certificate in a direct rollover to a Traditional IRA
Certificate according to our rules at the time of the change. The change of
ownership and rollover to a Traditional IRA Certificate may only occur when the
Annuitant will no longer be a Participant/Employee in the qualified plan.
The Income Manager (Life Annuity with a Period Certain) payout annuity
certificates provide guaranteed payments for the Annuitant's life or for the
Annuitant's life and the life of a joint Annuitant. Income Manager (Period
Certain) payout annuity certificates provide payments for a specified period.
The Certificate Owner and Annuitant must meet the issue age and payment
requirements. Income Manager payout annuity certificates provide guaranteed
level payments (Traditional IRA, Roth IRA and NQ Certificates) under both forms
of certificate, or guaranteed increasing payments (NQ Certificates) under only
Income Manager (Life Annuity with a Period Certain) payout annuity certificates.
If you apply a part of the Annuity Account Value under any of the above Income
Manager payout annuity certificates, it will be considered a withdrawal and may
be subject to withdrawal charges. See "Withdrawal Options" above. If 100% of the
Annuity Account Value is applied from an Equitable Accumulator Certificate at a
time when the dollar amount of the withdrawal charge is greater than 2% of
remaining contributions (after withdrawals), such withdrawal charge will not be
deducted. However, a new withdrawal charge schedule will apply under the new
certificate. For purposes of the withdrawal charge schedule, the year in which
your Annuity Account Value is applied under the new certificate will be
"Contract Year 1." If 100% of the Annuity Account Value is applied from the
Equitable Accumulator when the dollar amount of the withdrawal charge is 2% or
less, such withdrawal charge will not be deducted and there will be no
withdrawal charge schedule under the new certificate. You should consider the
timing of your purchase as it relates to the potential for withdrawal charges
under the new certificate. No subsequent contributions will be permitted under
an Income Manager (Life Annuity with a Period Certain) payout annuity
certificate.
You may also apply your Annuity Account Value to an Income Manager (Period
Certain) payout annuity certificate once withdrawal charges are no longer in
effect under your Equitable Accumulator Certificate. No withdrawal charges will
apply under this Income Manager (Period Certain) payout annuity certificate.
The payout annuities are described in our prospectus for the Income Manager.
Copies of the most current version are available from your registered
representative. To purchase an Income Manager payout annuity certificate we also
require the return of your Equitable Accumulator Certificate. An Income Manager
payout annuity certificate will be issued to put one of the payout annuity
options into effect. Depending upon your circumstances, this may be accomplished
on a tax-free basis. Consult your tax adviser.
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PART 5: DEDUCTIONS AND CHARGES
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CHARGES DEDUCTED FROM THE ANNUITY ACCOUNT VALUE
We allocate the entire amount of each contribution to the Investment Options you
select, subject to certain restrictions. We then periodically deduct certain
amounts from your Annuity Account Value. Unless otherwise indicated, the charges
described below and under "Charges Deducted from the Investment Funds" below
will not be increased by us for the life of the Certificates. We may reduce
certain charges under group or sponsored arrangements. See "Group or Sponsored
Arrangements" below.
Withdrawal Charge
A withdrawal charge will be imposed as a percentage of each contribution made to
the extent that (i) a Lump Sum Withdrawal or cumulative withdrawals during a
Contract Year exceed the free corridor amount, or (ii) if the Certificate is
surrendered to receive its Cash Value. We determine the withdrawal charge
separately for each contribution in accordance with the table below.
CONTRACT YEAR
1 2 3 4 5 6 7 8 9 10+
- --------------------------------------------------------------------------------
Percentage of
Contribution 8.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
The applicable withdrawal charge percentage is determined by the Contract Year
in which the excess withdrawal is made or the Certificate is surrendered,
beginning with "Contract Year 1" with respect to each contribution withdrawn or
surrendered. For purposes of the table, for each contribution, the Contract Year
in which we receive that contribution is "Contract Year 1."
The withdrawal charge is deducted from the Investment Options from which each
such withdrawal is made in proportion to the amount being withdrawn from each
Investment Option.
Free Corridor Amount
The free corridor amount is 15% of the Annuity Account Value at the beginning of
the Contract Year, minus any amount previously withdrawn during that Contract
Year.
There is no withdrawal charge if a Lump Sum Withdrawal is taken to satisfy
minimum distribution requirements under a Traditional IRA Certificate. A free
corridor amount is not applicable to a surrender.
For purposes of calculating the withdrawal charge, (1) we treat contributions as
being withdrawn on a first-in, first-out basis, and (2) amounts withdrawn up to
the free corridor amount are not considered a withdrawal of any contributions.
Although we treat contributions as withdrawn before earnings for purposes of
calculating the withdrawal charge, the Federal income tax law treats earnings
under Equitable Accumulator Certificates as withdrawn first. See "Part 7: Tax
Aspects of the Certificates."
The withdrawal charge is to help cover sales expenses.
baseBUILDER Benefits Charge
If you elect the Combined Guaranteed Minimum Income Benefit and Guaranteed
Minimum Death Benefit, we deduct a charge annually on each Processing Date. The
charge is equal to a percentage of the Guaranteed Minimum Income Benefit benefit
base in effect on the Processing Date. The percentage is equal to 0.30%. The
Guaranteed Minimum Income Benefit benefit base is described under "How
Withdrawals Affect Your Guaranteed Minimum Income Benefit and Guaranteed Minimum
Death Benefit" in Part 4.
This charge will be deducted from your Annuity Account Value in the Investment
Funds on a pro rata basis. If there is insufficient value in the Investment
Funds, all or a portion of such charge will be deducted from the Guarantee
Periods in order of the earliest Expiration Date(s) first. A market value
adjustment may apply. See "Market Value Adjustment for Transfers, Withdrawals or
Surrender Prior to the Expiration Date" in Part 2.
Charges for State Premium and Other Applicable Taxes
We deduct a charge for applicable taxes, such as state or local premium taxes,
that might be imposed in your state. Generally, we deduct this charge from the
amount applied to provide an annuity benefit. In certain states, however, we may
deduct the charge for taxes from contributions. The current tax charge that
might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico
and 5% in the U.S. Virgin Islands).
CHARGES DEDUCTED FROM THE INVESTMENT FUNDS
Mortality and Expense Risks Charge
We will deduct a daily charge from the net assets in each Investment Fund to
compensate us for mortality and expense risks, including the Guaranteed Minimum
Death Benefit. The daily charge is at the rate of 0.003032%, which is equivalent
to an annual rate of 1.10%, on the assets in each Investment Fund.
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The mortality risk assumed is the risk that Annuitants as a group will live for
a longer time than our actuarial tables predict. As a result, we would be paying
more in annuity income than we planned. We also assume a risk that the mortality
assumptions reflected in our guaranteed annuity payment tables, shown in each
Certificate, will differ from actual mortality experience. Lastly, we assume a
mortality risk to the extent that at the time of death, the Guaranteed Minimum
Death Benefit exceeds the Cash Value of the Certificate. The expense risk
assumed is the risk that it will cost us more to issue and administer the
Certificates than we expect.
Administration Charge
We will deduct a daily charge from the net assets in each Investment Fund, to
compensate us for administration expenses under the Certificates. The daily
charge is at a rate of 0.000692% (equivalent to an annual rate of 0.25%) on the
assets in each Investment Fund. We reserve the right to increase this charge to
an annual rate of 0.35%, the maximum permitted under the Certificates.
Distribution Charge
We will deduct a daily charge from the assets in each Investment Fund to
compensate us for a portion of our sales expenses. The daily charge is at a rate
of 0.000695% (equivalent to an annual rate of 0.25%) on the assets in each
Investment Fund. This charge will never exceed applicable regulatory
limitations.
HRT CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against HRT's assets, the 12b-1 fee,
direct operating expenses of HRT (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and liability
insurance), and certain investment-related expenses of HRT (such as brokerage
commissions and other expenses related to the purchase and sale of securities),
are reflected in each Portfolio's daily share price. The maximum investment
advisory fees paid annually by the Portfolios cannot be changed without a vote
by shareholders. They are as follows:
- -------------------------------------------------------------
MAXIMUM
INVESTMENT
ADVISORY FEE
HRT PORTFOLIO (ANNUAL RATE)
- -------------------------------------------------------------
Alliance Money Market 0.350%
Alliance High Yield 0.600%
Alliance Common Stock 0.475%
Alliance Aggressive Stock 0.625%
Alliance Small Cap Growth 0.900%
- -------------------------------------------------------------
Investment advisory fees are established under HRT's investment advisory
agreements between HRT and its investment adviser, Alliance.
The Rule 12b-1 Plan provides that HRT, on behalf of each Portfolio (other than
the Alliance Small Cap Growth Portfolio), may pay to EDI annually up to 0.25% of
the average daily net assets of a Portfolio attributable to its Class IB shares
in respect of activities primarily intended to result in the sale of the Class
IB shares. This fee will not be increased for the life of the Certificates. With
respect to the Alliance Small Cap Growth Portfolio, EDI will receive an annual
fee not to exceed the lesser of (a) 0.25% of the average daily net assets of the
Portfolio attributable to Class IB shares and (b) an amount that, when added to
certain other expenses of the Class IB shares, would result in a ratio of
expenses to average daily net assets attributable to Class IB shares equalling
1.20%. Prior to October 8, 1997, EDI waived a portion of the 12b-1 fee with
respect to the Alliance Small Cap Growth Portfolio. Fees and expenses are
described more fully in the HRT prospectus.
EQAT CHARGES TO PORTFOLIOS
Investment management fees charged daily against EQAT's assets, the 12b-1 fee,
direct operating expenses of EQAT (such as trustees' fees, expenses of
independent auditors and legal counsel, administrative service fees, custodian
fees, and liability insurance), and certain investment-related expenses of EQAT
(such as brokerage commissions and other expenses related to the purchase and
sale of securities), are reflected in each Portfolio's daily share price. The
investment management fees paid annually by the Portfolios cannot be changed
without a vote by shareholders. They are as follows:
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- -------------------------------------------------------------
MAXIMUM
INVESTMENT
ADVISORY FEE
EQAT PORTFOLIO (ANNUAL RATE)
- -------------------------------------------------------------
BT Equity 500 Index 0.25%
BT Small Company Index 0.25%
BT International Equity Index 0.35%
JPM Core Bond 0.45%
Lazard Large Cap Value 0.55%
Lazard Small Cap Value 0.80%
MFS Research 0.55%
MFS Emerging Growth Companies 0.55%
Merrill Lynch Basic Value Equity 0.55%
Merrill Lynch World Strategy 0.70%
Morgan Stanley Emerging
Markets Equity 1.15%
EQ/Putnam Growth & Income Value 0.55%
EQ/Putnam Investors Growth 0.55%
EQ/Putnam International Equity 0.70%
- -------------------------------------------------------------
EQ Financial has entered into expense limitation agreements with EQAT, with
respect to each Portfolio, pursuant to which EQ Financial has agreed to waive or
limit its fees and to assume other expenses so that the total annual operating
expenses of each Portfolio (other than interest, taxes, and brokerage
commissions, in accordance with generally accepted accounting principles, other
extraordinary expenses not incurred in the ordinary course of such Portfolio's
business and amounts payable pursuant to a plan adopted in accordance with Rule
12b-1 under the 1940 Act) are limited to certain amounts. See the prospectus for
EQAT for more information.
The Rule 12b-1 Plan provides that EQAT, on behalf of each Portfolio, may pay to
EDI annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily intended
to result in the sale of the Class IB shares. This fee will not be increased for
the life of the Certificates. Fees and expenses are described more fully in the
EQAT prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal charge
or the mortality and expense risks charge, or change the minimum initial
contribution requirements. We may also change the Guaranteed Minimum Death
Benefit and the Guaranteed Minimum Income Benefit. We may also offer Investment
Funds investing in Class IA shares of HRT and EQAT, which are not subject to the
12b-1 fee. Group arrangements include those in which a trustee or an employer,
for example, purchases contracts covering a group of individuals on a group
basis. Group arrangements are not available for Traditional IRA and Roth IRA
Certificates. Sponsored arrangements include those in which an employer allows
us to sell Certificates to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the size
and stability of the group or sponsoring organization among other factors. We
take all these factors into account when reducing charges. To qualify for
reduced charges, a group or sponsored arrangement must meet certain
requirements, including our requirements for size and number of years in
existence. Group or sponsored arrangements that have been set up solely to buy
Certificates or that have been in existence less than six months will not
qualify for reduced charges.
We may also establish different Guaranteed Rates for the Guarantee Periods under
different classes of Certificates for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in effect
when a Certificate is approved for issue. We may change these rules from time to
time. Any variation in the withdrawal charge will reflect differences in costs
or services and will not be unfairly discriminatory.
Group or sponsored arrangements may be governed by the Code, the Employee
Retirement Income Security Act of 1974 (ERISA), or both. We make no
representations as to the impact of those and other applicable laws on such
programs. WE RECOMMEND THAT EMPLOYERS, TRUSTEES, AND OTHERS PURCHASING OR MAKING
CERTIFICATES AVAILABLE FOR PURCHASE UNDER SUCH PROGRAMS SEEK THE ADVICE OF THEIR
OWN LEGAL AND BENEFITS ADVISERS.
OTHER DISTRIBUTION ARRANGEMENTS
Charges may be reduced or eliminated when sales are made in a manner that
results in savings of sales and administrative expenses, such as sales through
persons who are compensated by clients for recommending investments and receive
no commission or reduced commissions in connection with the sale of the
Certificates. In no event will a reduction or elimination of charges be
permitted where it would be unfairly discriminatory.
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PART 6: VOTING RIGHTS
- --------------------------------------------------------------------------------
THE TRUSTS' VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of HRT and EQAT. Since we own
the assets of the Separate Account, we are the legal owner of the shares and, as
such, have the right to vote on certain matters. Among other things, we may
vote:
o to elect the Trusts' Board of Trustees,
o to ratify the selection of independent auditors for the Trusts, and
o on any other matters described in the current prospectuses for the Trusts or
requiring a vote by shareholders under the 1940 Act.
Because HRT is a Massachusetts business trust and EQAT is a Delaware business
trust, annual meetings are not required. Whenever a shareholder vote is taken,
we will give Certificate Owners the opportunity to instruct us how to vote the
number of shares attributable to their Certificates. If we do not receive
instructions in time from all Certificate Owners, we will vote the shares of a
Portfolio for which no instructions have been received in the same proportion as
we vote shares of that Portfolio for which we have received instructions. We
will also vote any shares that we are entitled to vote directly because of
amounts we have in an Investment Fund in the same proportions that Certificate
Owners vote.
Each share of the Trusts is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted upon.
However, if the Trustees determine that shareholders in a Portfolio are not
affected by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQAT shares currently are sold only to our
separate accounts. HRT shares are held by other separate accounts of ours and by
separate accounts of insurance companies unaffiliated with us. Shares held by
these separate accounts will probably be voted according to the instructions of
the owners of insurance policies and contracts issued by those insurance
companies. While this will dilute the effect of the voting instructions of the
Certificate Owners, we currently do not foresee any disadvantages arising out of
this. HRT's Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts that possibly may arise and to determine what
action, if any, should be taken in response. If we believe that HRT's response
to any of those events insufficiently protects our Certificate Owners, we will
see to it that appropriate action is taken to protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Certificate Owner approval,
Certificate Owners will be entitled to one vote for each Accumulation Unit they
have in the Investment Funds. Each Certificate Owner who has elected a variable
annuity payout may cast the number of votes equal to the dollar amount of
reserves we are holding for that annuity in an Investment Fund divided by the
Accumulation Unit Value for that Investment Fund. We will cast votes
attributable to any amounts we have in the Investment Funds in the same
proportion as votes cast by Certificate Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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PART 7: TAX ASPECTS OF THE CERTIFICATES
- --------------------------------------------------------------------------------
This Part of the prospectus generally covers our understanding of the current
Federal income tax rules that apply to NQ, Traditional IRA, and Roth IRA
Certificates owned by United States taxpayers.
This Part does not apply to NQ Certificates used as the investment vehicle for
qualified plans discussed throughout the prospectus and in Appendix II.
This prospectus does not provide detailed tax information and does not address
issues such as state income and other taxes, Federal income tax and withholding
rules for non-U.S. taxpayers, or Federal gift and estate taxes. A gift or estate
tax transfer may arise whenever payments or contract rights are provided to
someone other than the original owner of the Certificates. Please consult a tax
adviser when considering the tax aspects of the Certificates.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities and individual retirement arrangements. In addition, the
Treasury Department may amend existing regulations, issue new regulations, or
adopt new interpretations of existing laws. State tax laws and, if you are not a
United States resident, foreign tax laws, may also affect the tax consequences
to you or the beneficiary. These laws may change from time to time without
notice and, as a result, the tax consequences may be altered. There is no way of
predicting whether, when or in what form any such change would be adopted. Any
such change could have retroactive effects regardless of the date of enactment.
We suggest you consult your legal or tax adviser.
TRANSFERS AMONG INVESTMENT OPTIONS
Under current law, there will not be any tax liability if you transfer Annuity
Account Value among the Investment Funds, or between the Guaranteed Period
Account and one or more Investment Funds.
TAXATION OF NON-QUALIFIED ANNUITIES
This section generally covers our understanding of the current Federal income
tax laws that apply to a non-qualified annuity purchased with only after-tax
dollars and not subject to any special retirement plan rules.
Equitable Life has designed the NQ Certificate to qualify as an "annuity" for
purposes of Federal income tax law. Gains in the Annuity Account Value of the
Certificate generally will not be taxable to you until a distribution occurs,
either by a withdrawal of part or all of its value or as a series of periodic
payments. However, there are some exceptions to this rule: (1) if a Certificate
fails the investment diversification requirements; (2) if you transfer a
Certificate, for example, as a gift to someone other than your spouse (or
divorced spouse), any gain in its Annuity Account Value will be taxed at the
time of transfer; (3) the assignment or pledge of any portion of the value of a
Certificate will be treated as a distribution of that portion of the
Certificate; and (4) when an insurance company (or its affiliate) issues more
than one non-qualified deferred annuity certificate or contract during any
calendar year to the same taxpayer, the certificates or contracts are required
to be aggregated in computing the taxable amount of any distribution.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Certificate unless
an exception under the Code applies.
Withdrawals
Prior to the Annuity Commencement Date, any withdrawal which does not terminate
your total interest in the NQ Certificate is taxable to you as ordinary income
to the extent there has been a gain in the Annuity Account Value, and is subject
to income tax withholding. See "Federal and State Income Tax Withholding" below.
The balance of the distribution is treated as a return of the "investment" or
"basis" in the Certificate and is not taxable. Generally, the investment or
basis in the NQ Certificate equals the contributions made, less any amounts
previously withdrawn which were not taxable. If your Equitable Accumulator NQ
Certificate was issued as a result of a tax-free exchange of another NQ life
insurance or deferred annuity contract as described in "Methods of Payment:
Section 1035 Exchanges" in Part 3, your investment in that original contract
generally is treated as the basis in the Equitable Accumulator NQ Certificate
regardless of the value of that original contract at the time of the exchange.
Special rules may apply if contributions made to another annuity certificate or
contract prior to August 14, 1982 are transferred to a Certificate in a tax-free
exchange. To take advantage of these rules, you must notify us prior to such an
exchange.
If you surrender or cancel the NQ Certificate, the distribution is taxable to
the extent it exceeds the investment in the NQ Certificate.
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Annuity Payments
Once annuity payments begin, a portion of each payment is considered to be a
tax-free recovery of investment based on the ratio of the investment to the
expected return under the NQ Certificate. The remainder of each payment will be
taxable. In the case of a variable annuity, special rules apply if the payments
received in a year are less than the amount permitted to be recovered tax free.
In the case of a life annuity, after the total investment has been recovered,
future payments are fully taxable. If payments cease as a result of death, a
deduction for any unrecovered investment will be allowed.
Early Distribution Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable portion
of a distribution unless the distribution is (1) made on or after the date you
attain age 59 1/2, (2) made on or after your death, (3) attributable to your
disability, (4) part of a series of substantially equal installments as an
annuity for your life (or life expectancy) or the joint lives (or joint life
expectancies) of you and a beneficiary, or (5) with respect to income allocable
to amounts contributed to an annuity certificate or contract prior to August 14,
1982 which are transferred to the Certificate in a tax-free exchange.
Payments as a Result of Death
If, as a result of the Annuitant's death, the beneficiary is entitled to receive
the death benefit described in Part 3, the beneficiary is generally subject to
the same tax treatment as would apply to you, had you surrendered the
Certificate (discussed above).
If the beneficiary elects to take the death benefit in the form of a life income
or installment option, the election should be made within 60 days after the day
on which a lump sum death benefit first becomes payable and before any benefit
is actually paid. The tax computation will reflect your investment in the
Certificate.
The Certificate provides a minimum guaranteed death benefit that in certain
circumstances may be greater than either the contributions made or the Annuity
Account Value. This provision provides investment protection against an untimely
termination of a Certificate on the death of an Annuitant at a time when the
Certificate's Annuity Account Value might otherwise have provided a lower
benefit. Although we do not believe that the provision of this benefit should
have any adverse tax effect, it is possible that the IRS could take a contrary
position and could assert that some portion of the charges for the minimum
guaranteed death benefit should be treated for Federal income tax purposes as a
partial withdrawal from the Certificate. If this were so, such a deemed
withdrawal could be taxable, and for Certificate Owners under age 59 1/2, also
subject to tax penalty.
Special distribution requirements apply upon the death of the owner of a
non-qualified annuity. That is, in the case of a contract where the owner and
annuitant are different, even though the annuity contract could continue because
the annuitant has not died, Federal tax law requires that the person who
succeeds as owner of the contract take taxable distribution of the contract
within a specified period of time. This includes the surviving Joint Owner in a
nonspousal joint ownership situation. See "When an NQ Certificate Owner Dies
before the Annuitant" in Part 3.
SPECIAL RULES FOR NQ CERTIFICATES ISSUED IN PUERTO RICO
Under current law Equitable Life treats income from NQ Certificates as
U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is
excludable from U.S. taxation. Income from NQ Certificates is also subject to
Puerto Rico tax. The computation of the taxable portion of amounts distributed
from a Certificate may differ in the two jurisdictions. Therefore, you might
have to file both U.S. and Puerto Rico tax returns, showing different amounts of
income for each. Puerto Rico generally provides a credit against Puerto Rico tax
for U.S. tax paid. Depending on your personal situation and the timing of the
different tax liabilities, you may not be able to take full advantage of this
credit.
Please consult your tax adviser to determine the applicability of these rules to
your own tax situation.
IRA TAX INFORMATION
The term "IRA" may generally refer to all individual retirement arrangements,
including individual retirement accounts and individual retirement annuities. In
addition to being available in both trusteed or custodial account form or
individual annuity form, there are many varieties of IRAs. There are
"Traditional IRAs" which are generally funded on a pre-tax basis. There are Roth
IRAs, newly available in 1998, which must be funded on an after-tax basis.
SEP-IRAs (including SARSEP-IRAs) and SIMPLE-IRAs are issued and funded in
connection with employer-sponsored retirement plans. Regardless of the type of
IRA, your interest in the IRA cannot be forfeited. You or your beneficiaries who
survive you are the only ones who can receive the benefits or payments.
The Equitable Accumulator Certificate is designed to qualify as an "individual
retirement annuity" under Section 408(b) of the Code. This prospectus contains
the information which the Internal Revenue Service (IRS) requires to be
disclosed to you before you purchase an individual retirement arrangement. This
section of Part 7 covers some of the special tax
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rules that apply to individual retirement arrangements, including Traditional
IRAs and Roth IRAs. Education IRAs are not discussed in this prospectus because
they are not available in individual retirement annuity form.
Further information regarding individual retirement arrangements generally can
be found in Internal Revenue Service Publication 590, entitled "Individual
Retirement Arrangements (IRAs)," which is generally updated annually, and can be
obtained from any IRS district office.
There is no limit to the number of IRAs (including Roth IRAs) you may establish
or maintain as long as you meet the requirements for establishing and funding
the IRA. However, if you maintain multiple IRAs, you may be required to
aggregate IRA values or contributions for tax purposes. You should be aware that
all types of IRAs are subject to certain restrictions in order to qualify for
special treatment under the Federal tax law.
The Equitable Accumulator IRA Certificate has been approved by the IRS as to
form for use as a Traditional IRA. This IRS approval is a determination only as
to the form of the annuity, does not represent a determination of the merits of
the annuity as an investment, and may not address certain features under the
Equitable Accumulator IRA Certificate. The IRS does not yet have a procedure in
place for approving the form of Roth IRAs.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS)
Cancellation
You can cancel a Certificate issued as a Traditional IRA by following the
directions in Part 3 under "Free Look Period." Since there may be adverse tax
consequences if a Certificate is cancelled (and because we are required to
report to the IRS certain distributions from cancelled Traditional IRAs), you
should consult with a tax adviser before making any such decision. If you cancel
this Certificate, you may establish a new individual retirement arrangement if
at the time you meet the requirements for establishing an individual retirement
arrangement.
Contributions to Traditional IRAs
Individuals may make three different types of contributions to purchase a
Traditional IRA, or as later additions to an existing Traditional IRA: "regular"
contributions out of earnings, tax-free "rollover" contributions from
tax-qualified plans, or direct custodian-to-custodian transfers from other
traditional individual retirement arrangements ("direct transfers").
The initial contribution to the Certificate must be either a rollover or a
direct custodian-to-custodian transfer. See "Rollovers and Transfers" discussed
below. Any subsequent contributions you make may be any of rollovers, direct
transfers or "regular" Traditional IRA contributions. See "Contributions under
the Certificates" in Part 3. The immediately following discussion relates to
"regular" Traditional IRA contributions. For the reasons noted in "Rollovers and
Transfers" below, you should consult with your tax adviser before making any
subsequent contributions to a Traditional IRA which is intended to serve as a
"conduit" IRA.
Generally, $2,000 is the maximum amount of contributions which you may make to
all IRAs (including Roth IRAs) in any taxable year. The above limit may be less
when your earnings are below $2,000. This limit does not apply to rollover
contributions or direct custodian-to-custodian transfers into a Traditional IRA.
If you are married and file a joint income tax return, your and your spouse's
compensation effectively can be aggregated for purposes of determining the
permissible amount of regular contributions to Traditional IRAs (and Roth IRAs
discussed below). Even if one spouse has no compensation or compensation under
$2,000, married individuals filing jointly can contribute up to $4,000 for any
taxable year to any combination of Traditional IRAs and Roth IRAs. (Any
contributions to Roth IRAs reduce the ability to contribute to Traditional IRAs
and vice versa.) The maximum amount may be less if earnings are less and the
other spouse has made IRA contributions. No more than a combined total of $2,000
can be contributed annually to either spouse's traditional and Roth individual
retirement arrangements. Each spouse owns his or her individual retirement
arrangements (Traditional and Roth IRA) even if contributions were fully funded
by the other spouse.
The amount of Traditional IRA contributions for a tax year that you can deduct
depends on whether you are covered by an employer-sponsored tax-favored
retirement plan. An employer-sponsored tax-favored retirement plan includes a
qualified plan, a tax-sheltered account or annuity under Section 403(b) of the
Code (TSA) or a simplified employee pension plan. In certain cases, individuals
covered by a tax-favored retirement plan include persons eligible to participate
in the plan although not actually participating. Whether or not a person is
covered by a retirement plan will be reported on an employee's Form W-2.
Regardless of adjusted gross income (AGI), you may make deductible contributions
to a Traditional IRA for each tax year up to the lesser of $2,000 or 100% of
compensation (MAXIMUM PERMISSIBLE DOLLAR DEDUCTION) if not covered by a
retirement plan.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for
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IRA contributions phases out with AGI between $30,000 and $40,000 in 1998. This
amount will be indexed every year until 2005. If you are married and file a
joint return, and you are covered by a tax-favored retirement plan during any
part of the taxable year, the deduction for Traditional IRA contributions phases
out with AGI between $50,000 and $60,000 in 1998. This amount will be indexed
every year until 2007. Married individuals filing separately and living apart at
all times are not treated as being married for purposes of this deductible
contribution calculation. Generally, the active participation in an
employer-sponsored retirement plan of an individual is determined independently
for each spouse. Where spouses have "married filing jointly" status, however,
the maximum deductible Traditional IRA contribution for an individual who is not
an active participant (but whose spouse is an active participant) is phased out
for taxpayers with AGI of between $150,000 and $160,000.
To determine the deductible amount of the contribution with the phase out, you
determine AGI and subtract $30,000 if you are single, $50,000 if you are married
and file a joint return with your spouse. The resulting amount is your Excess
AGI. You then determine the limit on the deduction for Traditional IRA
contributions using the following formula:
Maximum Adjusted
$10,000 - Excess AGI Permissible Dollar
-------------------- x Dollar = Deduction
$10,000 Deduction Limit
If you are not eligible to deduct part or all of the Traditional IRA
contribution you may still make nondeductible contributions on which earnings
will accumulate on a tax-deferred basis. The deductible and nondeductible
contributions to your Traditional IRA (or the nonworking spouse's Traditional
IRA) may not, however, together exceed the maximum $2,000 per person limit. See
"Excess Contributions" below. You must keep your own records of deductible and
non-deductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Distributions from Traditional
IRA Certificates" below.
If you are making nondeductible contributions in any taxable year, or you have
made nondeductible contributions to a Traditional IRA in prior years and are
receiving amounts from any Traditional IRA, you must file the required
information with the IRS. Moreover, if you are making nondeductible Traditional
IRA contributions, you must retain all income tax returns and records pertaining
to such contributions until interests in all Traditional IRAs are fully
distributed.
Traditional IRA contributions may be made for a tax year until the deadline for
filing a Federal income tax return for that tax year (without extensions). No
contributions are allowed for the tax year in which you attain age 70 1/2 or any
tax year after that. A working spouse age 70 1/2 or over, however, can
contribute up to the lesser of $2,000 or 100% of "earned income" to a spousal
individual retirement arrangement for a nonworking spouse until the year in
which the nonworking spouse reaches age 70 1/2.
EXCESS CONTRIBUTIONS
Excess contributions to a Traditional IRA are subject to a 6% excise tax for the
year in which made and for each year thereafter until withdrawn. In the case of
"regular" Traditional IRA contributions any contribution in excess of the lesser
of $2,000 or 100% of compensation or earned income is an "excess contribution"
(without regard to the deductibility or nondeductibility of Traditional IRA
contributions under this limit). Also, any "regular" contributions made after
you reach age 70 1/2 are excess contributions. In the case of rollover
Traditional IRA contributions, excess contributions are amounts which are not
eligible to be rolled over (for example, after-tax contributions to a qualified
plan or minimum distributions required to be made after age 70 1/2). An excess
contribution (rollover or "regular") which is withdrawn, however, before the
time for filing your Federal income tax return for the tax year (including
extensions) is not includable in income and therefore is not subject to the 10%
penalty tax on early distributions (discussed below under "Penalty Tax on Early
Distributions"), provided any earnings attributable to the excess contribution
are also withdrawn and no tax deduction is taken for the excess contribution.
The withdrawn earnings on the excess contribution, however, would be includable
in your gross income and would be subject to the 10% penalty tax. If excess
contributions are not withdrawn before the time for filing your Federal income
tax return for the year (including extensions), "regular" contributions may
still be withdrawn after that time if the Traditional IRA contribution for the
tax year did not exceed $2,000 and no tax deduction was taken for the excess
contribution; in that event, the excess contribution would not be includable in
gross income and would not be subject to the 10% penalty tax. Lastly, excess
"regular" contributions may also be removed by underutilizing the allowable
contribution limits for a later year.
If excess rollover contributions are not withdrawn before the time for filing
your Federal tax return for the year (including extensions) and the excess
contribution occurred as a result of incorrect information provided by the plan,
any such excess amount can be withdrawn if no tax deduction was taken for the
excess contribution. As above, excess rollover contributions withdrawn under
those circumstances would not be includable in gross income and would not be
subject to the 10% penalty tax.
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ROLLOVERS AND TRANSFERS
Rollover contributions may be made to a Traditional IRA from these sources: (i)
qualified plans, (ii) TSAs (including 403(b)(7) custodial accounts) and (iii)
other traditional individual retirement arrangements.
The rollover amount must be transferred to the Certificate either as a direct
rollover of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the individual
retirement arrangement. In the latter cases, the rollover must be made within 60
days of the date the proceeds from another traditional individual retirement
arrangement or an eligible rollover distribution from a qualified plan or TSA
were received. Generally, the taxable portion of any distribution from a
qualified plan or TSA is an eligible rollover distribution and may be rolled
over tax free to a Traditional IRA unless the distribution is (i) a required
minimum distribution under Section 401(a)(9) of the Code; or (ii) one of a
series of substantially equal periodic payments made (not less frequently than
annually) (a) for the life (or life expectancy) of the plan participant or the
joint lives (or joint life expectancies) of the plan participant and his or her
designated beneficiary, or (b) for a specified period of ten years or more. Any
amount contributed to a Traditional IRA after you attain age 70 1/2 must be net
of your required minimum distribution for the year in which the rollover or
direct transfer contribution is made.
Under some circumstances, amounts from a Certificate may be rolled over on a
tax-free basis to a qualified plan. To get this "conduit" Traditional IRA
treatment, the source of funds used to establish the Traditional IRA must be a
rollover contribution from the qualified plan and the entire amount received
from the Traditional IRA (including any earnings on the rollover contribution)
must be rolled over into another qualified plan within 60 days of the date
received. Similar rules apply in the case of a TSA. If you make a contribution
to the Certificate which is from an eligible rollover distribution and you
commingle such contribution with other contributions, you may not be able to
roll over these eligible rollover distribution contributions and earnings to
another qualified plan (or TSA, as the case may be) at a future date, unless the
Code permits.
Under the conditions and limitations of the Code, you may elect for each
Traditional IRA to make a tax-free rollover once every 12-month period among
individual retirement arrangements (including rollovers from retirement bonds
purchased before 1983). Custodian-to-custodian transfers are not rollovers and
can be made more frequently than once a year.
The same tax-free treatment applies to amounts withdrawn from the Certificate
and rolled over into other traditional individual retirement arrangements unless
the distribution was received under an inherited Traditional IRA. Tax-free
rollovers are also available to the surviving spouse beneficiary of a deceased
individual, or a spousal alternate payee of a qualified domestic relations order
applicable to a qualified plan. In some cases, Traditional IRAs can be
transferred on a tax-free basis between spouses or former spouses incidental to
a judicial decree of divorce or separation.
DISTRIBUTIONS FROM TRADITIONAL IRA CERTIFICATES
Income or gains on contributions under Traditional IRAs are not subject to
Federal income tax until benefits are distributed to you. Distributions include
withdrawals from your Certificate, surrender of your Certificate and annuity
payments from your Certificate. Death benefits are also distributions. Except as
discussed below, the amount of any distribution from a Traditional IRA is fully
includable as ordinary income by you in your gross income.
If you have made nondeductible IRA contributions to any Traditional IRA (whether
or not this particular arrangement), those contributions are recovered tax free
when distributions are received. You must keep records of all such nondeductible
contributions. At the end of each tax year in which you have received a
distribution from any traditional individual retirement arrangement, you
determine a ratio of the total nondeductible Traditional IRA contributions (less
any amounts previously withdrawn tax free) to the total account balances of all
Traditional IRAs held by you at the end of the tax year (including rollover
Traditional IRAs) plus all Traditional IRA distributions made during such tax
year. The resulting ratio is then multiplied by all distributions from the
Traditional IRA during that tax year to determine the nontaxable portion of each
distribution.
In addition, a distribution (other than a required minimum distribution received
after age 70 1/2) is not taxable if (1) the amount received is a return of
excess contributions which are withdrawn, as described under "Excess
Contributions" above, (2) the entire amount received is rolled over to another
traditional individual retirement arrangement (see "Rollovers and Transfers"
above) or (3) in certain limited circumstances, where the Traditional IRA acts
as a "conduit," the entire amount is paid into a qualified plan or TSA that
permits rollover contributions.
Distributions from a Traditional IRA are not entitled to the special favorable
five-year averaging method (or, in certain cases, favorable ten-year averaging
and long-term capital gain treatment) available in certain cases to
distributions from qualified plans.
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REQUIRED MINIMUM DISTRIBUTIONS
The minimum distribution rules require Traditional IRA owners to start taking
annual distributions from their retirement plans by age 70 1/2. The distribution
requirements are designed to provide for distribution of your interest in the
IRA over your life expectancy. Whether the correct amount has been distributed
is calculated on a year-by-year basis; there are no provisions in the Code to
allow amounts taken in excess of the required amount to be carried over or
carried back and credited to other years.
Generally, you must take the first required minimum distribution with respect to
the calendar year in which you turn age 70 1/2. You have the choice to take the
first required minimum distribution during the calendar year you turn age 70
1/2, or to delay taking it until the three-month (January 1 - April 1) period in
the next calendar year. (Distributions must commence no later than the "Required
Beginning Date," which is the April 1st of the calendar year following the
calendar year in which you turn age 70 1/2.) If you choose to delay taking the
first annual minimum distribution, then you will have to take two minimum
distributions in that year -- the delayed one for the first year and the one
actually for that year. Once minimum distributions begin, they must be made at
some time every year.
There are two approaches to taking minimum distributions -- "account based" or
"annuity based" -- and there are a number of distribution options in both of
these categories. These choices are intended to give you a great deal of
flexibility to provide for yourself and your family.
An account-based minimum distribution approach may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond your life
expectancy or the joint life expectancies of you and a designated beneficiary.
An annuity-based approach involves application of the Annuity Account Value to
an annuity for your life or the joint lives of you and a designated beneficiary,
or for a period certain not extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options are
best for your own personal situation. Individuals who are participants in more
than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Your required minimum distribution for any taxable year is calculated by taking
into account the required minimum distribution from each of your traditional
individual retirement arrangements. The IRS, however, does not require that you
make the required distribution from each traditional individual retirement
arrangement that you maintain. As long as the total amount distributed annually
satisfies your overall minimum distribution requirement, you may choose to take
your annual required distribution from any one or more traditional individual
retirement arrangements that you maintain.
You may recompute your minimum distribution amount each year based on your
current life expectancy as well as that of your spouse. No recomputation is
permitted, however, for a beneficiary other than a spouse.
If you have been computing minimum distributions with respect to Traditional IRA
funds on an account-based approach (discussed above) you may subsequently apply
such funds to a life annuity-based payout, provided that you have elected to
recalculate life expectancy annually (and your spouse's life expectancy if a
spousal joint annuity is selected). For example, if you anticipate exercising
your Guaranteed Minimum Income Benefit or selecting any other form of life
annuity payout after you are age 70 1/2, you must have elected to recalculate
life expectancies.
If there is an insufficient distribution in any year, a 50% tax may be imposed
on the amount by which the minimum required to be distributed exceeds the amount
actually distributed. The penalty tax may be waived by the Secretary of the
Treasury in certain limited circumstances. Failure to have distributions made as
the Code and Treasury regulations require may result in disqualification of your
Traditional IRA. See "Tax Penalty for Insufficient Distributions" below.
Except as described in the next sentence, if you die after distribution in the
form of an annuity has begun, or after the Required Beginning Date, payment of
the remaining interest must be made at least as rapidly as under the method used
prior to your death. (The IRS has indicated that an exception to the rule that
payment of the remaining interest must be made at least as rapidly as under the
method used prior to your death applies if the beneficiary of the Traditional
IRA is your surviving spouse. In some circumstances, your surviving spouse may
elect to "make the Traditional IRA his or her own" and halt distributions until
he or she reaches age 70 1/2.)
If you die before the Required Beginning Date and before distributions in the
form of an annuity begin, distributions of your entire interest under the
Certificate must be completed within five years after death, unless payments to
a designated beneficiary begin within one year of your death and are made over
the beneficiary's life or over a period certain which does not extend beyond the
beneficiary's life expectancy.
If your surviving spouse is the designated beneficiary, your spouse may delay
the commencement of such
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payments up until you would have attained 70 1/2. In the alternative, a
surviving spouse may elect to roll over the inherited Traditional IRA into the
surviving spouse's own Traditional IRA.
TAXATION OF DEATH BENEFITS
Distributions received by a beneficiary are generally given the same tax
treatment you would have received if distribution had been made to you.
If your spouse is the sole primary beneficiary and elects to become the
successor Annuitant and Certificate Owner, no death benefit is payable until the
surviving spouse's death.
GUARANTEED MINIMUM DEATH BENEFIT
The Code provides that no part of an individual retirement account may be
invested in life insurance contracts. Treasury Regulations provide that an
individual retirement account may be invested in an annuity contract which
provides a death benefit of the greater of premiums paid or the contract's cash
value. Your Certificate provides a minimum death benefit guarantee that in
certain circumstances may be greater than either of contributions made or the
Annuity Account Value. Although there is no ruling regarding the type of minimum
death benefit guarantee provided by the Certificate, Equitable Life believes
that the Certificate's minimum death benefit guarantee should not adversely
affect the qualification of the Certificate as a Traditional IRA. Nevertheless,
it is possible that the IRS could disagree, or take the position that some
portion of the charge in the Certificate for the minimum death benefit guarantee
should be treated for Federal income tax purposes as a taxable partial
withdrawal from the Certificate. If this were so, such a deemed withdrawal would
also be subject to tax penalty for Certificate Owners under age 59 1/2.
PROHIBITED TRANSACTION
A Traditional IRA may not be borrowed against or used as collateral for a loan
or other obligation. If the IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which the
event occurred. If this happens, you must include in Federal gross income for
that year an amount equal to the fair market value of the Traditional IRA
Certificate as of the first day of that tax year, less the amount of any
nondeductible contributions not previously withdrawn. Also, the early
distribution penalty tax of 10% will apply if you have not reached age 59 1/2
before the first day of that tax year. See "Penalty Tax on Early Distributions"
below.
PENALTY TAX ON EARLY DISTRIBUTIONS
The taxable portion of Traditional IRA distributions will be subject to a 10%
penalty tax unless the distribution is made (1) on or after your death, (2)
because you have become disabled, (3) on or after the date when you reach age 59
1/2, or (4) in accordance with the exception outlined below if you are under 59
1/2. Also not subject to penalty tax are IRA distributions used to pay (5)
certain extraordinary medical expenses or medical insurance premiums for defined
unemployed individuals, (6) qualified first-time home buyer expense payments, or
(7) higher educational expense payments, all as defined in the Code.
A payout over your life or life expectancy (or joint and survivor lives or life
expectancies), which is part of a series of substantially equal periodic
payments made at least annually, is also not subject to penalty tax. To permit
you to meet this exception, Equitable Life has two options: Substantially Equal
Payment Withdrawals and the Income Manager (Life Annuity with a Period Certain)
payout annuity certificates, both of which are described in Part 4. The version
of the Income Manager payout annuity certificates which would meet this
exception must provide level payments for life. If you are a Traditional IRA
Certificate Owner who will be under age 59 1/2 as of the date the first payment
is expected to be received and you choose either option, Equitable Life will
calculate the substantially equal annual payments under a method we will select
based on guidelines issued by the IRS (currently contained in IRS Notice 89-25,
Question and Answer 12). Although Substantially Equal Payment Withdrawals and
Income Manager payments are not subject to the 10% penalty tax, they are taxable
as discussed in "Distributions from Traditional IRA Certificates" above. Once
Substantially Equal Payment Withdrawals or Income Manager payments begin, the
distributions should not be stopped or changed until the later of your attaining
age 59 1/2 or five years after the date of the first distribution, or the
penalty tax, including an interest charge for the prior penalty avoidance, may
apply to all prior distributions under this option. Also, it is possible that
the IRS could view any additional withdrawal or payment you take from your
Certificate as changing your pattern of Substantially Equal Payment Withdrawals
or Income Manager payments for purposes of determining whether the penalty
applies.
Where a taxpayer under age 59 1/2 purchases a traditional individual retirement
annuity contract calling for substantially equal periodic payments during a
fixed period, continuing afterwards under a joint life contingent annuity with a
reduced payment to the survivor (e.g., a joint and 50% to survivor), the
question might be raised whether payments will not be substantially equal for
the joint lives of the taxpayer and survivor, as the payments will be reduced at
some point. In issuing our information returns, we code the substantially equal
periodic payments from such a contract as eligible for an exception from the
early distribution penalty. We believe that any change in payments to the
survivor would come
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within the statutory provision covering change of payments on account of death.
As there is no direct authority on this point, however, if you are under age 59
1/2, you should discuss this item with your own tax adviser when electing a
reduced survivorship option.
TAX PENALTY FOR INSUFFICIENT DISTRIBUTIONS
Failure to make required distributions discussed above in "Required Minimum
Distributions" may cause the disqualification of the Traditional IRA.
Disqualification may result in current taxation of your entire benefit. In
addition a 50% penalty tax may be imposed on the difference between the required
distribution amount and the amount actually distributed, if any.
We do not automatically make distributions from a Certificate before the Annuity
Commencement Date unless a request has been made. It is your responsibility to
comply with the minimum distribution rules. We will notify you when our records
show that your age 70 1/2 is approaching. If you do not select a method, we will
assume you are taking your minimum distribution from another Traditional IRA
that you maintain. You should consult with your tax adviser concerning these
rules and their proper application to your situation.
ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS)
This section of Part 7 covers some of the special tax rules that apply to Roth
IRAs.
The Equitable Accumulator Roth IRA is designed to qualify as a Roth individual
retirement annuity under Sections 408A and 408(b) of the Code.
Cancellation
You can cancel a Certificate issued as a Roth IRA by following the directions in
Part 3 under "Free Look Period." In addition, you can cancel an Equitable
Accumulator Roth IRA Certificate issued as a result of a full conversion of an
Equitable Accumulator Traditional IRA Certificate by following the instructions
in the request for full conversion form available from our Processing Office or
your registered representative. Since there may be adverse tax consequences if a
Certificate is cancelled (and because we are required to report to the IRS
certain distributions from cancelled IRAs), you should consult with a tax
adviser before making any such decision.
Contributions to Roth IRAs
The following discussion relates to contributions to Roth IRAs. Contributions to
Traditional IRAs are discussed above.
Individuals may make four different types of contributions to purchase a Roth
IRA, or as later additions to an existing Roth IRA: (1) "regular" after-tax
contributions out of earnings, (2) taxable "rollover" contributions from
Traditional IRAs ("conversion" contributions), (3) tax-free rollover
contributions from other Roth IRAs, or (4) tax-free direct
custodian-to-custodian transfers from other Roth IRAs ("direct transfers"). See
"Contributions under the Certificates" in Part 3. Since only direct transfer and
rollover contributions are permitted under the Roth IRA Certificate, regular
after-tax contributions are not discussed here.
ROLLOVERS AND DIRECT TRANSFERS -- WHAT IS THE DIFFERENCE BETWEEN ROLLOVER AND
DIRECT TRANSFER TRANSACTIONS?
Rollover contributions may be made to a Roth IRA from only two sources: (i)
another Roth IRA ("tax-free rollover contribution"), or (ii) another Traditional
IRA in a taxable "conversion" rollover ("conversion contribution"). No
contribution may be made to a Roth IRA from a qualified plan under Section
401(a) of the Code, or a tax-sheltered arrangement under Section 403(b) of the
Code. We do not accept rollover contributions from SIMPLE-IRAs in 1998. The
rollover contribution must be applied to the new Roth IRA Certificate within 60
days of the date the proceeds from the other Roth IRA or the Traditional IRA was
received by you.
Direct transfer contributions may be made to a Roth IRA only from another Roth
IRA. The difference between a rollover transaction and a direct transfer
transaction is that in a rollover transaction the individual actually takes
possession of the funds rolled over, or constructively receives them in the case
of a change from one type of plan to another. In a direct transfer transaction,
the individual never takes possession of the funds, but directs the first Roth
IRA custodian, trustee or issuer to transfer the first Roth IRA funds directly
to Equitable Life, as the Roth IRA issuer. Direct transfer transactions can only
be made between identical plan types (for example, Roth IRA to Roth IRA);
rollover transactions may be made between identical plan types but must be made
between different plan types (for example, Traditional IRA to Roth IRA).
Although the economic effect of a Roth IRA to Roth IRA rollover transaction and
a Roth IRA to Roth IRA direct transfer transaction is the same -- both can be
accomplished on a completely tax-free basis -- Roth IRA to Roth IRA rollover
transactions are limited to once every 12-month period for the same funds.
Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover
transactions and can be made more frequently than once a year.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited Roth IRA to one or more other Roth IRAs. Also, in
some cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses incidental to a judicial decree of divorce or separation.
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The IRS has recently proposed rules on "recharacterizations" of contributions
made to Roth IRAs as contributions to Traditional IRAs and vice versa. These
rules are proposed and not final and may be changed before they are finalized.
You should consult your tax adviser regarding the potential impact of these
rules on your own situation.
CONVERSION CONTRIBUTIONS TO ROTH IRAS
In a conversion rollover transaction, you withdraw (or are deemed to withdraw)
all or a portion of funds from a Traditional IRA you maintain and convert it to
a Roth IRA within 60 days after you receive (or are deemed to receive) the
Traditional IRA proceeds. Unlike a rollover from a Traditional IRA to another
Traditional IRA, the conversion rollover transaction is not tax exempt; the
distribution from the Traditional IRA is generally fully taxable. (If you have
ever made nondeductible regular contributions to any Traditional IRA -- whether
or not it is the Traditional IRA you are converting -- a pro rata portion of the
distribution is tax exempt.) For this reason, Equitable Life is required to
withhold 10% Federal income tax from the amount converted unless you elect out
of such withholding. See "Federal and State Income Tax Withholding and
Information Reporting" below.
However, even if you are under age 59 1/2 there is no premature distribution
penalty on the Traditional IRA withdrawal that you are converting to a Roth IRA.
Also, a special rule applies to Traditional IRA funds converted to a Roth IRA in
calendar year 1998 only. For 1998 Roth IRA conversion rollover transactions, you
can elect to include the gross income from the Traditional IRA conversion
ratably over the four-year period 1998-2001. See discussion of the pre-age 59
1/2 withdrawal penalty and the special penalties that may apply to premature
withdrawals of converted funds under "Additional Taxes and Penalties" and
"Penalty Tax on Premature Distributions" below.
YOU CANNOT MAKE CONVERSION CONTRIBUTIONS TO A ROTH IRA FOR ANY TAXABLE YEAR IN
WHICH YOUR ADJUSTED GROSS INCOME EXCEEDS $100,000. (For this purpose, your
adjusted gross income is computed without the gross income stemming from the
Traditional IRA conversion.) You also cannot make conversion contributions to a
Roth IRA for any taxable year in which your Federal income tax filing status is
"married filing separately."
Finally, you cannot make conversion contributions to a Roth IRA to the extent
that the funds in your Traditional IRA are subject to the annual required
minimum distribution rule applicable to Traditional IRAs beginning at age 70
1/2. For the potential effects of violating these rules, see discussion of
"Additional Taxes and Penalties" and "Excess Contributions" below.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS
NO RESTRICTIONS ON WITHDRAWALS. You can withdraw any or all of your funds from a
Roth IRA at any time; you do not need to wait for a special event like
retirement. However, these withdrawals may be subject to a withdrawal charge as
stated in your Certificate. See discussion in Part 5. Also, the withdrawal may
be taxable to an extent and, even if not taxable, may be subject to tax penalty
in certain circumstances. See the discussion below under "Distributions from
Roth IRAs," "Additional Taxes and Penalties," and "Penalty Tax on Premature
Distributions."
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your Certificate, surrender of your
Certificate and annuity payments from your Certificate. Death benefits are also
distributions.
The following distributions from Roth IRAs are free of income tax:
(1) Rollovers from a Roth IRA to another Roth IRA.
(2) Direct transfers from a Roth IRA to another Roth IRA (see "Rollovers and
Direct Transfers" above).
(3) "Qualified Distributions" from Roth IRAs (see "Qualified Distributions from
Roth IRAs" below).
(4) Return of excess contributions (see "Additional Taxes and Penalties," and
"Excess Contributions" below).
Qualified Distributions from Roth IRAs
Distributions from Roth IRAs made because of one of the following four
qualifying events or reasons are not includable in income: (1) you attain age 59
1/2, (2) your death, (3) your disability (as defined in the Code), or (4) a
"qualified first-time homebuyer distribution" (as also defined in the Code).
Qualified first-time homebuyer distributions are limited to $10,000 lifetime in
the aggregate from all Roth and Traditional IRAs of the taxpayer.
You also have to meet a 5-year aging period. A qualified distribution is any
distribution made after the five-taxable year period beginning with the first
taxable year for which you made any contribution to any Roth IRA (whether or not
the one from which the distribution is being made).
Non-Qualified Distributions from Roth IRAs
Non-qualified distributions from Roth IRAs are any distributions which do not
meet the qualifying event and five-year aging period tests described above and
are potentially taxable as ordinary income. In contrast to Traditional IRA
distributions, which are assumed to be fully taxable, non-qualified
distributions receive return-of-investment-first treatment. That is, the
recipient is
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taxed only on the difference between the amount of the distribution and the
amount of Roth IRA contributions (less any distributions previously recovered
tax free).
Like Traditional IRAs, taxable distributions from a Roth IRA are not entitled to
the special favorable five-year averaging method (or, in certain cases,
favorable ten-year averaging and long-term capital gain treatment) available in
certain cases to distributions from qualified plans.
Although the IRS has not yet issued complete guidance on all aspects of Roth
IRAs, it appears that you will be required to keep your own records of regular
and conversion contributions to all Roth IRAs in order to assure appropriate
taxation. An individual making contributions to a Roth IRA in any taxable year,
or receiving amounts from any Roth IRA may be required to file the information
with the IRS and retain all income tax returns and records pertaining to such
contributions until interests in Roth IRAs are fully distributed.
REQUIRED MINIMUM DISTRIBUTIONS AT DEATH
If you die before annuitization or before the entire amount of the Roth IRA has
been distributed to you, distributions of your entire interest under the Roth
IRA must be completed to your designated beneficiary by December 31 of the fifth
year after your death, unless payments to a designated beneficiary begin by
December 31 of the year after your death and are made over the beneficiary's
life or over a period which does not extend beyond the beneficiary's life
expectancy. If your surviving spouse is the designated beneficiary, no
distributions to a beneficiary are required until after the surviving spouse's
death.
TAXATION OF DEATH BENEFIT
Distributions received by a beneficiary are generally given the same tax
treatment you would have received if distribution had been made to you.
ADDITIONAL TAXES AND PENALTIES
You are subject to additional taxation for using your Roth IRA funds in
prohibited transactions (as described below). There are also additional taxes
for making excess contributions and making certain pre-age 59 1/2 distributions.
Prohibited Transactions
A Roth IRA may not be borrowed against or used as collateral for a loan or other
obligation. If the Roth IRA is borrowed against or used as collateral, its
tax-favored status will be lost as of the first day of the tax year in which the
event occurred. If this happens, you may be required to include in your Federal
gross income for that year an amount equal to the fair market value of your Roth
IRA Certificate as of the first day of that tax year. Also, an early
distribution penalty tax of 10% could apply if you have not reached age 59 1/2
before the first day of that tax year. See "Penalty Tax on Premature
Distributions" below.
EXCESS CONTRIBUTIONS
Excess contributions to a Roth IRA are subject to a 6% excise tax for the year
in which made and for each year thereafter until withdrawn. In the case of
rollover Roth IRA contributions, "excess contributions" are amounts which are
not eligible to be rolled over (for example, conversion contributions from a
Traditional IRA if your adjusted gross income is in excess of $100,000 in the
conversion year).
Although the impact of the proposed IRS rules is not clear, it appears that
rules similar to the rules applicable to Traditional IRAs generally apply to an
excess contribution ("regular" or rollover) which is withdrawn or
recharacterized before the time for filing your Federal income tax return for
the tax year (including extensions). It is not includable in income and is not
subject to the 10% penalty tax on early distributions (discussed below under
"Penalty Tax on Premature Distributions"), provided any earnings attributable to
the excess contribution are also withdrawn or recharacterized. Any withdrawn
earnings on the excess contribution, however, could be includable in your gross
income for the tax year in which the excess contribution from which they arose
was made and could be subject to the 10% penalty tax.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
The taxable portion of distributions from a Roth IRA made before you reach age
59 1/2 will be subject to an additional 10% Federal income tax penalty unless
one of the following exceptions applies. There are exceptions for:
o Your death,
o Your disability,
o Distributions used to pay certain extraordinary medical expenses,
o Distributions used to pay medical insurance premiums for certain unemployed
individuals,
o Substantially equal payments made at least annually over your life (or your
life expectancy), or over the lives of you and your beneficiary (or your
joint life expectancies) using an IRS-approved distribution method,
o "Qualified first-time homebuyer distributions" as defined in the Code, and
o Distributions used to pay specified higher education expenses as defined in
the Code.
46
<PAGE>
Special penalty rules may apply to prematurely withdrawn amounts attributable to
1998 conversion rollovers. Please consult your tax advisor.
Because Roth IRAs have only been recently approved, you should consult with your
tax adviser as to whether they are an appropriate investment vehicle for you.
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
Equitable Life is required to withhold Federal income tax from Traditional IRA
distributions and the taxable portion of payments from annuity contracts, unless
the recipient elects not to be subject to income tax withholding. For this
reason we are generally required to withhold on conversion rollovers of
Traditional IRAs to Roth IRAs, as the deemed withdrawal from the Traditional IRA
is taxable. Withholding may also apply to any taxable amounts paid under a free
look or cancellation. Generally, no withholding is required on distributions
which are not taxable (for example, a direct transfer from one Roth IRA to
another Roth IRA you own). In the case of distributions from a Roth IRA, we may
not be able to calculate the portion of the distribution (if any) subject to
tax. We may be required to withhold on the gross amount of the distribution
unless you elect out of withholding as described below. This may result in tax
being withheld even though the Roth IRA distribution is not taxable in whole or
in part.
The rate of withholding will depend on the type of distribution and, in certain
cases, the amount of the distribution. Special withholding rules apply to
foreign recipients and United States citizens residing outside the United
States. See your tax adviser if you think you may be affected by such rules.
Any income tax withheld is a credit against your income tax liability. If a
recipient does not have sufficient income tax withheld or does not make
sufficient estimated income tax payments, however, the recipient may incur
penalties under the estimated income tax rules. Recipients should consult their
tax advisers to determine whether they should elect out of withholding. Requests
not to withhold Federal income tax must be made in writing prior to receiving
benefits under the Certificate. Our Processing Office will provide forms for
this purpose. No election out of withholding is valid unless the recipient
provides us with the correct Taxpayer Identification Number and a United States
residence address.
Certain states have indicated that income tax withholding will apply to payments
from the Certificates made to residents. In some states, a recipient may elect
out of state withholding. Generally, an election out of Federal withholding will
also be considered an election out of state withholding. If you need more
information concerning a particular state or any required forms, call our
Processing Office at the toll-free number and consult your tax adviser.
Periodic payments are generally subject to wage-bracket type withholding (as if
such payments were payments of wages by an employer to an employee) unless the
recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and claiming
three withholding exemptions. There is an annual threshold of taxable income
from periodic annuity payments which is exempt from withholding based on this
assumption. For 1998, a recipient of periodic payments (e.g., monthly or annual
payments) which total less than a $14,400 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies a
different choice of withholding exemption. A withholding election may be revoked
at any time and remains effective until revoked. If a recipient fails to provide
a correct Taxpayer Identification Number, withholding is made as if the
recipient is single with no exemptions.
A recipient of a non-periodic distribution (total or partial) will generally be
subject to withholding at a flat 10% rate. A recipient who provides a United
States residence address and a correct Taxpayer Identification Number will
generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right to make withholding
elections.
OTHER WITHHOLDING
As a general rule, if death benefits are payable to a person two or more
generations younger than you, a Federal generation skipping tax may be payable
with respect to the benefit at rates similar to the maximum estate tax rate in
effect at the time. The generation skipping tax provisions generally apply to
transfers which would also be subject to the gift and estate tax rules.
Individuals are generally allowed an aggregate generation skipping tax exemption
of $1 million. Because these rules are complex, you should consult with your tax
adviser for specific information, especially where benefits are passing to
younger generations, as opposed to a spouse or child.
If we believe a benefit may be subject to generation skipping tax we may be
required to withhold for such tax unless we receive acceptable written
confirmation that no such tax is payable.
IMPACT OF TAXES TO EQUITABLE LIFE
The Certificates provide that Equitable Life may charge the Separate Account for
taxes. Equitable Life can set up reserves for such taxes.
47
<PAGE>
- --------------------------------------------------------------------------------
PART 8: OTHER INFORMATION
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and consolidated financial statement
schedules of Equitable Life at December 31, 1997 and 1996 and for each of the
three years in the period ended December 31, 1997 included in Equitable Life's
Annual Report on Form 10-K, incorporated by reference in the prospectus, have
been examined by PricewaterhouseCoopers LLP, independent accountants, whose
reports thereon are incorporated herein by reference. Such consolidated
financial statements and consolidated financial statement schedules have been
incorporated herein by reference in reliance upon the reports of
PricewaterhouseCoopers LLP given upon their authority as experts in accounting
and auditing.
LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings, none
of which, in our view, are likely to have a material adverse effect upon the
Separate Account, our ability to meet our obligations under the Certificates or
the Certificates' distribution.
48
<PAGE>
- --------------------------------------------------------------------------------
PART 9: INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
This Part presents performance data for each of the Investment Funds included in
the tables below. The performance data were calculated by two methods. The first
method, presented in Tables 1 and 2, reflects all applicable fees and charges,
including the optional baseBUILDER benefits charge, but not the charges for any
applicable taxes such as premium taxes.
The second method, presented in Tables 3, 4 and 5, also reflects all applicable
fees and charges, but does not reflect the withdrawal charge, the optional
baseBUILDER benefits charge, or the charge for tax such as premium taxes. These
additional charges would effectively reduce the rates of return credited to a
particular Certificate.
The Certificates described in this prospectus are being offered for the first
time as of the date of this prospectus. Accordingly, the performance data for
the Investment Funds have been adjusted for expenses, as described herein, that
would have been incurred had these Certificates been available prior to the date
of this prospectus. In addition, the investment results prior to October 1996,
when HRT Class IB shares were not available, have been adjusted to reflect 12b-1
fees.
In all cases the results shown in the tables are based on the actual historical
investment experience of the corresponding Portfolios of HRT or EQAT, as the
case may be (see "HRT Portfolios" below). Certain of the Investment Funds began
operations on a date after the inception date of the corresponding Portfolio, as
indicated in Table 1. When we advertise the performance of an Investment Fund we
will separately include the historical performance of the Investment Fund,
determined in the manner shown in Table 1, since the Investment Fund's inception
date, as and to the extent required by regulatory authorities.
HRT Portfolios
The performance data for the Alliance Money Market and Alliance Common Stock
Funds that invest in corresponding HRT Portfolios, for periods prior to March
22, 1985, reflect the investment results of two open-end management separate
accounts (the "predecessor separate accounts") which were reorganized in unit
investment trust form. The "Since Inception" figures for these Investment Funds
are based on the date of inception of the predecessor separate accounts. These
performance data have been adjusted to reflect the maximum investment advisory
fee payable for the corresponding Portfolio of HRT, as well as an assumed charge
of 0.06% for direct operating expenses.
EQAT Portfolios
EQAT commenced operations on May 1, 1997. The Investment Funds of the Separate
Account that invest in Class IB shares of Portfolios of EQAT commenced
operations on May 1 and December 31, 1997.
See "Part 2: The Guaranteed Period Account" for information on the Guaranteed
Period Account.
The performance data in Tables 1 and 2 (which reflect the first calculation
method described above) illustrate the average annual total return of the
Investment Funds, and the growth of an investment in the Investment Funds,
respectively, over the periods shown, assuming a single initial contribution of
$1,000 plus a $30 Credit and the surrender of a Certificate, at the end of each
period on December 31, 1997. An Investment Fund's average annual total return is
the annual rate of growth of the Investment Fund that would be necessary to
achieve the ending value of a contribution kept in the Investment Fund for the
period specified.
Each calculation assumes that the $1,000 contribution plus the $30 Credit was
allocated to only one Investment Fund, no transfers or subsequent contributions
were made and no amounts were allocated to any other Investment Option under the
Certificate.
In order to calculate annualized rates of return, we divide the Cash Value of a
Certificate which is surrendered on December 31, 1997 by the $1,000 contribution
plus the $30 Credit made at the beginning of each period illustrated. The result
of that calculation is the total growth rate for the period. Then we annualize
that growth rate to obtain the average annual percentage increase (decrease)
during the period shown. When we "annualize," we assume that a single rate of
return applied each year during the period will produce the ending value, taking
into account the effect of compounding.
49
<PAGE>
TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CERTIFICATE SURRENDERED ON
DECEMBER 31, 1997*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
------------------------------------------------------------------------------------
SINCE
INVESTMENT
INVESTMENT ONE THREE FIVE TEN FUND SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION** INCEPTION***
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Money Market
Alliance High Yield
Alliance Common Stock
Alliance Aggressive Stock
Alliance Small Cap Growth
MFS Research
MFS Emerging Growth Companies [TO BE INSERTED BY AMENDMENT]
Merrill Lynch Basic Value Equity
Merrill Lynch World Strategy
Morgan Stanley Emerging
Markets Equity
EQ/Putnam Growth & Income
Value
EQ/Putnam Investors Growth
EQ/Putnam International Equity
- -------------------
See footnotes below.
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
TABLE 2
GROWTH OF $1,000 UNDER A CERTIFICATE SURRENDERED ON DECEMBER 31, 1997*
- -------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
------------------------------------------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE
FUND YEAR YEARS YEARS YEARS INCEPTION***
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market
Alliance High Yield
Alliance Common Stock
Alliance Aggressive Stock
Alliance Small Cap Growth
MFS Research
MFS Emerging Growth Companies [TO BE INSERTED BY AMENDMENT]
Merrill Lynch Basic Value Equity
Merrill Lynch World Strategy
Morgan Stanley Emerging
Markets Equity
EQ/Putnam Growth & Income
Value
EQ/Putnam Investors Growth
EQ/Putnam International Equity
</TABLE>
- -------------------
* The tables reflect the withdrawal charge and the optional baseBUILDER
benefits charge.
** The "Since Inception" dates for the Investment Funds are as follows:
Alliance Money Market, Alliance High Yield, Alliance Common Stock, and
Alliance Aggressive Stock (October 16, 1996); Alliance Small Cap Growth, MFS
Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value,
EQ/Putnam Investors Growth, and EQ/Putnam International Equity (May 1,
1997); Merrill Lynch Basic Value Equity and Merrill Lynch World Strategy
(August 1, 1997); and Morgan Stanley Emerging Markets Equity (December 31,
1997).
*** The "Since Inception" dates for the Portfolios of HRT and EQAT are as
follows: Alliance Money Market (July 13, 1981); Alliance High Yield (January
2, 1987); Alliance Common Stock (January 13, 1976); Alliance Aggressive
Stock (January 27, 1986); Alliance Small Cap Growth (May 1, 1997); MFS
Research (May 1, 1997); MFS Emerging Growth Companies (May 1, 1997); Merrill
Lynch Basic Value Equity (May 1, 1997); Merrill Lynch World Strategy (May 1,
1997); Morgan Stanley Emerging Markets Equity (August 20, 1997); EQ/Putnam
Growth & Income Value (May 1, 1997); and EQ/Putnam International Equity (May
1, 1997).
- --------------------------------------------------------------------------------
50
<PAGE>
Tables 3, 4 and 5 (which reflect the second calculation method described above)
provide you with information on rates of return on an annualized, cumulative and
year-by-year basis.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same cumulative
return, if performance had been constant over the entire period.
BENCHMARKS
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Nor do they reflect other charges such as the mortality and
expense risks charge, administration charge, distribution charge or any
withdrawal or optional benefit charge, under the Certificates. Comparisons with
these benchmarks, therefore, are of limited use. We include them because they
are widely known and may help you to understand the universe of securities from
which each Portfolio is likely to select its holdings. Benchmark data reflect
the reinvestment of dividend income.
PORTFOLIO INCEPTION DATES AND COMPARATIVE BENCHMARKS:
ALLIANCE MONEY MARKET: July 13, 1981; Salomon Brothers Three-Month T-Bill Index.
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index.
ALLIANCE COMMON STOCK: January 13, 1976; Standard & Poor's 500 Index.
ALLIANCE AGGRESSIVE STOCK: January 27, 1986; 50% Russell 2000 Small Stock Index
and 50% Standard & Poor's Mid-Cap Total Return Index.
ALLIANCE SMALL CAP GROWTH: May 1, 1997; Russell 2000 Growth Index.
MFS RESEARCH: May 1, 1997; Standard & Poor's 500 Index.
MFS EMERGING GROWTH COMPANIES: May 1, 1997; Russell 2000 Index.
MERRILL LYNCH BASIC VALUE EQUITY: May 1, 1997; Standard & Poor's 500 Index.
MERRILL LYNCH WORLD STRATEGY: May 1, 1997; 36% Standard & Poor's 500 Index/24%
Morgan Stanley Capital International Europe, Australia, Far East Index/21%
Salomon Brothers U.S. Treasury Bond 1 Year+/14% Salomon Brothers World
Government Bond (excluding U.S.)/and 5% Three-Month U.S. Treasury Bill.
MORGAN STANLEY EMERGING MARKETS EQUITY: August 20, 1997; Morgan Stanley Capital
International Emerging Markets Free Price Return Index.
EQ/PUTNAM GROWTH & INCOME VALUE: May 1, 1997; Standard & Poor's 500 Index.
EQ/PUTNAM INVESTORS GROWTH: May 1, 1997; Standard & Poor's 500 Index.
EQ/PUTNAM INTERNATIONAL EQUITY: May 1, 1997; Morgan Stanley Capital
International Europe, Australia, Far East Index.
The Lipper Variable Insurance Products Performance Analysis Survey (LIPPER)
records the performance of a large group of variable annuity products, including
managed separate accounts of insurance companies. According to Lipper Analytical
Services, Inc., the data are presented net of investment management fees, direct
operating expenses and asset-based charges applicable under annuity contracts.
Lipper data provide a more accurate picture than market benchmarks of the
Equitable Accumulator performance relative to other variable annuity products.
51
<PAGE>
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.48% 3.55% 2.76% 3.83% 4.64% -- 5.21%
Lipper Money Market 3.95 4.05 3.29 4.41 5.39 -- 5.77
Benchmark 5.23 5.41 4.71 5.61 6.33 -- 6.87
ALLIANCE HIGH YIELD 16.28 18.18 13.75 10.71 -- -- 9.97
Lipper High Yield 12.87 14.23 10.68 10.33 -- -- 9.46
Benchmark 12.83 14.54 11.72 12.09 -- -- 11.39
ALLIANCE COMMON STOCK 26.84 26.23 18.81 15.80 15.08 15.38% 13.69
Lipper Growth 24.35 24.72 16.01 15.40 13.99 15.20 13.97
Benchmark 33.36 31.15 20.27 18.05 17.52 16.66 15.44
ALLIANCE AGGRESSIVE STOCK 8.77 19.01 12.77 16.79 -- -- 17.16
Lipper Mid-Cap 12.11 15.54 9.27 14.32 -- -- 15.87
Benchmark 27.31 24.88 17.11 17.74 -- -- 15.12
ALLIANCE SMALL CAP
GROWTH -- -- -- -- -- -- 25.16**
Lipper Small Cap -- -- -- -- -- -- 26.66**
Benchmark -- -- -- -- -- -- 27.66**
MFS RESEARCH -- -- -- -- -- -- 14.80**
Lipper Growth -- -- -- -- -- -- 21.89**
Benchmark -- -- -- -- -- -- 22.55**
MFS EMERGING GROWTH
COMPANIES -- -- -- -- -- -- 21.11**
Lipper Mid-Cap -- -- -- -- -- -- 20.88**
Benchmark -- -- -- -- -- -- 28.68**
MERRILL LYNCH BASIC
VALUE EQUITY
Lipper Growth & Income
Benchmark
MERRILL LYNCH WORLD [TO BE INSERTED BY AMENDMENT]
STRATEGY
Lipper Global Flexible Portfolio
Benchmark
MORGAN STANLEY
EMERGING MARKETS
EQUITY -- -- -- -- -- -- (20.66)**
Lipper Emerging Markets -- -- -- -- -- -- N/A
Benchmark -- -- -- -- -- -- (21.43)**
EQ/PUTNAM GROWTH &
INCOME VALUE -- -- -- -- -- -- 14.96**
Lipper Growth & Income -- -- -- -- -- -- 20.28**
Benchmark -- -- -- -- -- -- 22.55**
EQ/PUTNAM INVESTORS
GROWTH -- -- -- -- -- -- 23.32**
Lipper Growth -- -- -- -- -- -- 21.89**
Benchmark -- -- -- -- -- -- 22.55**
EQ/PUTNAM INTERNATIONAL
EQUITY -- -- -- -- -- -- 8.40**
Lipper International -- -- -- -- -- -- 3.41**
Benchmark -- -- -- -- -- -- 2.85**
</TABLE>
- -------------------
See footnotes on page 56.
- --------------------------------------------------------------------------------
52
<PAGE>
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.48% 11.03% 14.57% 45.58% 97.57% -- 130.94%
Lipper Money Market 3.95 12.64 17.61 54.00 120.14 -- 151.25
Benchmark 5.23 17.13 25.87 72.64 150.97 -- 199.34
ALLIANCE HIGH YIELD 16.28 65.08 90.41 176.63 -- -- 184.30
Lipper High Yield 12.87 49.17 66.26 169.15 -- -- 173.12
Benchmark 12.83 50.26 74.04 213.08 -- -- 227.68
ALLIANCE COMMON STOCK 26.84 101.12 136.71 333.69 722.13 1,649.46% 1,574.72
Lipper Growth 24.35 94.70 111.50 321.71 625.81 1,602.96 1,659.17
Benchmark 33.36 125.60 151.62 425.67 1,026.40 2,080.13 2,248.74
ALLIANCE AGGRESSIVE STOCK 8.77 68.55 82.36 371.95 -- -- 560.88
Lipper Mid-Cap 12.11 56.12 69.26 311.80 -- -- 478.26
Benchmark 27.31 94.76 120.25 412.08 -- -- 436.52
ALLIANCE SMALL CAP
GROWTH -- -- -- -- -- -- 25.16**
Lipper Small Cap -- -- -- -- -- -- 26.66**
Benchmark -- -- -- -- -- -- 27.66**
MFS RESEARCH -- -- -- -- -- -- 14.80**
Lipper Growth -- -- -- -- -- -- 21.89**
Benchmark -- -- -- -- -- -- 22.55**
MFS EMERGING GROWTH
COMPANIES -- -- -- -- -- -- 21.11**
Lipper Mid-Cap -- -- -- -- -- -- 20.88**
Benchmark -- -- -- -- -- -- 28.68**
MERRILL LYNCH BASIC
VALUE EQUITY
Lipper Growth & Income
Benchmark
MERRILL LYNCH WORLD [TO BE INSERTED BY AMENDMENT]
STRATEGY
Lipper Global Flexible Portfolio
Benchmark
MORGAN STANLEY
EMERGING MARKETS
EQUITY -- -- -- -- -- -- (20.66)**
Lipper Emerging Markets -- -- -- -- -- -- N/A
Benchmark -- -- -- -- -- -- (21.43)
EQ/PUTNAM GROWTH &
INCOME VALUE -- -- -- -- -- -- 14.96**
Lipper Growth & Income -- -- -- -- -- -- 20.28**
Benchmark -- -- -- -- -- -- 22.55**
EQ/PUTNAM INVESTORS
GROWTH -- -- -- -- -- -- 23.32**
Lipper Growth -- -- -- -- -- -- 21.89**
Benchmark -- -- -- -- -- -- 22.55**
EQ/PUTNAM INTERNATIONAL
EQUITY -- -- -- -- -- -- 8.40**
Lipper International -- -- -- -- -- -- 3.41**
Benchmark -- -- -- -- -- -- 2.85**
</TABLE>
- -------------------
See footnotes on page 56.
- --------------------------------------------------------------------------------
53
<PAGE>
TABLE 5
YEAR-BY-YEAR RATES OF RETURN*
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE
MONEY
MARKET*** 8.82% 6.47% 4.64% 4.66% 5.34% 7.18% 6.23% 4.23% 1.65% 1.06% 2.10% 3.80% 3.37% 3.48%
ALLIANCE HIGH
YIELD -- -- -- 2.77 7.71 3.20 (2.95) 22.17 10.23 20.88 (4.58) 17.71 20.60 16.28
ALLIANCE
COMMON
STOCK*** (3.78) 30.97 15.21 5.46 20.18 23.28 (9.82) 35.34 1.31 22.52 (3.94) 30.01 21.97 26.84
ALLIANCE
AGGRESSIVE
STOCK -- -- 32.96 5.32 (0.73) 40.86 6.16 83.43 (4.95) 14.59 (5.59) 29.21 19.93 8.77
</TABLE>
- ----------------
* Returns do not reflect the withdrawal charge, the optional baseBUILDER
benefits charge, and any charge for tax such as premium taxes. There are no
returns shown in Table 5 for the Alliance Small Cap Growth Fund and the
Investment Funds investing in EQAT as such Funds have less than one year of
performance.
**Unannualized
<TABLE>
<CAPTION>
***Prior to 1984 the Year-by-Year Rates of Return were: 1976 1977 1978 1979 1980 1981 1982 1983
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 7.46% (10.92)% 6.24% 27.45% 47.37% (7.60)% 15.41% 23.80%
ALLIANCE MONEY MARKET -- -- -- -- -- 5.36 10.94 6.95
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may describe
general economic and market conditions affecting the Separate Account and each
respective trust and may present the performance of the Investment Funds or
compare it with (1) that of other insurance company separate accounts or mutual
funds included in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS or similar investment services that monitor the
performance of insurance company separate accounts or mutual funds, (2) other
appropriate indices of investment securities and averages for peer universes of
funds which are shown under "Benchmarks" and "Portfolio Inception Dates and
Comparative Benchmarks" in this Part 9, or (3) data developed by us derived from
such indices or averages. The Morningstar Variable Annuity/Life Report consists
of nearly 700 variable life and annuity funds, all of which report their data
net of investment management fees, direct operating expenses and separate
account charges. VARDS is a monthly reporting service that monitors
approximately 760 variable life and variable annuity funds on performance and
account information. Advertisements or other communications furnished to present
or prospective Certificate Owners may also include evaluations of an Investment
Fund or Portfolio by financial publications that are nationally recognized such
as Barron's, Morningstar's Variable Annuity Sourcebook, Business Week, Chicago
Tribune, Forbes, Fortune, Institutional Investor, Investment Adviser, Investment
Dealer's Digest, Investment Management Weekly, Los Angeles Times, Money, Money
Management Letter, Kiplinger's Personal Finance, Financial Planning, National
Underwriter, Pension & Investments, USA Today, Investor's Business Daily, The
New York Times, and The Wall Street Journal.
ALLIANCE MONEY MARKET FUND AND ALLIANCE HIGH YIELD FUND YIELD INFORMATION
The current yield and effective yield of the Alliance Money Market Fund and
Alliance High Yield Fund may appear in reports and promotional material to
current or prospective Certificate Owners.
Current yield for the Alliance Money Market Fund will be based on net changes in
a hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). Current yield for the Alliance High Yield Fund
will be based on net changes in a hypothetical investment over a given 30-day
period, exclusive of capital changes, and then "annualized" (assuming that the
same 30-day result would occur each month for 12 months). "Effective yield" is
calculated in a manner similar to that used to calculate current yield, but when
annualized, any income earned by the investment is assumed to be reinvested. The
"effective yield" will be slightly higher than the "current yield" because any
earnings are compounded weekly for the Alliance Money Market Fund and monthly
for the Alliance High Yield Fund. Alliance Money Market Fund and Alliance High
Yield Fund yields and effective yields assume the deduction of all Certificate
charges and expenses other than the withdrawal charge, the optional baseBUILDER
benefits charge, and any charge for tax such as premium tax. See "Part 5:
Alliance Money Market Fund and Alliance High Yield Fund Yield Information" in
the SAI.
54
<PAGE>
APPENDIX I: MARKET VALUE ADJUSTMENT EXAMPLE
- --------------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined and
how it would be applied to a withdrawal, assuming that $100,000 was allocated on
February 15, 1999 to a Guarantee Period with an Expiration Date of February 15,
2008 at a Guaranteed Rate of 7.00% resulting in a Maturity Value at the
Expiration Date of $183,846, and further assuming that a withdrawal of $50,000
was made on February 15, 2003.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSUMED
GUARANTEED RATE ON FEBRUARY 15, 2003
5.00% 9.00%
-----------------------------------------------------------
As of February 15, 2003 (Before Withdrawal)
- -------------------------------------------
<S> <C> <C>
(1) Present Value of Maturity Value,
also Annuity Account Value.................................. $ 144,048 $ 119,487
(2) Guaranteed Period Amount.................................... 131,080 131,080
(3) Market Value Adjustment: (1) - (2).......................... 12,968 (11,593)
On February 15, 2003 (After Withdrawal)
- ---------------------------------------
(4) Portion of (3) Associated
with Withdrawal: (3) x [$50,000/(1)]........................ $ 4,501 $ (4,851)
(5) Reduction in Guaranteed
Period Amount: [$50,000 - (4)].............................. 45,499 54,851
(6) Guaranteed Period Amount: (2) - (5)......................... 85,581 76,229
(7) Maturity Value.............................................. 120,032 106,915
(8) Present Value of (7), also
Annuity Account Value....................................... 94,048 69,487
</TABLE>
- --------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have
increased (from 7.00% to 9.00% in the example), a portion of a negative market
value adjustment is realized. On the other hand, if a withdrawal is made when
rates have decreased (from 7.00% to 5.00% in the example), a portion of a
positive market value adjustment is realized.
55
<PAGE>
APPENDIX II: PURCHASE CONSIDERATIONS FOR QP CERTIFICATES
- --------------------------------------------------------------------------------
Any trustee considering a purchase of a QP Certificate should discuss with its
tax adviser whether this is an appropriate investment vehicle for the employer's
plan. Trustees should consider whether the plan provisions permit the investment
of plan assets in the QP Certificate, the distribution of such an annuity, the
purchase of the Guaranteed Minimum Income Benefit, and the payment of death
benefits in accordance with the requirements of the Code. The form of
Certificate and this prospectus should be reviewed in full, and the following
factors, among others, should be noted. This QP Certificate accepts transfer
contributions only and not regular, ongoing payroll contributions. For 401(k)
plans under defined contribution plans, no employee after-tax contributions are
accepted. Under defined benefit plans, we will not accept rollovers from a
defined contribution plan to a defined benefit plan. We will only accept
transfers from a defined benefit plan or a change of investment vehicles in the
plan.
For defined benefit plans, the maximum percentage of actuarial value of the plan
Participant/Employee's "Normal Retirement Benefit" which can be funded by a QP
Certificate is 80%. The Annuity Account Value under a QP Certificate may at any
time be more or less than the lump sum actuarial equivalent of the "Accrued
Benefit" for a defined benefit plan Participant/Employee. Equitable Life does
not guarantee that the Annuity Account Value under a QP Certificate will at any
time equal the actuarial value of 80% of a Participant/Employee's Accrued
Benefit. If overfunding of a plan occurs, withdrawals from the QP Certificate
may be required. A withdrawal charge and/or market value adjustment may apply.
Further, Equitable will not perform or provide any plan recordkeeping services
with respect to the QP Certificates. The plan's administrator will be solely
responsible for performing or providing for all such services. There is no loan
feature offered under the QP Certificates, so if the plan provides for loans and
a Participant/Employee takes a loan from the plan, other plan assets must be
used as the source of the loan and any loan repayments must be credited to other
investment vehicles and/or accounts available under the plan.
Finally, because the method of purchasing the QP Certificates and the features
of the QP Certificates may appeal more to plan Participants/Employees who are
older and tend to be highly paid, and because certain features of the QP
Certificates are available only to plan Participants/Employees who meet certain
minimum and/or maximum age requirements, plan trustees should discuss with their
advisers whether the purchase of the QP Certificates would cause the plan to
engage in prohibited discrimination in contributions, benefits or otherwise.
56
<PAGE>
APPENDIX III: GUARANTEED MINIMUM DEATH BENEFIT EXAMPLE
- --------------------------------------------------------------------------------
Under the Certificates the death benefit is equal to the Annuity Account Value
or, if greater, the Guaranteed Minimum Death Benefit (see "Guaranteed Minimum
Death Benefit" in Part 3).
The following is an example illustrating the calculation of the Guaranteed
Minimum Death Benefit. Assuming $100,000 is allocated to the Investment Funds
(with no allocation to the Alliance Money Market Fund or the Guarantee Periods),
no subsequent contributions, no transfers and no withdrawals, the Guaranteed
Minimum Death Benefit for an Annuitant age 45 would be calculated as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
END OF 6% ROLL UP TO AGE 80 ANNUAL RATCHET TO AGE 80
CONTRACT ANNUITY GUARANTEED MINIMUM GUARANTEED MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 $105,000 $106,000 $105,000(2)
2 $115,500 $112,360 $115,500(2)
3 $132,825 $119,102 $132,825(2)
4 $106,260 $126,248 $132,825(3)
5 $116,886 $133,823 $132,825(3)
6 $140,263 $141,852 $140,263(2)
7 $140,263 $150,363 $140,263(3)
----------------------------------------------------------------------------------------------------------------------
</TABLE>
The Annuity Account Values for Contract Years 1 through 7 are determined based
on hypothetical rates of return of 5.00%, 10.00%, 15.00%, (20.00)%, 10.00%,
20.00% and 0.00%, respectively.
6% ROLL UP TO AGE 80
(1) For Contract Years 1 through 7, the Guaranteed Minimum Death Benefit equals
the amount allocated increased by 6%.
ANNUAL RATCHET TO AGE 80
(2) At the end of Contract Years 1, 2 and 3, and again at the end of Contract
Year 6, the Guaranteed Minimum Death Benefit is equal to the current
Annuity Account Value.
(3) At the end of Contract Years 4, 5 and 7, the Guaranteed Minimum Death
Benefit is equal to the Guaranteed Minimum Death Benefit at the end of the
prior year since it is equal to or higher than the current Annuity Account
Value.
57
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Part 1: Minimum Distribution Withdrawals-- Traditional IRA
Certificates 2
- --------------------------------------------------------------------------------
Part 2: Accumulation Unit Values 2
- --------------------------------------------------------------------------------
Part 3: Annuity Unit Values 2
- --------------------------------------------------------------------------------
Part 4: Custodian and Independent Accountants 3
- --------------------------------------------------------------------------------
Part 5: Alliance Money Market Fund and Alliance
High Yield Fund Yield Information 3
- --------------------------------------------------------------------------------
Part 6: Long-Term Market Trends 4
- --------------------------------------------------------------------------------
Part 7: Key Factors in Retirement Planning 6
- --------------------------------------------------------------------------------
Part 8: Financial Statements 9
- --------------------------------------------------------------------------------
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Life
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Equitable Accumulator SAI dated ________, 1998:
---------------------------------------------------------------------
Name
---------------------------------------------------------------------
Address
---------------------------------------------------------------------
City State Zip
(MLSAI9/98)
58
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The by-laws of The Equitable Life Assurance Society of the
United States ("Equitable Life") provide, in Article VII, as follows:
7.4 Indemnification of Directors, Officers and Employees. (a)
To the extent permitted by the law of the State of New
York and subject to all applicable requirements thereof:
(i) any person made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by reason
of the fact that he or she, or his or her testator or
intestate, is or was a director, officer or employee of
the Company shall be indemnified by the Company;
(ii) any person made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by reason
of the fact that he or she, or his or her testator or
intestate serves or served any other organization in any
capacity at the request of the Company may be indemnified
by the Company; and
(iii) the related expenses of any such person in any of said
categories may be advanced by the Company.
(b) To the extent permitted by the law of the State of New
York, the Company may provide for further indemnification
or advancement of expenses by resolution of shareholders
of the Company or the Board of Directors, by amendment of
these By-Laws, or by agreement. {Business Corporation Law
ss.ss. 721-726; Insurance Law ss.1216}
The directors and officers of Equitable Life are insured under policies
issued by Lloyd's of London, X. L. Insurance Company and ACE Insurance Company.
The annual limit on such policies is $100 million, and the policies insure the
officers and directors against certain liabilities arising out of their conduct
in such capacities.
II-1
<PAGE>
ITEM 16. EXHIBITS
Exhibits No.
(1) (a) Form of Distribution Agreement by and among
Equitable Distributors, Inc., Separate
Account Nos. 45 and 49 of Equitable Life and
Equitable Life Assurance Society of the
United States, incorporated by reference to
Exhibit 1(a) to the Registration Statement
on Form S-3 (File No. 33-88456).
(b) Form of Distribution Agreement dated as of
January 1, 1998 among The Equitable Life
Assurance Society of the United States for
itself and as depositor on behalf of certain
separate accounts and Equitable
Distributors, Inc., incorporated herein by
reference to Exhibit 3(b) to the
Registration Statement on Form N-4 (File No.
333-05593) on May 1, 1998.
(c) Form of The Hudson River Trust Sales
Agreement by and among Equico Securities,
Inc. (now EQ Financial Consultants, Inc.),
The Equitable Life Assurance Society of the
United States, Equitable Distributors, Inc.
and Separate Account No. 49 of The Equitable
Life Assurance Society of the United States,
incorporated by reference to Exhibit 1(c) to
the Registration Statement on Form S-3 (File
No. 33-88456).
(4) (a) Form of group annuity contract no.
1050-94IC, previously filed with this
Registration Statement on Form S-3 (File No.
333-24009) on March 6, 1998.
(b) Form of group annuity certificate nos. 94ICA
and 94ICB, previously filed with this
Registration Statement on Form S-3 (File No.
333-24009) on March 6, 1998.
(b)(i) Form of Data pages for Equitable Accumulator
TSA, incorporated by reference to Exhibit
No. 4(s) to the Registration Statement on
Form N-4 (File No. 33-05593) filed on May
22, 1998.
(c) Forms of Endorsement Nos. 94ENIRAI, 94ENNQI
and 94ENMVAI to contract no. 1050-94IC and
data pages no. 94ICA/BIM(IRA), (NQ), (NQ
Plan A) and (NQ Plan B), previously filed
with this Registration Statement on Form S-3
(File No. 333-24009) on March 6, 1998.
(c)(i) Form of Data Pages for Equitable Accumulator
Select TSA, incorporated by reference to
Exhibit 4(k) to the Registration Statement
on Form N-4 (File No. 333-31131) filed on
May 22, 1998.
(d) Forms of Application used with the IRA, NQ
and Fixed Annuity Markets, previously filed
with this Registration Statement on Form S-3
(File No. 333-24009) on March 6, 1998.
(d)(i) Form of Data Pages for Equitable Accumulator
TSA, incorporated by reference to Exhibit
No. 4(v) to the Registration Statement on
Form N-4 (File No. 33-83750) filed on May
22, 1998.
(e) Form of Endorsement no. 95ENLCAI to contract
no. 1050-94IC and data pages no. 94ICA/BLCA,
previously filed with this Registration
Statement on Form S-3 (File No. 333-24009)
on March 6, 1998.
(e)(i) Form of Endorsement Applicable to TSA
Certificates, incorporated by reference to
Exhibit 4(t) to the Registration Statement
on Form N-4 (File No. 333-05593) filed on
May 22, 1998.
(f) Forms of Data Pages for Rollover IRA, IRA
Assured Payment Option, IRA Assured Payment
Option Plus, Accumulator, Assured Growth
Plan, Assured Growth Plan (Flexible Income
Program), Assured Payment Plan (Period
Certain) and Assured Payment Plan (Life with
a Period Certain), incorporated by reference
to Exhibit 4(f) to the Registration
Statement on Form S-3 (File No. 33-88456).
(f)(i) Form of Enrollment Form/Application for
Equitable Accumulator (IRA, NQ, QF and TSA),
incorporated by reference to Exhibit No.
5(f) to the Registration Statement on Form
N-4 (File No. 333-05593) filed on May 22,
1998.
II-2
<PAGE>
Exhibits No.
(g) Forms of Data Pages for Rollover IRA, IRA
Assured Payment Option, IRA Assured Payment
Option Plus, Accumulator, Assured Growth
Plan and Assured Payment Plan (Life Annuity
with a Period Certain), incorporated by
reference to Exhibit 4(g) to the
Registration Statement on Form S-3 (File No.
33-88456).
(h) Form of Separate Account Insulation
Endorsement for the Endorsement Applicable
to Market Value Adjustment Terms,
incorporated by reference to Exhibit 4(h) to
the Registration Statement on Form S-3 (File
No. 33-88456).
(i) Forms of Guaranteed Minimum Income Benefit
Endorsements (and applicable data page for
Rollover IRA) for Endorsement Applicable to
Market Value Adjustment Terms and for the
Life Contingent Annuity Endorsement,
incorporated by reference to Exhibit 4(i) to
the Registration Statement on Form S-3 (File
No. 33-88456).
(j) Forms of Enrollment Form/Application for
Rollover IRA, Choice Income Plan, Assured
Growth Plan, Accumulator and Assured Payment
Plan, incorporated by reference to Exhibit
4(j) to the Registration Statement on Form
S-3 (File No. 33-88456).
(k) Forms of Data Pages for the Accumulator,
incorporated by reference to Exhibit 4(k) to
the Registration Statement on Form S-3 (File
No. 33-88456).
(l) Forms of Data Pages for the Rollover IRA,
incorporated by reference to Exhibit 4(l) to
the Registration Statement on Form S-3 (File
No. 33-88456).
(m) Forms of Data Pages for the Accumulator and
Rollover IRA, incorporated by reference to
Exhibit 4(m) to the Registration Statement
on Form S-3 (File No. 33-88456).
(n) Forms of Data Pages for Accumulator and
Rollover IRA, incorporated by reference to
Exhibit 4(n) to the Registration Statement
on Form S-3 (File No. 33-88456).
(o) Forms of Data Pages for the Accumulator,
Rollover IRA, Income Manager Accumulator,
Income Manager Rollover IRA, Equitable
Accumulator, Income Manager (IRA and NQ) and
MVA Annuity (IRA and NQ), previously filed
with this Registration Statement (File No.
333-24009) on April 30, 1997.
(p) Forms of Enrollment Form/Application for
Income Manager Accumulator, Income Manager
Rollover IRA, Equitable Accumulator, Income
Manager (IRA and NQ) and MVA Annuity (IRA
and NQ), previously filed with this
Registration Statement (File No. 333-24009)
on April 30, 1997.
(q) Forms of Data Pages for Equitable
Accumulator Select (IRA) and Equitable
Accumulator Select (NQ), previously filed
with this Registration Statement (File No.
333-24009) on September 18, 1997.
(r) Forms of Enrollment Form/Application for
Equitable Accumulator Select (IRA and NQ),
previously filed with this Registration
Statement (File No. 333-24009) on September
18, 1997.
(s) Form of Data Pages No. 94ICB and 94ICBMVA
for Equitable Accumulator (IRA)
Certificates, incorporated by reference to
Exhibit 4(m) to the Registration Statement
on Form N-4 (File No. 33-83750) on
February 27, 1998.
(t) Form of Data Pages No. 94ICB and 94ICBMVA
for Equitable Accumulator (NQ) Certificates,
incorporated by reference to Exhibit 4(n) to
the Registration Statement on Form N-4 (File
No. 33-83750) on February 27, 1998.
(u) Form of Data Pages No. 94ICB and 94ICBMVA
for Equitable Accumulator (QP) Certificates,
incorporated by reference to Exhibit 4(o) to
the Registration Statement on Form N-4 (File
No. 33-83750) on February 27, 1998.
(v) Form of Data Pages No. 94ICB, 94ICBMVA and
94ICBLCA for Assured Payment Option
Certificates, incorporated by reference to
Exhibit 4(p) to the Registration Statement
on Form N-4 (File No. 33-83750) on
February 27, 1998.
(w) Form of Data Pages No. 94ICB, 94ICBMVA and
94ICBLCA for APO Plus Certificates,
incorporated by reference to Exhibit 4(q) to
the Registration Statement on Form N-4 (File
No. 33-83750) on February 27, 1998.
(x) Form of Endorsement applicable to Defined
Benefit Qualified Plan Certificates No.
98ENDQPI incorporated by reference to
Exhibit 4(r) to the Registration Statement
on Form N-4 (File No. 33-83750) on
February 27, 1998.
(y) Form of Endorsement applicable to
Non-Qualified Certificates No. 98ENJONQI,
incorporated by reference to Exhibit 4(s) to
the Registration Statement on Form N-4 (File
No. 33-83750) on February 27, 1998.
(z) Form of Endorsement applicable to Charitable
Remainder Trusts No. 97ENCRTI, incorporated
by reference to Exhibit 4(t) to the
Registration Statement on Form N-4 (File No.
33-83750) on February 27, 1998.
(a)(a) Form of Enrollment Form/Application No.
126737 (5/98) for Equitable Accumulator
(IRA, NQ and QP), incorporated by reference
to Exhibit 5(e) to the Registration
Statement on Form N-4 (File No. 33-83750)
on February 27, 1998.
(b)(b) Form of Endorsement for Extra Credit Annuity
Form No. 98ECENDI and Data Pages 94ICA/B,
incorporated herein by reference to Exhibit
No. 4(j) to Amendment No. 14 to the Separate
Account No. 49 N-4 Registration Statement,
filed September 30, 1998.
(c)(c) Form of Endorsement for Extra Credit Annuity
Form No. 98ECENDI and Data Pages 94ICA/B,
incorporated herein by reference to Exhibit
No. 4(k) to Amendment No. 13 to the Separate
Account No. 45 N-4 Registration Statement,
filed September 30, 1998.
(d)(d) Form of Endorsement applicable to Defined
Contribution Qualified Plan Certificates No.
97ENQPI and Data Pages 94ICA/B, incorporated
herein by reference to Exhibit No. 4 (k) to
Amendment No. 14 to the Separate Account 49
N-4 Registration Statement, filed September
30, 1998.
(e)(e) Form of Endorsement applicable to Defined
Contribution Qualified Plan Certificates No.
97ENQPI and Data Pages 94ICA/B, incorporated
herein by reference to Exhibit No. 4(l) to
Amendment No. 13 to the Separate Account 45
N-4 Registration Statement, filed September
30, 1998.
II-3
<PAGE>
Exhibits No.
(5) (a) Opinion and Consent of Jonathan E. Gaines,
Esq., Vice President and Associate General
Counsel of Equitable, as to the legality of
the securities being registered, previously
filed with this Registration Statement (File
No. 333-24009) on April 30, 1997.
(b) Copy of the Internal Revenue Service
determination letter regarding qualification
under Section 401 of the Internal Revenue
Code, incorporated by reference to Exhibit
5(b) to the Registration Statement on Form
S-3 (File No. 33-88456).
(8) (a) Not applicable.
(23) (a) Consent of PricewaterhouseCoopers LLP.
(b) Consent of Counsel (see Exhibit 5(a).
(c) Powers of Attorney, previously filed with
this Registration Statement No. 333-24009
on May 1, 1998.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post- effective amendment
to this registration statement:
(i) to include any prospectus required
by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any
facts or events arising after the
effective date of the registration
statement (or the most recent
post-effective amendment thereof)
which, individually or in the
aggregate represent a fundamental
change in the information set forth
in the registration statement;
(iii) to include any material information
with respect to the plan of
distribution not previously
disclosed in the registration
statement or any material change to
such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933,
each such post-effective amendment shall be
deemed to be a new registration statement
relating to the securities offered therein,
and the offering of such securities at that
time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the
securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
(c) Insofar as indemnification for liabilities 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 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.
II-6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has caused this Registration Statement or amendment
thereto to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and State of New York, on September 30th, 1998.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
(Registrant)
By: /s/ Jerome S. Golden
-------------------
Jerome S. Golden
Executive Vice President
Product Management Group
The Equitable Life Assurance Society
of the United States
As required by the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed by or on behalf of
the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
PRINCIPAL EXECUTIVE OFFICERS:
<S> <C>
Michael Hegarty President, Chief Operating Officer and Director
Edward D. Miller Chairman of the Board, Chief Executive Officer and Director
PRINCIPAL FINANCIAL OFFICER:
Stanley B. Tulin Vice Chairman of the Board, Chief Financial Officer and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel Senior Vice President and Controller
- ---------------------
Alvin H. Fenichel
September 30, 1998
</TABLE>
DIRECTORS:
Francoise Colloc'h Donald J. Greene George T. Lowy
Henri de Castries John T. Hartley Edward D. Miller
Joseph L. Dionne John H.F. Haskell, Jr. Didier Pineau-Valencienne
Denis Duverne Michael Hegarty George J. Sella, Jr.
William T. Esrey Mary R. (Nina) Henderson Stanley B. Tulin
Jean-Rene Fourtou W. Edwin Jarmain Dave H. Williams
Norman C. Francis G. Donald Johnston, Jr.
By: /s/Jerome S. Golden
-------------------
Jerome S. Golden
Attorney-in-Fact
September 30, 1998
II-7
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. TAG VALUE
- ----------- ---------
(23) (a) Consent of PricewaterhouseCoopers EX-99.23a CONSENT
II-8
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post-Effective Amendment No. 6 to the Registration
Statement No. 333-24009 on Form S-3 of our report dated February 10, 1998
appearing on page F-1 of The Equitable Life Assurance Society of the United
States' Annual Report on Form 10-K for the year ended December 31, 1997. We also
consent to the incorporation by reference of our report on the Consolidated
Financial Statement Schedules dated February 10, 1998 which appears on page F-54
of such Annual Report on Form 10-K. We also consent to the references to us
under the heading "Independent Accountants" in this Prospectus.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
New York, New York
September 29, 1998
